Thank you for sharing!

Your article was successfully shared with the contacts you provided.
While the debate continues on how to make the Sarbanes-Oxley Act more business-friendly, the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have continued to ramp up their enforcement of another statute affecting corporate America: the Foreign Corrupt Practices Act. FCPA investigations have become an increasingly common feature on the corporate landscape, but the enforcement regime could use some fine-tuning, because the current focus on after-the-fact prosecution does not do complete justice to the law as Congress envisioned it. Enforcement of the FCPA has never been as energetic as it is now, and it seems poised to become one of the more active areas of federal white-collar criminal enforcement. Within the last two months, DOJ announced the resolution of two criminal FCPA cases-one involving Schnitzer Steel Industries Inc., in connection with bribery in China, and the other involving Statoil ASA, in connection with bribery in Iran. The FBI recently announced the deployment of additional agent resources to FCPA enforce- ment, and anecdotal reports from Washington suggest that dozens of these investigations are currently in the pipeline. Worldwide anti-corruption initiatives are also gaining momentum, from the OECD (Organisation for Economic Co-operation and Development) in Europe to the U.N. Convention Against Corruption, which won Senate approval in September. DOJ officials are also seeking-and receiving-closer cooperation than ever before from their counterparts in Europe and elsewhere. The global pressure to stem corruption is growing, and our law enforcement authorities are motivated to make U.S. companies take the FCPA seriously. There’s nothing wrong with enforcement of the law, of course, but enforcement is not the beginning and end of DOJ’s responsibility. The FCPA also includes a procedure calling on DOJ to provide guidance to companies at the outset of business transactions, before they run the risk of committing a violation. This “opinion procedure” can offer something of a safe harbor for companies requesting assistance, but in DOJ’s rush to prosecute violations, this important aspect of the law seems to be getting little attention-and providing little real benefit. One need only look at the number of times the procedure has been invoked since 1980-43 in total-to get an idea of how marginal it has remained. In any given year, DOJ has never issued more than four opinions; in some years there are none. The most recent, issued on Oct. 16, was the first in more than two years. The opinion procedure has seldom been invoked by American businesses because it is perceived as cumbersome and slow, and it is often out of step with the needs of companies putting together real business transactions. DOJ will only provide opinions regarding future transactions, and it needs to have complete information about the proposed transaction. In practice, this process can take months. And companies are not likely to have complete information about a transaction until it is ready to go-which is usually the point when a company is least likely to be able to put it on hold while DOJ deliberates. If a transaction is moving quickly, it simply cannot be a candidate for the opinion procedure. Some safe harbor is needed These shortcomings have pushed the opinion procedure to the margins of the FCPA regime, with the result that the FCPA has become all stick and no carrot. DOJ needs to give attention as well to the other half of the regulatory regime-either by revitalizing the current opinion procedure or by developing a new sort of safe harbor, as some heavyweights in securities law, such as former SEC general counsel James Doty, are now advocating. In order to be successful, the opinion procedure (or new safe harbor provision) would need to provide guidance to companies in real time, so that pending transactions will not come to a stop while the DOJ deliberates. This could require real-time reporting to DOJ as transactions are being structured, but the benefit of such involvement could be worth the cost, given the frequency with which companies are now being placed under investigation and the expense that entails. The safe harbor would also need to provide the same presumption of legality that the opinion procedure currently does, but it would need to be available for day-to-day sorts of issues, not just for the new and unusual questions that are typically the subject of DOJ opinions now. This may call for greater resources than DOJ currently assigns to that function, but they would be resources well-spent. There’s no doubting that the FCPA is good for American business. Foreign bribery hampers the efficiency of the markets and dampens competition. And by propping up unstable regimes, it ultimately undermines democracy and the rule of law. The FCPA’s goals are laudable, but the threat of criminal prosecution is not the best-or the only-way of encouraging American business to comply with the law. Mark Miller is a partner in the Washington office of Baker Botts.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.