The New FCPA Dialogue: what changes to the law are needed and will they come?

Hi all. I hope everyone had a great Thanksgiving.  While we all start the mad dash to year end, I want to follow up on a recent Wall Street Journal article published on November 28, 2011, by Joe Polazzolo: “Critics Target Bribery Law.”  Mr. Palazzolo wrote an interesting article about the FCPA, the current state of its enforcement and companies’ abilities to be compliant.  He  highlights the U.S. Chamber of Commerce’s $700,000 investment to lobby for clarification of the anti-bribery law to provide more guidance to businesses (and Boards of Directors) to arguably increase compliance while protecting US companies’ abilities to compete. The Chamber is a noble, forward-thinking and proactive organization.   In my opinion, the Chamber has some of the most experienced trade professionals fighting for international U.S. business growth.  SO when the Chamber spends money to hire outside lobbyists for any effort, we should take notice.

The FCPA has come a long way. In the late 1980s I wrote my first FCPA article for the Japanese paper Nihon Keizai Shimbun.  Back then, the definitions of the law’s provisions were so vague that it was barely enforceable and the Justice Department’s enforcement statistics were weak at best.  The law was amended and that helped the government prosecute and define what actions would be violations.  Yes, there are lots of unclear nuances in every element of the law itself and the fact that prosecutions end in settlements means they don’t provide case law for legal research.  However, we have come far with compliance and getting the focus on global anti-corruption efforts.  Thirty-eight countries are parties to the Organization for Economic Cooperation and Development (OECD) Convention on Preventing Bribery of Foreign Public Officials in International Business Transactions, and 154 countries are parties to the United Nations Convention against Corruption.  Both treaties require governments to criminalize (and to enforce their laws against) bribery.

The FCPA is a hot topic everywhere (including at the WSJ).  Businesses are taking notice and taking the necessary steps to understand, train employees, document overseas actions and conduct mergers and acquisitions due diligence reviews.  My point is that the law is finally effective and producing results.  Yes, guidance from the Justice Department will undoubtedly be forthcoming.  As more companies focus on compliance (as more senior executives face penalties) the natural evolution will be more information to help clarify obligations.  What is really needed is transparency.  Look at export compliance voluntary disclosures at OFAC and the Commerce Department for examples.  Aggravating and mitigating circumstances are part of the process and there are formulas for determining the “value” of a disclosure.

I believe the Justice Department will get there—hopefully sooner than later.  Maybe some of the proceeds from the penalties can go to developing further transparency of the process and the Chamber won’t have to allocate its resources to get some attention!  It is a major accomplishment that this discussion is a priority for such influential organizations like the Chamber of Commerce. To obtain the reduction we are now seeing in global corruption, we needed the entire process to play out and it took high-profile U.S. cases to get us there. The global playing field is becoming more level for U.S. companies as other nations are participating in anti-bribery efforts.