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Former DOJ Official Questions Liability Theories in FCPA Cases
By Christopher M. Matthews | February 26, 2022 5:37 pm

Charles James, the Justice Department’s antitrust chief under both Bush administrations, questioned the “secondary theories of liability” being used by the DOJ in the prosecution of foreign corruption in an interview with Corporate Counsel released Friday.

James discussed the theories in relation to an “oil for food” investigation that he settled in 2007 while working for Chevron. On Thursday, Chevron announced that James was retiring as an executive vice president at the company.

In November 2007, Chevron agreed to pay $30 million to settle allegations that it had violated the Foreign Corrupt Practices Act during its participation in the United Nations’ oil-for-food program. In its complaint against Chevron, the Securities and Exchange Commission alleged that bribes had been made by the intermediaries who helped Chevron purchase 78 million barrels of crude oil from Iraq between April 2001 and May 2002. Chevron neither confirmed nor denied the charges in its settlement

In the interview with Corporate Counsel, James said that he was not sure if due diligence is enough to keep a company from being held liable for crimes committed by intermediaries in the company’s employ, and that he questioned secondary theories of liability — holding the company liable for actions taken by its employees or contractors — as a policy resolution.

Below is excerpt of the interview, click here to see the rest of it

Q: Let’s first talk about corruption. You settled an “oil for food” investigation in 2007 for $30 million. Do you think regulators sometimes interpret the FCPA too aggressively?

A: I’m certainly not going to say that prosecution of foreign corruption is inappropriate. We settled that case and put it behind us. But I continue to think we had a strong and worthwhile legal position. One of challenges in that space is that there are virtually no FCPA cases that get litigated. This was a case in which it was alleged that Chevron should have known the people it engaged in arms-length transactions with were giving money to the Saddam Hussein regime. Nobody ever said Chevron gave anyone a dime.

Q: That certainly puts the onus on companies to do due diligence on their intermediaries. Have you improved compliance during your time overseeing the function?

A: Yes, we have increased our due diligence in this and other areas. But I’m not altogether sure, if your conduct is going to be judged by what a person actually did, that you’re really protected by due diligence. That’s one of the risks in enforcement based on secondary theories of liability. I question that as a policy resolution but in individual cases you have to do what you have to do.

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