In a sign that the Foreign Corrupt Practices Act is increasingly becoming a political issue, a U.S. senator said Tuesday that her office has received complaints from companies in her home state about federal enforcement of the international anti-bribery law.
Sen. Amy Klobuchar, a Democrat from Minnesota, said during a Senate Judiciary subcommittee hearing on the FCPA that some Minnesota companies have told her enforcement is putting them at a competitive disadvantage on the global playing field.
Klobuchar did not name the companies. But Minnesota multinationals like 3M Co., General Mills Inc. and C.H. Robinson Worldwide Inc., face heightened FCPA exposure because of their presence in foreign markets.
And at least two Minnesota-based companies have been the subject of FCPA investigations. Minnesota-based Digi International Inc., which makes computer networking products, disclosed Monday that it spent $1.4 million on a foreign bribery investigation that did not result in any charges. Medical device supplier Medtronic Inc., the seventh largest company in Minnesota, has also disclosed that is is under FCPA investigation by the Justice Department and the Securities and Exchange Commission.
Minnesota-based 3M Co. disclosed in a Nov. 12, 2009, SEC filing that it voluntarily disclosed to the DOJ and SEC an internal investigation into reports it had received about alleged bid rigging, foreign bribery and other “inappropriate conduct” at a subsidiary in Turkey.
The senator said Minnesota companies want the Justice Department to provide more guidance on complying with vague areas of the FCPA. Klobuchar asked Deputy Assistant Attorney General Greg Andres, who testified before the subcommittee, whether the Department would be willing to provide that additional guidance.
“Do you think there is more you could be doing?” Klobuchar asked. “I just keep hearing… that what you’re doing isn’t enough.” Andres said the Justice Department would consider providing additional guidance on FCPA compliance but wasn’t specific.
The hearing of the Judiciary subcommittee on crime and drugs was convened by its chairman, Sen. Arlen Specter (D-Pa.). It comes as the U.S. Chamber of Commerce has called on Congress to make changes to the 1977 law amid ramped up enforcement and record fines.
Klobuchar asked Andres about another popular idea advanced by corporate FCPA lawyers: a leniency program to reward companies that self-disclose violations with reduced penalties. ”It seems like that would be a way to advance the anti-corruption effort,” Klobuchar said.
Andres said there is no plan to adopt a leniency program for FCPA disclosures, because the department has other ways beyond self-disclosure to learn about violations. By contrast, he said, antitrust authorities often learn of criminal price-fixing only when a member of the cartel comes forward, making a clearly defined reward system more productive.
“We don’t believe that immunity is appropriate here, just as its not appropriate for a bank robber to get immunity just for disclosing the robbery,” Andres said.
None of the Republican members of the subcommittee attended the hearing. Sen. Patrick Leahy (D-Vt.), the chairman of the Judiciary Committee, appeared briefly, voicing his support for FCPA enforcement and praising Specter, who recently lost his re-election bid. Sen. Chris Coons (D-Del.) said that he would welcome the opportunity to work on proposed amendments to the FCPA.
The Justice Department has levied more than $1 billion in criminal penalties in the past year to resolve foreign bribery cases. The SEC has imposed more than $600 million in sanctions. Both agencies have pushed to expand the reach of the law, charging more individuals and companies that are not based in the United States.
Klobuchar told reporters after the hearing that “there’s no legislation at this point” to amend the FCPA but said, “We will have discussions with the Justice Department.”
She added: ”We had a good discussion today, and we want to continue that going forward.”