Sometimes the universe acts in serendipitous ways I cannot simply fathom. Having wrapped up a three-part series inspired by the original gonzo journalist, Hunter S. Thompson; we now find we lose one of Thompson’s key influences, Tom Wolfe. According to his (front page) New York Times (NYT) obituary, Wolfe was “an innovative journalist and novelist whose technicolor, wildly punctuated prose brought to life the worlds of California surfers, car customizers, astronauts and Manhattan’s moneyed status-seekers in works like “The Kandy-Kolored Tangerine-Flake Streamline Baby,” “The Right Stuff” and “Bonfire of the Vanities”. I would add to that distinguished list, “A Man in Full.” His lexicon informs the new US government anti-piling on policy.
Wolfe could turn a phrase like no one else, coining two of my favorite terms Radical Chic and the Me Decade. Praise for Wolfe has long been standard and the NYT obituary quoted several. Two of my favorites were Joseph Epstein, who had previously written in the The New Republic, Wolfe was “As a titlist of flamboyance he is without peer in the Western world”. The indomitable William F. Buckley Jr., “writing in National Review, put it more simply: “He is probably the most skillful writer in America — I mean by that he can do more things with words than anyone else.””
It is hard to even identify one Wolfe book as my favorite. The one I thought was the best was his story of the original seven Mercury astronauts and the race to the moon in “The Right Stuff”. For entertainment, I found “Bonfire of the Vanities” by far the most engaging. However, one that probably affected me the most was “A Man in Full”. Although set in post-Atlanta real estate downturn in the 90s, every one of the characters was well known to me, having lived through the first oil bust in Houston in the ‘80s. That is how universal Wolfe’s writing and character descriptions were in his novels.
Honoring Wolfe seems like an appropriate way to introduce today’s blog post, which was informed by last week’s speech by Department of Justice (DOJ) Deputy Attorney General (DAG) Rod Rosenstein and his ‘anti-piling on’ initiative. Rosenstein delivered his remarks to the New York City Bar White Collar Crime Institute on May 9. Anti-piling on and its evil twin-antithesis ‘piling on’ are phrases with the antecedent from the ‘one-pie’ concept but as Wolfe might intone it is a fuller and richer experience.
In the Foreign Corrupt Practices Act (FCPA) world, the concept of ‘one-pie’ was explained back in 2016 by Kara Brockmeyer, (the then) Chief of the FCPA Unit at the Securities and Exchange Commission (SEC), and Daniel Kahn, (then and current) head of the DOJ FCPA Unit. The concept was that enforcement authorities were moving towards one total cost to anti-corruption violators that would be equitably split up by authorities where the corruption occurred or by the countries that had jurisdiction. Kahn noted that companies who self-disclosed to multiple regulators and extensively remediated, along the lines laid out in the 2016 FCPA Pilot Program, were more likely to garner credit with US regulators for fines paid to overseas authorities.
Some of the examples of this one-pie policy in the realm of international anti-corruption enforcement include the following prosecutions. In 2016, Odebrecht/Braskem, with $2.6 bn in penalties involving US, Switzerland and Brazil; VimpelCom, with $795MM in total penalties, involving the US and The Netherlands. In 2017, Telia Companies AB, with $965MM in total penalties, involving the US and Sweden; Rolls-Royce, with $809MM in total penalties, involving the UK, US and Brazil; Keppel Offshore & Marine Ltd, with $422MM in total penalties, involving the US, Singapore and Brazil.
The one-pie concept has now expanded into a formal DOJ policy, entitled “Policy on Coordination of Corporate Resolution Penalties”, which has been formally incorporated into the US Attorney’s Manual at USAM Title 1, 1-12.100. Announcing this anti-piling on policy, Rosenstein said, it “encourages coordination among Department components and other enforcement agencies when imposing multiple penalties for the same conduct. The aim is to enhance relationships with our law enforcement partners in the United States and abroad, while avoiding unfair duplicative penalties.”
Rosenstein went on to detail four key considerations under the new anti-piling on policy. The first was not a policy change but a reaffirmation “to principles of fairness and the rule of law”. The consideration “affirms that the federal government’s criminal enforcement authority should not be used against a company for purposes unrelated to the investigation and prosecution of a possible crime. We should not employ the threat of criminal prosecution solely to persuade a company to pay a larger settlement in a civil case.”
The second consideration “addresses situations in which Department attorneys in different components and offices may be seeking to resolve a corporate case based on the same misconduct.” The “new policy directs Department components to coordinate with one another and achieve an overall equitable result. The coordination may include crediting and apportionment of financial penalties, fines, and forfeitures, and other means of avoiding disproportionate punishment.”
The third consideration “encourages Department attorneys, when possible”; to coordinate their activities “with other federal, state, local, and foreign enforcement authorities seeking to resolve a case with a company for the same misconduct.” The fourth and final consideration in the new anti-piling on policy employs some of the factors that DOJ attorneys can use in evaluating “whether multiple penalties serve the interests of justice in a particular case.” Rosenstein stated that “sometimes, penalties that may appear duplicative really are essential to achieve justice and protect the public. In those cases, we will not hesitate to pursue complete remedies, and to assist our law enforcement partners in doing the same.”
Rosenstein also laid out what he called “additional factors” the DOJ may take into account, including “egregiousness of the wrongdoing; statutory mandates regarding penalties; the risk of delay in finalizing a resolution; and the adequacy and timeliness of a company’s disclosures and cooperation with the Department.” Most significantly, he also stated, “Cooperating with a different agency or a foreign government is not a substitute for cooperating with the Department of Justice. And we will not look kindly on companies that come to the Department of Justice only after making inadequate disclosures to secure lenient penalties with other agencies or foreign governments. In those instances, the Department will act without hesitation to fully vindicate the interests of the United States.”
He also acknowledged the DOJ’s “ability to coordinate outcomes in joint and parallel proceedings is also constrained by more practical concerns. The timing of other agency actions, limits on information sharing across borders, and diplomatic relations between countries are some of the challenges we confront that do not always lend themselves to easy solutions.”
By incorporating the basics from the one-pie concept into the USAM and adding some of the factors and considerations he articulated in his speech, Rosenstein once again provided solid benefits to companies who step forward and self-disclose potential FCPA violations. With the language of ‘anti-piling on’ Rosenstein has added a Wolfe-inspired phrase to the FCPA lexicon.
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© Thomas R. Fox, 2018