FCPA Reform Bill Expected to be Drafted, Business Wants Changes

Representative Plans to Draft and then Introduce FCPA Reform Bill

Representative Sensenbrenner (R) said that he plans to draft and introduce a bill to reform the FCPA. He asked the Justice Department to work with him and others on the Committee in drafting the bill. The Justice Department official said that he did not think changes were needed, but was willing to work with Congress.

Prosecutions Up, Record Number of FCPA Fines in FY 2010

Representative Sensenbrenner stated that in the last few years there has been a dramatic increase in the number of cases prosecuted by the Justice Department under the FCPA, including a record number of fines. He noted that it has been reported that FCPA fines made up half of all Justice Department Criminal Division penalties in fiscal year 2010.

Justice Dept Focuses FCPA Enforcement on Matters that are Clear, Egregious

The Justice Department official noted that the Department has seen an increase in voluntary disclosures of FCPA violations. He also noted that the Department focuses its FCPA and related enforcement on matters where the allegations of criminal conduct are clear, egregious, and fall squarely within the FCPA. The official provided specific examples of such egregious conduct -- see ITT’s Online Archives or 12/07/10, 12/29/10, and 02/02/11 news, 10120720, 10122909, and 11020225 for BP summaries of examples provided.

Reps Say Businesses Are Concerned with Vague Enforcement of FCPA

Representatives stated that the business community has expressed concerns about the FCPA and the Justice Department’s enforcement of the FCPA. Businesses that are trying to comply with FCPA assert that the law is being enforced in a vague and impenetrable manner. Because the risks of prosecution are so great (possible fines and prison sentences), some companies would rather settle with the Justice Department than go to court. This results in a shortage of court decisions determining the limits of the law.

Need to Clarify Term “Foreign Official,” Discuss Limiting Successor Liability

Multiple Representatives noted that clarification of the term “foreign official” is needed. Some also thought that discussions needed to be had on limiting successor liability.

DOJ Would Like Statute of Limitations Extended for FCPA Investigations

The Justice Department official also stated that he would like the statue of limitations extended so that the Department has a longer period of time to investigate FCPA cases. He noted that foreign bribery cases are difficult, as they need to rely on information from foreign partners, and they take longer to investigate and detect.

9 Factors Considered by DOJ When Assessing Whether to Pursue Charges

The Justice Department official stated that when the Department seeks to enforce the FCPA against corporate entities, it does so pursuant to internal procedures set forth in the Department’s U.S. Attorney’s Manual. The Principles require federal prosecutors to consider the following nine factors when assessing whether to pursue charges against a business entity:

• The nature and seriousness of the offense, including the risk of harm to the public, and applicable policies and priorities, if any, governing the prosecution of corporations for particular categories of crime;
• The pervasiveness of wrongdoing within the corporation, including the complicity in, or the condoning of, the wrongdoing by corporate management;
• The corporation’s history of similar misconduct, including prior criminal, civil, and regulatory enforcement actions against it;
• The corporation's timely and voluntary disclosure of wrongdoing and its willingness to cooperate in the investigation of its agents;
• The existence and effectiveness of the corporation's pre-existing compliance program;
• The corporation’s remedial actions, including any efforts to implement an effective corporate compliance program or to improve an existing one, to replace responsible management, to discipline or terminate wrongdoers, to pay restitution, and to cooperate with the relevant government agencies;
• The collateral consequences, including whether there is disproportionate harm to shareholders, pension holders, employees, and others not proven personally culpable, as well as impact on the public arising from the prosecution;
• The adequacy of the prosecution of individuals responsible for the corporation's malfeasance; and
• The adequacy of remedies such as civil or regulatory enforcement actions.

Compliance Program and Cooperation are Important

Pursuant to these Principles, generally the Department does not hold a corporate entity accountable for the acts of a single employee. And while no single factor is necessarily more important than another, the existence and implementation of a company’s compliance program remains an important factor, and one which the Department has routinely recognized as significant. Cooperation is another important factor.

(See ITT’s Online Archives or 05/10/11 news, 11051032, for BP summary of DOJ detailing the “facilitation payment” exception to FCPA anti-bribery rules.)