New Year, new Congress, new . . . Foreign Corrupt Practices Act reform efforts? Well, now that weve all had a chance to digest the recent government guidance on antibribery enforcement, the Manhattan Institute for Policy Research has added to calls for legislative reform of the 1977 statute.
On Wednesday, the think tank released an issue brief that laments the dearth of judicial oversight in FCPA casesand pointedly criticizes the FCPA guidance produced by the U.S. Department of the Justice and the Securities and Exchange Commission in November.
Were worried about what seems to be fairly unfettered Justice Department interpretation of the law, said James Copland, director of the institutes Center for Legal Policy, in a call with reporters.
Entitled The Foreign Corrupt Practices Act: Aggressive Enforcement and Lack of Judicial Review Create Uncertain Terrain for Businesses, the article cites the widespread use of non-prosecution and deferred-prosecution agreements between companies and enforcement agencies to settle cases. Such agreements can protect a companys bottom line by heading off criminal prosecution, while allowing the government to impose penalties and compliance requirements at the same time.
But NPAs and DPAs are most often not reviewed by a judge. That resolution may come about at a cost of creating de facto case law that is not very good, says brief author Paul Enzinna, a partner at Brown Rudnick who specializes in white-collar defense and government investigations.
The brief argues that Congress should step in and amend the law in three areas:
- Jurisdiction: Congress should clarify the reach of the FCPAs in furtherance of jurisdiction, the article states. Specifically, Congress should decide whether to limit the FCPAs application against foreign businesses bribing foreign officials.
- Foreign officials: Given the proliferation of state-owned enterprises in formerly Communist countries and still-Communist China that U.S. businesses come into contact with, Congress should specify the extent to which the FCPA applies to low-level employees of state-owned enterprises.
- Facilitating payments: Congress should clarify the routine government actions covered by the FCPAs express exemption for facilitating payments not covered by its prohibition on payments to officials to obtain or retain business, the brief argues.
Copland said that departures from the statute by enforcement agencies is a significant problem. The application of the law, he added, should involve a broader policy consideration by elected officials.
But will a legislative reform agendaprominently articulated by the U.S. Chamber of Commerce in a 2010 position paper advance in 2013? And if so, how far would it get? A couple of firms have already started to weigh in on those questions.
Last month, former U.S. Attorney General Alberto Gonzales tackled the topic on the FCPA Professor blog, in a post called The Impact of the New FCPA Guidance on Reform Efforts.
The guidance’s issuance steepens the climb for reformers, because it has created the perception of removing the element of uncertainty upon which much of the reformers’ claims of unfairness were premised, wrote Gonzales, now counsel at Waller Lansden Dortch & Davis. While the guidance can hardly be deemed a death knell for FCPA reform efforts, it certainly delays and likely hinders those endeavors.
On Wednesday, Miller & Chevalier touched on the subject in its FCPA Winter Review 2013. The firm credited the FCPA reform effort with having successfully pushed for the additional guidance reflected in the Resource Guide. Though Miller also noted that most of the reform priorities outlined in the Chambers October 2010 position paper remain outstanding.
It is not clear yet whether in 2013 the reform proponents will continue to vigorously pursue a full reform agenda, pause and wait for judicial clarification, or perhaps focus on a subset of issues that require legislative action, such as adding a compliance defense or narrowing the definition of foreign official, the alert states.
CorpCounsel.com contacted the Chambers Institute for Legal Reform and asked if it would be advocating for any changes to the statute this year. They said their view hasnt changed since the guidance was released.
That is, we are continuing to engage in the ongoing process of providing the much-needed clarity and certainty the business community needs on FCPA enforcement, according to an email from an ILR spokesperson. And while the guidance by definition can never provide the same certainty as an affirmative statute, were hopeful that it will help companies seeking to comply with the law in good faith and prosecutors charged with enforcing it.