The Good and Bad News in a Review of FCPA Enforcement and Trends
The good news for corporations is that the use of corporate monitors in cases involving violations of the Foreign Corrupt Practices Act is easing; the bad news is that the U.S. government isnt likely to rein in FCPA enforcement any time soon.
At least thats the view found in Shearman & Sterlings mid-year review of FCPA enforcement and trends [PDF].
Were seeing an increasingly nuanced approach to monitoring compliance after the resolution of a case, explained Danforth Newcomb, Shearmans dean of FCPA law. Fewer and fewer corporate defendants end up with a full-blown monitor, while more are [getting] a partial monitor, or even self-monitoring.
But Newcomb, now of counsel with Shearmans New York office, added that that monitors are not always an adversarial or disastrous outcome. In some cases they have been quite helpful to companies, he said in an interview this week with CorpCounsel.com.
The law firms biannual report was authored by Washington, D.C. partner Philip Urofsky, who was traveling out of the country.
It notes that on the penalties side, the corporate penalties assessed in 2012 are consistent with those imposed in previous years. The government collected $129.7 million in financial penalties thus far in 2012, or about $18.5 million per corporationranging from a low of $2 million to a high of $54.6 million.
Newcomb said another significant trend in 2012 is that several trials ending in acquittals and dismissals had relatively little impact on substantive FCPA law. That comes as a surprise to those critics who thought there might be significant judicial interpretations different than how the U.S. Department of Justice views the law.
He explained that this trend is important in that most companies compliance programs were built on DOJs prosecutorial approach, such as the inclusion of state-owned enterprises in the definition of government officials.
That the judiciary isnt undercutting DOJs approach means that companies wont have to shake up their existing programs if theyre working well to curb overseas corruption, he said.
Another trend noted in the report is the narrowing of what can be considered a facilitation payment. Newcomb sees the U.S. moving somewhat toward aligning with the U.K. statute and other non-U.S. efforts that ban all facilitation payments as bribes. U.S. law currently allows them if the payments merely speed up an official act that would have occurred anyway.
The report also observes that the U.S. Chamber of Commerce has not slowed its lobbying efforts against the FCPA.
The Chamber has pushed especially hard for limits on liability when the misconduct took part in subsidiaries or acquired companies, and for a so-called compliance program defense, among other things.
But critics have noted that strong programs on paper dont always equate with compliance in reality.
The recent Wal-Mart bribery scandal in Mexico, which occurred in spite of what appeared on paper to have been a relatively well-established compliance program, may have served to further deter any notion of a complete defense based on existing compliance programs, the report suggests.
But all is not lost. It points out that the U.S. government has taken existing compliance policies into consideration when prosecuting FCPA violations, citing the case against a rogue employee of the Morgan Stanley Real Estate Group in China.
The government charged the employeebut not Morgan Stanleysaying the company has a strong antibribery program and had gone to great lengths to train and remind the employee of FCPA compliance.
See also: "Is FCPA Enforcement in Russia the Next China?", CorpCounsel, July 2012.