In 2012, the U.S. Department of Justice (DOJ) issued a Resource Guide of the Foreign Corrupt Practices Act (FCPA). Since then, much has happened in the landscape of investigations and enforcement actions against corporations doing business in the United States.
For starters, in 2018 the agency changed its policy from fighting corporate fraud and misconduct by focusing on the entity itself to prioritizing the pursuit of individuals responsible for wrongdoing.
Then-Deputy Attorney General Rod Rosenstein said, “the most effective deterrent to corporate criminal misconduct is identifying and punishing the people who committed the crime.”
Thereafter, prosecutors were instructed to evaluate corporate cooperation by whether the entity had identified all individuals substantially involved in the offense. In other words, who authorized and knew about the illicit conduct.
While most corporate entities have minimized public exposure and reputational damage by reaching agreements with the DOJ and paying fines, disgorgements and forfeiting profits, some corporate officials have chosen to challenge both the agency’s jurisdiction and the statute’s reach and interpretation.
Consequently, the DOJ decided to clarify its policy on the investigation and prosecution of corporations and/or their officers. Last Friday, July 3, 2020, the federal agency issued its Second Edition of the FCPA Resource Guide.
It should be noted, however, that many of the principles outlined in this Second Edition are not limited to investigations for violations of the FCPA, which penalizes the corrupt payment of bribes to foreign public officials in exchange for business advantages, the use of an instrumentality of interstate or foreign commerce to commit said violation, or filing false reports with regulatory agencies in order to conceal such payments.
In fact, this edition incorporates subsequently issued guidance on how and when prosecutors investigate and prosecute corporate entities and their officers, including the FCPA Corporate Compliance Policy, Selection of Monitors in Criminal Division Matters, Coordination of the Corporate Sanctions and Resolutions (Anti-Piling On policy), and the Evaluation of Compliance Programs.
The DOJ’s jurisdictional and investigative scope, as far as corporations are concerned, is quite comprehensive. Pages 10-11 of the Guide identify the individuals and acts subject to criminal liability under federal international anti-corruption laws.
This includes, for example, public corporations that regularly file reports with the Securities Exchange Commission; officers, directors, employees, agents, and shareholders of domestic corporations that utilize the mail, email, telephone, texts, or bank wire transfers to coordinate or facilitate a corrupt bribery payment; foreign individuals and entities that commit acts facilitating a corrupt bribery payment on U.S. soil; and acts by U.S. nationals, even when outside the U.S., otherwise known as “alternative jurisdiction.”
These illicit payments, whether disbursed directly, through third parties, commissions, favors, etc., are usually made in order to obtain commercial advantages, including guaranteeing a favorable tax payment, reducing or eliminating customs duties, obtaining government measures to prevent competitors from entering the market, or circumvent a license or permit required.
An ever-evolving topic of recent interest in the field of criminal corporate investigations is liability for the acts of third parties, including agents, contractors, distributors or sellers, successors and subsidiaries, regardless of their location. The Guide also includes a discussion of one of the most striking cases this year.
Last March 2020, Lawrence Hoskins, senior vice president of Asia Region for Alstom UK, was sentenced to jail for conspiring to commit money laundering transactions and violate the FCPA after coordinating the payment of bribes to Indonesian public officials for the purpose of establishing business in favor of an Alstom subsidiary in Connecticut, without ever setting foot on American soil.
Aside from providing greater transparency about the DOJ’s expectations for corporations, the Second Edition updates and incorporates measures on corporate compliance programs.
Based on the premise that corporate entities doing business in the U.S. should have a robust and updated compliance program, according to the DOJ, “the trust measure of an effective compliance program is how it responds to misconduct.”
The Guide contains statistics, judicial opinion summaries, and hypotheticals that will prove useful to corporate personnel in understanding and evaluating how to proceed when contracting with government and private entities, detect risk areas, identify third party red flags, mitigate damage, and anticipate violations of law.