Last week the U.S. Department of Justice issued new guidelines on enforcement of the Foreign Corrupt Practices Act. There are a few important takeaways for businesses.
First, the guidance appears to end the moratorium on FCPA enforcement that the president announced in February. And it’s worth noting that the DOJ’s recent whistleblower guidelines still allow the government to pay rewards to whistleblowers in FCPA cases. Reports of the FCPA’s death are greatly exaggerated.
Second, the administration sees the FCPA, and much of law enforcement, through the lens of cartels (and not in the antitrust sense of the word) and transnational criminal organizations. The highest priority for FCPA enforcement is conduct that is connected with these groups, involve money laundering for these groups, or is linked to foreign officials who have been bribed by these groups.
The FCPA itself prohibits bribery by people or businesses that are U.S. persons or have a close connection to the U.S. from paying bribes “in order to assist … in obtaining or retaining business for or with, or directing business to, any person.” Many bribes paid by or for cartels or TCOs will not fit the statutory definition without creative lawyering. But a business that bribes a public official to secure protection for a cartel in order to ensure that the cartel doesn’t interfere with the business’s operations might fit.
One of the main reasons for avoiding paying bribes is that once you start, it is very difficult to stop: the public official may get you prosecuted for the first bribe if you refuse to pay the second. The risk of not paying the second bribe for a drug cartel may be much greater. It’s easy to say that businesses should avoid bribes on behalf of cartels and TCOs; the more interesting question is how business will be affected by the priorities overall.
Third, the DOJ suggests that it will go soft on American companies that pay bribes to get business but go hard on companies that pay bribes to get business that an American company wants. So non-U.S. companies that are listed on a U.S. stock market, or have a U.S. subsidiary or American executives, might be more concerned about FCPA prosecution than others. The Guidelines do not make it clear how the DOJ would treat an American company that pays a bribe to get business that another American company wants.
Fourth, the Guidelines also instruct prosecutors to focus on “urgent threats to U.S. national security … from bribery … involving key infrastructure or assets.” It appears that the DOJ is referring to American infrastructure and assets, over which foreign officials may hold limited sway. I am not sure how consequential this priority is for most businesses other than in connection with the second – a foreign company that pays bribes to take business that a U.S. company involved in U.S. infrastructure wants would move up the priority list for investigation and prosecution.
Finally, the Guideless call for a focus on big bribes, sophisticated schemes to hide the bribes, fraudulent conduct in connection with the scheme, and efforts to obstruct justice, not on low dollar bribes that involve “generally accepted business courtesies.” The DOJ will also consider whether local prosecutors can and will investigate and prosecute.
In the real world, the scope of “generally accepted business courtesies” has been shrinking for years as more countries and the Organization for Economic Co-operation and Development ()ECD) engage in anti-bribery efforts and attempt to reduce corruption in their societies. It is not new for the DOJ to avoid taking on truly small scale cases because resources have always been limited. It is not clear how much will change as a result of this part of the Guidance.
For most businesses, this Guidance doesn’t provide much assurance. Businesses should continue their anti-bribery efforts for the reasons I explained in an earlier post. If you lead a non-U.S. company that has a U.S. connection and competes with American companies, you may be in the cross hairs. If you do not have an effective compliance program with a strong anti-bribery policy, this is a good time to get started.
Please do not hesitate to contact us for further assistance regarding this matter.[/column_1]
