Jon May Argues for FCPA Reform

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1 Response

  1. Howard says:

    Worst idea ever. And I’m including in that calculus Napolean’s idea to invade Russia in the winter.

    First of all, May says like it’s established fact “[a] typical scenario involves a company executive hiring a foreign consultant to help negotiate a contract with a particular ministry for the sale of a product or service. Unknown to management, the consultant’s fee includes a bribe to a foreign official.”

    That’s not a typical scenario. In fact, I’m hard-pressed to think of a single enforcement action brought by the DOJ that fits that description.

    May then compounds his mistake: “[e]ven though the bribe was not authorized by management, no one in management was aware of the bribe and the bribe was specifically against company policy, the company is criminally responsible.

    That may be true…theoretically. But frankly it sounds like something an outside counsel would say in a presentation in order to generate more fees from a gullible business client scared into spending the kind of money May supposes businesses currently spend on compliance.

    The reality of the enforcement record paints an entirely different picture. A company executive loses a bid for a government contract. The company had won the open bidding process, but his competitor—who got the contract—used a politically-connected agent to “somehow” get the contract out from under our executive. That executive then hires that agent himself to help the company win government contracts. The agent gets paid a commission much higher than market rates. So high, in fact, that after a while, the COO makes the finance people eventually reclassify the commission payment as part commission, part outside services. The company wins a government contract. The agent’s commission payment is used to buy an influential government official a quarter-million-dollar Ferrari. That is more than just a “typical” case, it’s an actual case.

    The reality is that companies get prosecuted because their senior executives know about, connive in creating, or actively put their heads in the sand about a bribery scheme.

    If May’s idea gets implemented, the only result would be a constant flow of prophylactic disclosures. No money would be spent on a thorough investigation. Just disclose and get corporate immunity. Not great for the employees involved, but since the DOJ doesn’t have even remotely the resources to follow up, the vast majority of conduct would be left untouched, no matter how bad it might end up being. Plus, given the flurry, a smart company would know that if they didn’t disclose, there’s virtually no chance of being found out.

    The Chamber’s ideas are bad enough. Let’s not sprint to their left to find new, worse ideas.