U.S. federal prosecutors and securities regulators today unveiled the government’s much-anticipated guidance for foreign-bribery enforcement, intending to provide companies and individuals a clearer picture of the conduct the government wants to thwart.
Top U.S. Justice Department and U.S. Securities and Exchange Commission officials prepared the 120-page Foreign Corrupt Practices Act (FCPA) guide, addressing, among other things, the definition of a foreign official, proper and improper gifts and the “hallmarks” of effective corporate compliance.
“Corruption is a global problem,” the guide says in an opening passage. “In the three decades since Congress enacted the FCPA, the extent of corporate bribery has become clearer and its ramifications in a trans¬national economy starker.” Click here for a copy of the guidance.
The guide book, signed by Lanny Breuer, the head of the DOJ Criminal Division, and Robert Khuzami, director of enforcement at the SEC, doesn’t change the FCPA itself. That would take an act of Congress.
The new guidance isn’t legally binding. Officials said the information is meant to give some insight into DOJ and SEC enforcement practices. The FCPA bar has long awaited the guidance, but it will remain to be seen, right now, whether the government has added any clarity to enforcement.
The FCPA, on the books since 1977, gives prosecutors and securities officials the power to fight companies and individuals that try to bribe foreign governments to obtain or retain contracts. Under Breuer, the prosecution of individuals for FCPA violations increased.
The manual provides hypothetical situations that look at whether a company or an official’s actions can be subject to criminal or civil anti-bribery or accounting provisions of the FCPA. DOJ and SEC officials examine court rulings that address FCPA provisions, and the guidance also looks at factors the government reviews to determine whether to charge a corporation.
Prosecutors assess, among other things, “the pervasiveness of wrongdoing within the corporation,” the nature of the offense and the corporation’s “timely and voluntary disclosure of wrongdoing.” The guidance says the government places a “high premium on self-reporting.”
The guidance also devotes a chunk of space to assessing effective corporate compliance programs. DOJ and the SEC, according to the guidance, “have no formulaic requirements” regarding those programs.
In “appropriate circumstances,” the DOJ and SEC may decline to pursue charges against a company based on the company’s effective compliance program,” according to the guidance.
The government may also “seek to reward a company for its program, even when that program did not prevent the particular underlying FCPA violation that gave rise to the investigation.
The FCPA, the new guidance notes, doesn’t prohibit gift-giving. “Rather, just like its domestic bribery counterparts, the FCPA prohibits the payments of bribes, including those disguised as gifts,” the document says.
Doling out promotional material—pens, hats, t-shirts and other items—is an “appropriate means of providing hospitality and promoting business,” regulators said. Examples of improper travel and entertainment expenses, however, according to the guidance, include a $12,000 birthday trip for a government decision-maker and a trip to Italy that includes $1,000 “pocket money.”
The guideline also takes a look at declinations, non-prosecution agreements and advisory opinions. DOJ and SEC lawyers also spend time assessing successor liability, noting that the government will act against a successor company in limited circumstances.
“This guide is designed to provide practical advice about, and useful insights into, our enforcement considerations,” the authors wrote. “For businesses desiring to compete fairly in foreign markets, it is our goal to maximize those businesses’ ability to comply with the FCPA in the most effective and efficient way suitable to their business and the markets in which they operate.”