Saturday, June 18, 2011
An "Adequate Procedures" Defense: Just How Adequate a Defense?
The recent House Judiciary hearing on FCPA oversight focused on a proposal to enact an “adequate procedures” defense for corporate liability under the FCPA. How such a defense would work reminds me of the old adage – “the devil is in the details.”
Many commentators have pointed to the UK Bribery Act defense of “adequate procedures” and the guidance that has followed. The Ministry of Justice Guidance on “adequate procedures” provided very little guidance, leaving plenty of room for discretion. Moreover, the “adequate procedures” concept differs little from the US Sentencing Guidelines Principles and the OECD Guidance on Effective Anti-Corruption Compliance programs (which the US Justice Department was involved in crafting).
In practical terms, the availability of the defense will act like an insurance policy for corporations. By implementing a comprehensive anti-corruption compliance program, a corporation can offer an affirmative defense of “adequate compliance program.”
How will a company exercise such an affirmative defense? Defendants raise affirmative defenses such as self-defense or insanity by asserting them in a timely manner. The timeliness of such an assertion varies by courts and rules. The burden of proof falls on the defendant to satisfy some evidentiary showing as to an affirmative defense before the court will instruct the jury to consider the defense. An affirmative defense excuses the defendant from any liability – it is an all or nothing deal.
What evidence will a defendant be allowed to put on and how will the jury consider it?
Is it an open door to mountains of evidence showing compliance with the law? Typically such evidence is barred in criminal cases.
How will a jury evaluate evidence showing 99 percent compliance with the law and 1 percent the charged violation?
Once the evidence is introduced by the defense, can the government then offer additional uncharged violations of the law, some of which involve anti-bribery and some of which involve other violations of a compliance program or laws?
These are the devils in the details. There is no existing criminal defense analogy to a new corporate defense of “adequate procedures” but it is an interesting concept and one that Congress should carefully consider as it drafts amendments to the FCPA.