FCPAméricas Blog
Understanding the FCPA — Where Lawyers Go for Guidance
7.31.2012
On my last trip to Latin America, attorneys asked me how they could learn more about the FCPA from primary sources. Like most of us, they regularly receive alerts and notices from law firms, accounting firms, investigation outfits, and consultants. They read the blogs, including FCPAméricas. And they see press articles (people are still talking about Wal-Mart).
But in the onslaught of information, primary sources sometimes get lost. Here are nine sources that U.S. lawyers use to help interpret enforcement and compliance under the FCPA.
1. The Statute. The law itself (The Foreign Corrupt Practices Act of 1977) is found in the United States Code at 15 U.S.C. §§78dd-1, et seq. Section 78m covers books and records and internal controls requirements that apply to companies that issue securities on U.S. stock exchanges (issuers). Section 78dd-1 covers improper payments by issuers. Section 78dd-2 covers improper payments by U.S. citizens, nationals, or residents and U.S. companies (domestic concerns). Section 78dd-3 covers improper payments by persons other than issuers and domestic concerns. And Section 78ff covers penalties. The U.S. Department of Justice (DOJ) provides links to the text in Spanish and Portuguese.
2. The Settlements. The DOJ and U.S. Securities and Exchange Commission (SEC) are the two enforcers of the FCPA. When they reach a settlement with a company pursuant to an enforcement action, they usually publish the settlement in the form of a Deferred Prosecution Agreement, Non-Prosecution Agreement, or other mechanism. These agreements provide extremely helpful guidance on how enforcement officials interpret the law. They also provide guidance on anti-corruption compliance expectations for companies, usually included in an Attachment C entitled “Corporate Compliance Program.”
3. The Court Decisions. Very few FCPA matters have gone to court. Companies generally choose not to challenge the action in court because of uncertainties regarding the potential outcome. Juries might not be sympathetic to bribery cases involving large corporations. There are other disincentives too. As soon as the company is indicted, it stands to lose import and export and government contracting privileges. Instead, companies choose to settle. But more and more individuals are now choosing to challenge FCPA actions in court. They have more to lose, like their freedom. Recent dismissals in the Lindsey Manufacturing case and the John O’Shea case demonstrate that individuals have a real chance of reaching a favorable outcome.
Important cases to date include the Fifth Circuit’s United States v. Kay, 359 F.3d 738 (5th Cir. 2004), where the court held that the FCPA does not merely cover payments to obtain or renew business contracts. The payments at issue in that case were for tax and customs audit and levy benefits. Another important case is last year’s United States v. Bourke, No. 09-4704-cr(L) (2nd Cir. Dec. 14, 2011), where the Second Circuit upheld a theory of conscious avoidance to satisfy the FCPA’s knowledge requirement. In that case, Frederic Bourke was convicted and sentenced to one year in prison for his role in investing in an oil privatization scheme in Azerbaijan despite knowing that a consultant would bribe officials.
4. The Opinion Procedure Releases. The DOJ offers a mechanism by which companies and individuals can seek opinions on whether or not a certain transaction would violate the FCPA. Since 1993, the DOJ has offered thirty-four such opinions, and it offered additional review procedure releases before that. These opinions cover a variety of topics, including third party intermediaries, customs matters, gifts and entertainment, and charitable contributions.
5. The Legislative History. The legislative history of the FCPA gives background information on various elements of the law. For example, though the statute itself includes “corruptly” as an element of the anti-bribery offense, it does not define the term. But House Report No. 95-640 (1977) describes its intended meaning. The report says that the word “connotes an evil motive or purpose, an intent to wrongfully influence the recipient.” It goes on to say that the word “does not require that the act be fully consummated, or succeed in producing the desired outcome.”
6. Responses to OECD Anti-Bribery Convention Questionnaires. Pursuant to its obligations under the OECD Anti-Bribery Convention, the United States Government has responded to OECD questionnaires with information on the meaning and enforcement of the FCPA. It has produced responses for the OECD’s Phases 1, 2, and 3 Reviews. Responses cover a broad range of topics, including definitions of terms, descriptions of specific enforcement actions, and an overview of important cases.
7. The Lay-Person’s Guide. The DOJ provides what it calls a “Lay-Person’s Guide” to the FCPA, offering a high-level overview of the FCPA’s basic components. This document is generally a good starting point for understanding the law’s basic elements, the affirmative defenses, and the nature of FCPA sanctions.
8. Guidance on the Whistleblower Mechanism. The Dodd-Frank whistleblower provisions of the FCPA became effective on August 12, 2011. Citizen and corporate whistleblowers, either from the United States or not, who provide “original information” to enforcement authorities in an investigation resulting in monetary sanctions over $1 million may recover between 10 and 30 percent of funds collected. The SEC administers the whistleblower program. Its Final Rule on the program provides helpful guidance.
9. Public Statements by Enforcement Officials. Enforcement officials regularly make public statements at conferences about their enforcement intentions. For example, they might announce the industries and sectors that they currently seek to target. They might provide insight into areas of business activity that they consider to create the highest risk. Practitioners in the field closely follow, record, and distribute these statements. FCPAméricas has previously reported on these statements, here and here.
The FCPAméricas blog is not intended to provide legal advice to its readers. The blog entries and posts include only the thoughts, ideas, and impressions of its authors and contributors, and should be considered general information only about the Americas, anti-corruption laws including the U.S. Foreign Corrupt Practices Act, issues related to anti-corruption compliance, and any other matters addressed. Nothing in this publication should be interpreted to constitute legal advice or services of any kind. Furthermore, information found on this blog should not be used as the basis for decisions or actions that may affect your business; instead, companies and businesspeople should seek legal counsel from qualified lawyers regarding anti-corruption laws or any other legal issue. The Editor and the contributors to this blog shall not be responsible for any losses incurred by a reader or a company as a result of information provided in this publication. For more information, please contact Info@MattesonEllisLaw.com.
The author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author.
© 2012 Matteson Ellis Law, PLLC
Post authored by Matteson Ellis, FCPAméricas Founder & Editor
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August 3rd, 2012 at 12:01 pm
[…] Understanding the FCPA — Where Lawyers Go for Guidance: Matt Ellis, FCPAméricas Blog, shares some resources that can help you learn more about the FCPA. […]