The FCPA Guidance is here and I will write a few postings on the subject.  Initially, it is important to look at the political landscape.  President Obama’s re-election communicated an important message to lawmakers and corporate leaders about public expectations. 

Bob Dylan wrote many famous songs, one of which is particularly appropriate considering the current political climate – The Times They Are A Changin, which he wrote in 1963:

Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone.
If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’.

The FCPA Paparazzi, the Chamber of Commerce and business leaders have expressed surprise or disappointment because the FCPA Guidance did not contain any significant “reform” measures.  The FCPA Paparazzi has issued a slew of client alerts reporting on the FCPA Guidance, most of which were already drafted and which reported on the “failure” of DOJ and the SEC to announce real “reform” measures. 

My question is very simple – was it realistic to expect DOJ and the SEC to announce major changes to the FCPA program?  Of course not; DOJ and the SEC had no political or legal reason to retreat.  DOJ and the SEC won the political struggle on Capitol Hill by outmaneuvering the Chamber of Commerce and those seeking to weaken the FCPA.  President Obama’s re-election has only strengthened their hand against “reform” or weakening forces.

The Chamber’s reform effort was flawed from the beginning when it announced a set of changes to the FCPA, some of which were unnecessary or impractical.  No one has ever explained how a compliance defense would work in practical operation or answered any of the significant concerns I have expressed in prior posts.  Moreover, some of the ideas the Chamber (and others) pushed were either meaningless or totally unpersuasive. 

FCPA reform will only occur when real needs are identified, and when changes are narrowly tailored to meet those specific needs.  Pushing an agenda of reform which is based on cries of unfairness or competitive disadvantage was (and is) doomed to fail.

Also, the Chamber failed to appreciate the political sensitivities surrounding its “reform” campaign.  There is not much political will in favor of “corruption” these days, whether foreign or domestic.  In the end, events overtook the Chamber and its wishful campaign. 

While the Chamber continued to whistle in the dark, the Justice Department and the SEC have done very well in the public view.  The election results underscored a very important mandate – Americans have made it clear that they expect fair play and honesty.  Companies better recognize and respond to that mandate.  In the coming years, compliance should be an even higher priority for companies. 

Furthermore, and contrary to the prevailing view of some commentators, the Justice Department has done very well in court on legal issues (despite the Lindsey reversal, the O-Shea dismissal and the Africa Sting debacle).  Judges have upheld DOJ’s definition of a “foreign official” and significant prosecutions premised on this view.

If anyone expresses surprise at the contours of the FCPA Guidance, they obviously have had their heads in the sand.  Political forces often dictate enforcement realities.  DOJ and the SEC have built a strong and effective enforcement program.  No one should expect DOJ and the SEC unilaterally to dismantle the program.  Of course, the Justice Department is sensitive to political forces (sometimes too much so).  In many cases, DOJ does not fully appreciate the political reality which may prevent opposition forces from accomplishing anything.

In the end, the next four years (and perhaps beyond) will reflect the voter’s will for “change,” for corporate accountability, for fairness and for ethical conduct.  Business has a new “reality” to accept.  The sooner the business community embraces this reality, the easier the global marketplace. 

Who would have ever thought that the cycles of American history would bring us to this point – fifty years after Bob Dylan wrote “The Times They Are a Changin’” – change is upon us once again.