The U.S. Chamber Institute for Legal Reform has been, for some time, one of the leading voices demanding greater certainty and reforms in the government's enforcement of the Foreign Corrupt Practices Act. The Chamber's efforts in this area likely helped prompt the SEC and the DOJ to issue the 120-page "Resource Guide to the U.S. Foreign Corrupt Practices Act" that they jointly released in November 2012.
In a letter yesterday to the heads of enforcement of both the DOJ and SEC, the Chamber and over 30 other state, national, and international business and advocacy groups commended the government's FCPA guidance, but stated that numerous areas remain where the business community has been "left guessing" and needs further clarification.
Some of the areas that these representatives of the business community believe require greater certainty or further reforms include:
- Compliance Programs and Voluntary Disclosures -- The letter complains that even if a company has a state-of-the-art compliance program in place that is well-designed to prevent FCPA violations and is aggressively enforced, "it remains exposed to liability if the program is circumvented by even one employee." The Chamber contends that the FCPA should be reformed to add an affirmative defense that would "permit a company, if charged with an anti-bribery violation, to rebut the imposition of criminal liability if the individuals responsible for the violation circumvented compliance measures that were otherwise reasonably designed to identify and prevent such violations and implemented with appropriate vigor."
- Definitions of “Foreign Official” and “Instrumentality” -- The Chamber believes that if an entity does not perform a governmental function, it should not be considered a government instrumentality for purposes of the FCPA. The Chamber says that the Resource Guide confirms that the issue of whether an entity performs governmental functions is presently not considered dispositive by the DOJ or the SEC, however, and is rather just one of many factors to be considered.
- Declination Decisions -- The Resource Guide offered six examples of "declinations," i.e., actual matters in which the agencies had declined to pursue prosecution or enforcement action. The Chamber expressed concern that the DOJ and SEC were defining "declinations" too broadly, by including cases where the evidence of a violation simply was lacking. Rather, the Chamber wrote, declinations should only refer to decisions by the enforcement agencies "to exercise their discretion, ordinarily on the basis of mitigating factors, not to pursue prosecution or enforcement action despite having evidence of a violation that they consider sufficient to prove their case.... The incentives in favor of self-reporting and remediation are greatly reinforced when the Department and the SEC are able to demonstrate through actual examples that cooperation and remedial measures can result in a declination for a company even when certain employees or agents of that company have committed a meaningful violation of the FCPA."
Other issues addressed in the Chamber's letter include parent-subsidiary liability for anti-bribery violations, successor liability, and the mens rea standard for corporate criminal liability. Read the full letter here.