FCPA Enforcement: Picking Up Steam

Recent events surrounding FCPA enforcement have reminded everyone that DOJ’s so-called “set-backs” were only temporary, if any at all.  The FCPA paparazzi will be sure to exaggerate and overplay “trends” and recent enforcement actions.

It is hard to really assess FCPA enforcement trends.  FCPA cases take a long time from an initial voluntary disclosure to a settlement.  In between are twists and turns, an internal investigation, interviews and document reviews by outside counsel and DOJ attorneys (as appropriate), negotiations and then approval of a settlement.  DOJ attorneys have to monitor and manage, and ultimately review a case before they can even consider how to settle a case. 

It is clear that 2012 will be a big year in FCPA enforcement.  Big cases are likely to start appearing on the radar screen.  Companies like NewsCorp, Oracle, Goldman Sachs, Alstom, and others have disclosed FCPA inquiries.  Pharma and medical device companies are still being hammered.  Movie studios may now be under the gun for activities in China.  Numerous other companies have made public disclosures of possible FCPA violations. 

The mill is churning.  DOJ is more committed than ever.  The ongoing investigations and industry sweeps are likely to start bearing fruit.  Couple this with DOJ’s commitment to increasing individual prosecutions with the help of companies, and DOJ is looking at another banner year.

For the business community, there is really only one answer – Compliance.  Global companies need to reach down, audit risky operations, and fix any problems they find.  Recent events have shown that even those companies with lots of resources and commitments to compliance can get into big trouble.

Businesses have to let go of the dream of FCPA “reform.”  That effort is dead.  Congress is not about to revise the FCPA in this current atmosphere, especially months before an election.  Even as businesses look after the election, any effort to modify the FCPA will be difficult, if not impossible.  The Chamber of Commerce needs to review and revise its strategy.

Corporate criminal liability, as a whole, is a much more significant issue, especially with the weakening criminal intent standards, reliance on strict liability criminal prosecutions, and the federalization of every possible crime.  Here, the business community is likely to find more allies and more support from the public and on Capitol Hill. 

The doctrine of respondeat superior cries out for reform – a single corporate actor, acting contrary to corporate compliance and directions, can result in criminal liability for the entire corporation.  That does not seem fair.

The federal criminal code reads like the tax code and compliance is becoming more difficult and costly.  Moreover, the over-criminalization of the federal code is an unjustifiable expansion of federal authority to the detriment of state and local criminal prosecutions.  My former boss, Chairman Sensenbrenner, has led the way to reform the criminal code.  He is fierce and committed advocate on this issue.

FCPA enforcement is here to stay – and may even expand in the future with more coordinated global enforcement, increases in whistleblower tips, and additional DOJ and SEC resources committed to FCPA prosecutions.

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