At the 34th International Conference on the Foreign Corrupt Practices Act held last week in Washington, D.C., industry executives, members of the defense bar, and regulators examined developments in the enforcement of the Foreign Corrupt Practices Act (“FCPA”) over the past year and in the 40 years since its inception. Attendees heard from leaders at the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”), including Sandra Moser (Acting Chief of the DOJ’s Fraud Section), Daniel Kahn (Chief of the DOJ’s FCPA Unit), Steven Peikin (Co-Director of the SEC’s Division of Enforcement), Charles E. Cain (Chief of the SEC’s FCPA Unit), and Tracy L. Price (Assistant Director of the SEC’s FCPA Unit).
Deputy Attorney General Rod Rosenstein gave the keynote address and, with his announcement of the FCPA Corporate Enforcement Policy, set the focal point for the Conference. In addition to offering insight into the Policy announced by Mr. Rosenstein, the government faculty identified key issues in the investigation and prosecution of FCPA violations. Their collective comments signal an intent by the government to continue combatting corruption through vigorous enforcement of the FCPA.
The Keynote Address of the Deputy Attorney General
Mr. Rosenstein began by commenting on the revolutionary nature of the FCPA, which, forty years ago, represented the first effort in the world to criminalize the bribery of foreign officials. He stressed that this effort would continue, calling the FCPA “the law of the land” and confirming that the DOJ “will enforce it against both foreign and domestic companies that avail themselves of the privileges of the American marketplace.” [1] Mr. Rosenstein noted the recent victories of the DOJ’s FCPA Unit and credited collaborations with the Federal Bureau of Investigations, U.S. Attorneys’ Offices, and foreign authorities. Overall, he stated, 19 individuals pleaded guilty or were convicted in FCPA-related cases so far this year. He reiterated the DOJ’s commitment to holding individuals criminally accountable. In his view, the prosecution of culpable individuals is necessary to deter corporate corruption.
Mr. Rosenstein maintained that companies also have a role and that the government should seek to incentivize ethical corporate behavior. This was the goal of the FCPA Pilot Program introduced on April 5, 2016. [2] During the year and a half that it was in effect, the Pilot Program led to 30 voluntary disclosures, nearly twice as many as the previous 18-month period. With the Pilot Program, Mr. Rosenstein said, the DOJ took “a step forward in fighting corporate crime.”
Mr. Rosenstein then announced a revised version of the Pilot Program to be codified in the United States Attorneys’ Manual as the FCPA Corporate Enforcement Policy. [3] According to Mr. Rosenstein, the Policy will “reassure corporations that want to do the right thing” by providing “greater clarity” about the DOJ’s decision-making process and the benefits of complying with the Policy’s requirements. At the same time, Mr. Rosenstein predicted the DOJ will receive a larger volume of voluntary disclosures, allowing for further investigation and punishment of culpable individuals.
Mr. Rosenstein highlighted three “enhancements” of the Policy that go toward these reciprocal goals. First, a company that satisfies the requirements of the Policy—which correspond with those of the Pilot Program, i.e., self-disclosure, full cooperation, and timely and appropriate remediation—will presumptively receive a declination. That presumption may be rebutted by aggravating circumstances based on the nature and seriousness of the offense and whether the offender is a recidivist. Second, if an enforcement action is deemed necessary against a company that has otherwise met the Policy’s requirements, the DOJ will recommend a 50% reduction off the low end of the U.S. Sentencing Guidelines penalty range. Third, the Policy specifies “hallmarks” of an effective compliance program, which account for size and resources.
Mr. Rosenstein concluded by encouraging companies to maintain effective internal controls and compliance programs and to choose business associates cautiously. These steps, he emphasized, will help companies “protect themselves” and “pose a meaningful deterrent to corruption.”
Interview with Steven Peikin
Steven Peikin offered commentary on trends from the SEC’s perspective. He made clear that the SEC intends to apply the same level of resources to FCPA cases as in the past and noted the recent appointment of FCPA Unit Chief Charles Cain as evidence of that dedication. Mr. Peikin defended the shared competence of the SEC over FCPA actions, stating that registrants who have committed FCPA violations fall squarely within the SEC’s jurisdiction. Furthermore, he said, the dual nature of FCPA enforcement allows the SEC to take action civilly in cases that may be difficult to establish under a criminal burden of proof. He noted in particular the SEC’s work in connection with the books and records and internal...
