FCPA Enforcement is Increasingly Focused on Prosecution of Individuals
At a November 29, 2010 hearing of the Senate Judiciary Committee’s Crime and Drugs Subcommittee, Department of Justice and private sector witnesses testified on the enforcement of the Foreign Corrupt Practices Act1.
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Highlights of the written hearing statements from the DOJ and Chamber of Commerce witnesses include:
U.S. Has Prosecuted More Cases than Other OECD Convention Parties
In October 2010, following an official review, the Organisation for Economic Co-operation and Development (OECD) applauded the U.S. for its efforts to fight foreign bribery and noted that the U.S. has investigated and prosecuted the most foreign bribery cases among the Parties to the OECD’s Anti-Bribery Convention.
Prosecution of Individuals is Critical Part of DOJ Enforcement Strategy
DOJ states that in addition to prosecuting and entering into corporate resolutions with a variety of corporate entities, it prosecutes individuals who violate the FCPA, and will not hesitate to seek jail terms for such offenders when appropriate.
No “Safe Haven” for Individuals if Corporations Are Prosecuted
DOJ has made the prosecution of individuals a critical part of its FCPA enforcement strategy and warns that corporate prosecutions and resolutions do not provide a safe haven for corporate officials. According to DOJ, every agreement resolving a corporate FCPA investigation explicitly states that it provides no protection against prosecution for individuals.
(Since 2009, DOJ notes that it has charged over 50 individuals with FCPA violations. There are approximately 35 defendants awaiting trial on FCPA charges in the U.S. By contrast, in 2004, DOJ had charged only two individuals with FCPA violations.)
DOJ is Working to Increase Cooperation with Foreign Counterparts
While the prosecution of individuals remains a crucial component of DOJ’s FCPA enforcement program, such prosecutions often involve jurisdictional hurdles, foreign evidence and witnesses, foreign prosecutions, and issues with the relevant statute of limitations. As a result, DOJ is working to increase its cooperation with its foreign counterparts.
Deferred and Non-Prosecution Agreements Are Increasingly Used
The DOJ witness also discussed the use of deferred and non-prosecution agreements by DOJ. According to DOJ, such agreements provide an effective means to ensure that corporations make compliance enhancements, take affirmative remedial actions, provide crucial cooperation in ongoing criminal investigations; allow DOJ to resolve matters more quickly without protracted and costly litigation; and provide guidance to other companies when they are made public.
Chamber Says FCPA Enforcement Has Become More Aggressive, Expansive
Also testifying at the hearing was a witness representing the U.S. Chamber of Commerce and the U.S. Chamber Institute for Legal Reform. This witness testified that the FCPA had been tailored to balance various competing interests, but that balance has been altered, at times, by aggressive application and interpretations of the statute by the government.
Chamber Says FCPA Should be Reformed to Reflect Business Realities
According to the Chamber’s witness, the FCPA should be modified to make clear what is and what is not a violation. The statute should also take into account the realities that confront businesses that operate in countries with endemic corruption (e.g., Russia, which is consistently ranked by Transparency International as among the most corrupt in the world) or in countries where many companies are state-owned (e.g., China) and it therefore may not be immediately apparent whether an individual is considered a “foreign official” within the meaning of the FCPA.
Also discussed were the Chamber’s recently recommendations for improvements to the FCPA, including adding a compliance defense; defining a “foreign official” under the statute, adding a “willfulness” requirement for corporate criminal liability, and limiting a company’s liability for acts of a subsidiary.
(See ITT’s Online Archives or 11/08/10 news, 10110809, for BP summary of the Chamber’s FCPA reform recommendations.
See ITT’s Online Archives or 12/01/09 news, 10120129, for BP summary on DOJ’s strengthened FCPA enforcement efforts.
See ITT’s Online Archives or 11/04/10 news, 10110412, for BP summary of DOJ official’s comments on DOJ enforcement efforts, noting that 2010 could be a record year.)
1The FCPA prohibits U.S. companies and companies operating in the U.S. from paying bribes to foreign government officials, politicians, and political parties for the purpose of obtaining business opportunities abroad.
(Witness testimony, dated 11/29/10)