In two speeches last week Department of Justice (DOJ) Acting Principal Assistant Attorney General Trevor McFadden addressed multiple topics and issues around the Foreign Corrupt Practices Act (FCPA). The first set of remarks were made in Washington DC at the Anti-Corruption, Export Controls & Sanctions (ACES) 10th Compliance Summit (the “DC speech”). The second were made at the American Conference Institute (ACI) 19th Conference on the FCPA in New York City (the “NYC speech”).
While I have previously considered the evolution in the Department of Justice (DOJ) rationale for FCPA enforcement and the corporate response to FCPA compliance requirement, today I want to consider McFadden’s remarks and what they may portend for both FCPA enforcement and more broadly, international anti-corruption enforcement going forward. He began the final section of his remarks by reiterating the DOJ’s commitment to the concepts articulated in the Yates Memo. The DOJ wants to hold individuals accountable for corporate misconduct, as it is individuals not corporations who engage in actions. He also reiterated support for the concepts behind the FCPA Pilot Program stating, “the department regularly takes into consideration voluntary self-disclosures, cooperation and remedial efforts when making charging decisions involving business organizations.”
He next turned to the speed and length of FCPA investigations. McFadden said the DOJ is committed to moving forward “expeditiously” to investigate and bring investigations to a conclusion. However, to do so, companies must be prepared to meet this need for speed with prompt and thorough investigations. It also means there must be extensive cooperation, including companies working with the DOJ, to “prioritize internal investigations and to respond to Fraud Section requests promptly to ensure there are no unnecessary delays.”
McFadden believes this new, speedier resolution process will “be good for cooperating companies. No executive wants to deal with a lingering government investigation or the associated costs and distraction from the company’s mission.” Both the Fraud Section leadership and McFadden are focused on wrapping up old investigations, with no unnecessary delays. McFadden concluded this section by stating “My intent is for our FCPA investigations to be measured in months, not years.”
McFadden then moved on to how the DOJ will consider decisions to bring enforcement actions. Intoning that prosecutors will always follow the facts, there are times when this means the DOJ will “stop and close an investigation.” There may also be times “When we do not have evidence of the requisite criminal intent, there is no justification for a Criminal Division resolution, and we will defer to our regulatory colleagues to handle the matter” and the Securities and Exchange Commission (SEC) may pursue civil charges under the FCPA. Finally, there will be times when a criminal prosecution is warranted. McFadden made clear the DOJ will continue to use the full panoply of tools available to them.
McFadden then turned to international investigations and enforcement in the global fight against bribery and corruption. Similar to the efforts of US companies in leading the business response to compliance standards, the DOJ (and SEC) has lead the globe’s legal enforcement effort against corruption. Yet there is a growing international consensus against corruption reflected in both the passage of new and stronger of anti-bribery laws. Countries such as “UK, Brazil, the Netherlands and others who are taking new strides to fight corporate corruption at home and around the world” by increasingly prioritized anti-corruption prosecutions. All largely in concert with the DOJ and SEC.
The DOJ will share evidence of violations of foreign law with “international law enforcement partners where we do not have jurisdiction over the wrongdoers” as well as offering other assistance. He noted, “This is all part of our effort to ensure that companies and individuals subject to the jurisdiction of the FCPA are not disadvantaged as compared to other companies.” Both investigations and enforcement actions are increasingly international in scope and the DOJ seeks “to reach global resolutions that apportion penalties between the relevant jurisdictions so that companies that want to accept responsibility for misconduct are not unfairly penalized by multiple agencies.” McFadden specifically cautioned that the DOJ’s “willingness to apportion or credit penalties based on resolutions with other regulators assumes that the company cooperated with our investigation and did not engage in forum shopping to avoid department involvement in the matter.”
McFadden’s penultimate remarks dealt with transparency and information made available by the DOJ through declinations and other initiatives such as the Pilot Program. He noted the differences in declinations where there was insufficient evidence of corporate misconduct “where we would have brought criminal cases but for the companies’ voluntary self-disclosure, full cooperation, and comprehensive remediation.” He then went to specifically reiterate the importance of transparency in enforcement policies and practices, noting the Pilot Program had brought a large measure of transparency. The Pilot Program will continue pending a full assessment of it going forward.
What does it all mean for the compliance practitioner? DOJ speakers have articulated many of these concepts previously, however, McFadden emphasized a new drive towards more expeditious resolution, one way or the other, on FCPA investigations. That can certainly be good news for companies. However, this speedier process will put much more pressure on corporate compliance programs and compliance practitioners to address issues that rise up to potential FCPA violations promptly to get the investigations completed quickly and correctly. It will then put more pressure on the assessment and timing of a decision to self-disclose. Companies will also be required to provide more and probably higher quality evidence of culpability of employees and pointing the DOJ in directions they may not have considered.
These remarks also made clear the DOJ is committed to the international fight against bribery and corruption. It will work with its investigative and prosecutorial counterparts across the globe to not only share information but aggressively prosecute corruption scofflaws. This continues the intiatives begun by McFadden’s predecessors at the DOJ and others such as Kara Brockmeyer, recently retired from the SEC; to bring more and greater resources to bear across the globe to fight bribery and corruption. This too will also put more pressure on corporate compliance programs to get compliance right going forward. Just as the only hope for a company to receive a declination and not be prosecuted under the FCPA is to have an effective compliance program, fully operationalized, in place.
For those who thought that Trump would do away with the FCPA or his minions would work to weaken it, McFadden’s two speeches should be of comfort that the DOJ understands not only the value of the FCPA to the US as a country but also the US business community. Striving for a level playing field in the business world will always work to the advantage of US companies. Indeed more anti-corruption enforcement across the globe should also benefit American companies by even greater leveling of the playing field. McFadden’s remarks make clear that the FCPA is a positive for businesses and its continued enforcement will remain a top priority in the current DOJ.
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© Thomas R. Fox, 2017