Just How Much Guidance on Foreign Bribery Is Enough?
By Douglas Gillison | November 16, 2012 10:57 am

The U.S. government guide to complying with the Foreign Corrupt Practices Act released Wednesday may not have answered every question for business — but could it or should it have?

Industry advocates have maintained for at least two years that, with penalties and punitive payouts now stacking up into the billions for the bribery of foreign officials, they lacked certainty in how to comply with the law in real-world situations.

Gray areas may remain despite the new guidance. But a selection of commentators appeared to agree that the long-anticipated 130-page document would be a valuable guide to following the law (even if it doesn’t offer the guarantees that industry advocates had been seeking.)

In reacting to the release of the guidance, the U.S. Chamber of Commerce’s Institute for Legal Reform said it “can never provide the same certainty as an affirmative statute.” A coalition of NGOs said it “renders moot calls from the U.S. Chamber of Commerce’s Institute for Legal Reform for broad amendments to the FCPA that would weaken” enforcement.

Homer E. Moyer

The guidance was the Justice Department’s response to a well-funded lobbying campaign by the Chamber to amend the 35-year-old foreign anti-bribery statute, passed in the wake of Watergate-era corporate bribery scandals. Business has been alarmed by the increasingly aggressive enforcement of the FCPA in recent years, resulting in billions of dollars in penalties.

Assistant Attorney General Lanny Breuer announced a year ago that the Justice Department and Securities and Exchange Commission, which also enforces the FCPA, would produce the guidance for business. That prospect ended up stalling the Chamber’s push to amend the statute on Capitol Hill, allowing Democrats who had only half-heartedly supported amending the statute to ask for a wait-and-see approach.

Eugene Goldman

Homer E. Moyer, vice chair of the executive committee at Miller & Chevalier Chartered, said his initial impression was that neither side had yet been the loser.

“I don’t see this so far as a vehicle for either expanding the envelope or contracting it in light of criticisms or concerns,” he said Wednesday.

FCPA practitioners say the document now offers a very clear picture of what following the law should look like.

“Over all, we know more about when a prosecution is likely to be brought,” said Eugene I. Goldman, a partner at McDermott Will & Emery LLP and former senior counsel at the Securities and Exchange Commission. The document “provides clarity where clarity was needed,” he said.

While the some of the specificity and guarantees sought by industry may be lacking, the combination of past cases, hypothetical scenarios and practical tips gives about as much guidance as could reasonably be expected, according to Goldman.

William Devaney

“Isn’t it unrealistic to expect the government to cover every possible scenario?” he asked.

Alexandra Wrage, president of Trace International Inc., said better performing companies should be comforted that their compliance efforts were in fact justified.

“A handful of people seem disappointed that there isn’t anything really new or unexpected in the guidance, but I think most companies find that reassuring,” she wrote in an e-mail. “Good, well-run companies that have been taking FCPA compliance seriously for years should find this document reassuring and an affirmation of their programs, rather than a roadmap taking them in a new direction.”

William H. Devaney, a former federal securities fraud prosecutor in New Jersey and a partner at Venable LLP, said gray areas were inherent to the FCPA.

“It’s a statute that in any event doesn’t lend itself to bright lines,” he said. Where the guidance perhaps has been most helpful, he said, was in offering concrete examples that clarify common problems facing compliance officers.

Jacqueline Wolff

A hypothetical example of hosting foreign officials in Michigan on business and also offering them a complementary dinner, baseball game and a theatrical performance is described as acceptable (while sending them on a high-roller junket to Las Vegas with no connection to their work is not).

“I think a lot of compliance officers would have said no to the baseball game and the play,” said Devaney.

According to Jacqueline C. Wolff, a former federal prosecutor in New Jersey who is now the co-chair of corporate investigations and white collar defense litigation at Manatt Phelps & Phillips LLP, the baseball-game-and-play scenario was among the concrete examples of guidance that would help prevent wasting company resources.

“That was the biggest piece of clarity,” she said, adding that similar questions are common. “It comes up all the time. It generally doesn’t have any kind of corrupt intent attached to it and it takes up too much of their time.”

Steven Fagell

Steven Fagell

The guidance will not answer every question, she said.

“It makes it a little easier,” she said. “Can you just rely on it and say, ‘My answers must be in the guidance?’ No.”

Steven E. Fagell, Breuer’s ex-deputy chief of staff and now a partner at Covington & Burling LLP, said the handwringing was likely not over.

“I think there will be instances where industry will believe that the department did not go far enough,” he said. ”At the end of the day, companies will have to face thorny questions that can’t all be answered by the guidance.”
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