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Top takeaways from the new FCPA guidance
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Top takeaways from the new FCPA guidance

Experts offer advice for making the most of the DOJ's and SEC's long-awaited guidance

If there’s one thing that everyone can agree upon about the Foreign Corrupt Practices Act (FCPA) guidance the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) released Nov. 14, 2012, it’s that the document was long-awaited by the businesses that regularly confront the law’s nuances and ambiguities and the lawyers who advise them.

Assistant Attorney General Lanny Breuer, head of the DOJ’s Criminal Division, set off the waiting game in November 2011, when he teased in a speech that “detailed new guidance” on criminal and civil FCPA enforcement was forthcoming in 2012. There was a flurry of reports in September that the guidance would be out the next month. In the end, it came out just more than a year after Breuer first mentioned it at the American Conference Institute’s 2011 National Conference on the Foreign Corrupt Practices Act. 

Speaking at the conference again a year later, the day after the guidance’s release, Breuer said the guide “may be the most comprehensive effort ever undertaken by either the Justice Department or the SEC to explain our approach to enforcing a particular statute.”

The guide is largely a compendium of what already had been discernible by parsing the statute, past speeches, testimony and nonprosecution or deferred prosecution agreements, and it contains no stunners or revelations—or, for that matter, little that is truly new. Breuer himself has said he would be surprised if the guide answered everybody’s questions. 

For veteran FCPA practitioners such as Lisa Prager, former assistant U.S. attorney for the District of Columbia, and a partner at Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, the guidance is “kind of a big hoopla over not much of anything,” Prager says. 

But when it comes to the in-house legal and compliance professionals for whom FCPA issues are just one small slice of a day’s assorted duties, along with the companies and employees they must train, advise and protect, Prager and other experts say the guide is a helpful and comforting reference wherein the government has compiled, in writing and in one place, its views on various aspects of the FCPA and a number of the scenarios it may present. 

Declinations Revealed 

The guide runs about 120 pages long with 418 endnotes. It presents a basic introduction to the FCPA and its central aims and principles: How are payments to third parties treated? (Answer: Paying bribes through third parties doesn’t eliminate potential liability.) What constitutes a “foreign official” under the law? (Answer: The DOJ and SEC take a broad view, even on the oft-debated definition of “instrumentalities.”) The guide outlines the FCPA’s anti-bribery and accounting provisions. It then moves on to discuss related U.S. laws; guiding DOJ and SEC principles of enforcement; penalties, sanctions and remedies; resolutions; whistleblower provisions and protections; and DOJ opinion procedure.

Something that is new in the document is a first-time glimpse into declinations, or cases that the DOJ explored but decided not to prosecute. The guidance notes that in the past two years, the DOJ has declined “several dozen cases against companies where potential FCPA violations were alleged.” It also provides six anonymous examples of declinations—all of which involved voluntary disclosures to the government.

“People continue to be split [on] how valuable voluntary disclosures are,” says Thaddeus McBride, a partner in Sheppard Mullin’s international trade group. “Even if there’s a declination, you may need to really scorch the earth in the form of an investigation that is directed by the government. But getting the details of the declinations is useful for companies to have.”

Helpful Hypotheticals

Another helpful part of the guidance is a set of hypotheticals looking at various situations in detail. Prager says in-house counsel will find it comforting to see that the guidance puts in writing the government’s views on various scenarios involving gifts, travel and entertainment. For example, it says companies will not be in violation if, for instance, they distribute small promotional items at a trade show that foreign officials attend. It approves cups of coffee, cab fare and certain travel expenses associated with training or inspections. 

These views may be common sense for those who follow FCPA matters regularly, but Prager says they will provide a level of comfort for her clients. “They can now see in the guidance that this kind of a training program would be approved for these travel expenses, so it will help them with their own internal policies. … This helps solidify the position: ‘Here, the DOJ and the SEC have said this about what they’re going to allow here,’” she says.

Also useful to in-house counsel is a fairly thorough discussion of what the government considers to be a robust and effective compliance program. Again, it’s nothing that has never been said before, but to have it clearly laid out in one document is “extraordinarily helpful” to in-house lawyers, says Amar Sarwal, chief legal strategist of the Association of Corporate Counsel. 

The guide specifies that the DOJ and the SEC will give “meaningful credit” to a company that has implemented a comprehensive risk-based compliance program, “even if that program does not prevent an infraction in a low risk area because greater attention and resources had been devoted to a higher risk area.”

“That’s extraordinarily helpful as well to ensure that we’re not wasting resources that have little return on investment,” Sarwal says.

The guide also approves small, one-time facilitating payments, but Prager says she generally advises clients not to make them, and the guidance doesn’t change her view on that: “It’s still not wise to have [employees making] decisions in the field that could be difficult to analyze.”

Valuable Resource

The guide does not address some of the cloudier areas of the FCPA or delve as deep into some questions as experts would have liked—for instance, the definition of an instrumentality or due diligence for mergers and acquisitions. A lot of the lack of clarity in the statute is legislative in nature, Sarwal notes, so it would have been difficult for the DOJ and SEC to resolve such issues here.

The guide also is nonbinding, which Sarwal concedes is not as helpful to in-house counsel as notice-and-comment rulemaking would have been. The guide’s disclaimer states the guide is “informal and summary in nature” and “does not in any way limit the enforcement intentions or litigating positions” of the DOJ, SEC or any government agency.

“It’s not binding, but it is the U.S. government on record to a certain degree giving its views of particular situations, and that’s valuable,” McBride says. “I would recommend not only that companies read it if they can and use it as a resource, but also [that they] cite it.”

Associate Editor

Melissa Maleske

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