Some FCPA commentary is amusing.
Such as this assertion that the Foreign Corrupt Practices Act provides “bright-line rules.”
Nothing could be further from the truth.
For starters, the FCPA contains two sets of provisions: the anti-bribery provisions and the books and records and internal controls provisions (often collectively referred to as the accounting provisions).
The FCPA’s accounting provisions are entirely principle-based, the opposite of a bright-line rule.
The key – and most prominent term – in both the books and records and internal controls provisions in “reasonable.”
The FCPA then defines “reasonable assurances” and “reasonable detail” to “mean such level of detail and degree of assurance as would satisfy prudent officials in the conduct of their own affairs.”
Nothing bright-line here.
In fact, in a leading judicial decision construing the accounting provisions, a federal court judge stated:
“The main problem with the internal accounting controls provision of the FCPA is that there are no specific standards by which to evaluate the sufficiency of controls; any evaluation is inevitably a highly subjective process in which knowledgable individuals can arrive at totally different conclusions. Any ruling by a court with respect to the applicability of both the accounting provisions and the internal accounting control provisions should be strictly limited to the facts of each case.”
While the FCPA’s anti-bribery provisions have more specific elements than the FCPA’s accounting provisions, few of these elements are “bright-line” rules.
Given how the DOJ and SEC have chosen to enforce the FCPA (that is largely through resolution vehicles not subjected to any meaningful judicial scrutiny), judicial scrutiny of FCPA enforcement theories is rare.
But when judicial scrutiny does occur in individual enforcement actions (every single substantive FCPA judicial decision has concerned individual defendants), a common thread is a federal court judge finding portions of the FCPA vague and ambiguous and thus often resorting to the FCPA’s legislative history to give meaning to the law.
Some representative examples.
In U.S. v. Daisy Rafoi-Bleuler, Judge Kenneth Hoyt (S.D. Tex.) dismissed FCPA (and related charges) against the defendant while hinting that the term “agent” in the FCPA was unconstitutionally vague. Judge Hoyt stated:
“Apart from the Court’s determination that it lacks jurisdiction over the defendant under the FCPA and the MLCA, the Court finds...
