Wednesday, June 15, 2011

Congress and the FCPA: Here We Go Again

Chairman Sensenbrenner

Well, the message was clear yesterday to DOJ -- the House intends to "update" the FCPA statute.  Crime Subcommittee Chairman Sensenbrenner made it clear a bill is coming, and it is likely the bill will pass the House.  What happens after that?  Who knows.

The FCPA's history has been cyclical in terms of Congressional oversight and modification.  When business interests coalesce, Congress takes a fresh look and starts to tinker with the law.  The FCPA history is replete with examples of that. 

What is the next step?  Chairman Sensenbrenner will draft his bill, it will get bi-partisan support, and it will be scheduled for a House Judiciary mark up.  It will pass the House Judiciary Committee and eventually be taken up on the House floor.  It will pass the House floor. 

Will it pass the Senate?  That is a much more difficult question.  It depends on whether there will be any moving "vehicles" on which the House can force the Senate to pass the bill as part of a comprehensive strategy.  Chairman Sensenbrenner is a master of such tactics and has forced the Senate to take on measures that they never wanted to pass.  Behind the scenes, the Chamber will work effectively to bring greater momentum to the process, encouraging the Senate to allow passage or inclusion of an FCPA reform bill as part of a larger measure.  Will Moschella, the Chamber strategist, like Sensenbrenner, is an old hand in the House who is capable of moving measures through and getting them enacted.

Can DOJ stop the bill?  So far, DOJ has operated with a classic tin ear -- they are good at that and have been doing so for a while.  DOJ needs to do something to slow the bill.  What can they do?  Like the attorney-client privilege waiver issue of several years ago, DOJ needs to step up, adopt policy guidance and let the public know more about its prosecution guidelines and discretion.  DOJ needs to give businesses some safe harbors, rather than keeping them guessing.  DOJ has to start moving now or else it will get caught flat-footed and unresponsive. 

AAG Breuer's speech yesterday defending its FCPA enforcement record did little to quiet the House critics.  The ball is squarely in DOJ's corner; they need to act responsibly if they want to slow this process down.

Here are my suggestions for two areas they can address:

1.  "Foreign Official" definition -- this issue, which has been written about for months, should be clarified.  Two district decisions have listed a number of factors the court will take into account -- DOJ should develop its own guidance, listing the factors, and the weight they will give to each factor.  In doing so, DOJ should rely on traditional corporate notions of "control."

2.  Compliance Programs -- critics have focused on the need for an "adequate compliance procedures" defense to the activities of a rogue employee who commits a bribe.  DOJ claims it has not ever prosecuted a case involving a rogue employee but more frequently focuses on systemic breakdowns in compliance.  DOJ should issue a general guidance on the weight it will give to a robust compliance program, even suggesting that certain levels of compliance will result in certain percentage reductions in fines, or working within the guideline system, to award larger base offense level reductions for great compliance. 

1 comment:

  1. The entire charade over the FCPA reminds me of two prior episodes, where Congress suddenly finds a statute used successfully to get the right bad guys to be fatally flawed because business interests dislike it. The first was RICO. Everyone thought RICO was a gem until E.F. Hutton started kiting checks, and RICO claims sprouted like weeds. But guess what? If a business whose owner had a vowel at the end of their surname and belonged to "organized crime" had done it, we would have been saying "yup, exactly what we were trying to fix". The law doesn't depend on who runs afoul of it. That type of ad honinem nonsense is antithetical to our system of justice. The next episode was "honest services" mail fraud. Same play, different actors. As soon as "legitimate" business people get indicted, it's a travesty. Never a peep when it was applied to everyone from mail order investment scams to trade secret theft. But if legitimate business people do the crime, they should do the time. Take your proposal for defining "foreign official". It's the wrong solution: if the person who gets bribed isn't a government official, that doesn't make it legitimate to bribe someone. Prosecute them under the 36 state statutes, or the Travel Act, or the mail and wire fraud statutes. That's why the UK Act reads as it does: private bribery is not OK, and there are several international treaties with lots of signatories that take that position. This hand-wringing about how hard it is for legitimate business people to know how to act is another fantasy created by our friends at the US Chamber of Commerce, who don't like any form of regulation, period. We demean the role of law as a check against behavior that deserves our condemnation, as well as our profession, when we create these faux issues because of who is in the dock.