FCPA Compliance & ongoing reform efforts

Guest Blogger | Apr 11, 2012
This post was contributed by Michael Volkov of LeClairRyan and first appeared on Volkov's Corruption, Crime & Compliance Blog (regarding FCPA compliance and current reform initiatives)
Many companies are vaguely aware of the obligations for FCPA compliance in their international business dealings, but most SMEs don't have formal programs in place.  Compliance is an ongoing process, though, and the criminal and civil liability of executives is enforced with increasing severity.  Several business organizations continue to lobby for reform, but thus far it appears that there will not be substantive changes to the regulations.

The drumbeat continues for reform

The Justice Department has bought itself time but is now feeling the pressure on its upcoming guidance.   Do not hold your breath when it comes to the FCPA Guidance.  It will not contain any big surprises — it may restate a lot of the law and the principles of prosecution but it will not reflect any significant changes in the overall enforcement program.

Secretary of State Hillary Clinton’s recent defense of the FCPA confirms that the Administration does not intend to “weaken” the FCPA, either by its guidance or by supporting legislative changes.  With the fortunes of President Obama continuing to rise, DOJ will be even more resistant to such changes.  Secretary Clinton’s recent speech may reflect the State Department’s position against any reform and push back against discussion at DOJ to reform the law or issue guidance which gives some relief to the business community. 

Discussion of business impact

As I have noted before, the primary audience for FCPA reform is not on Capitol Hill – legislators are just a means to an end –  which is pressure on the Justice Department.  There is little likelihood that the business community will be able to enact any serious legislative reform to the FCPA, especially in an election year when representatives and Senators are focused more on the election than legislation.  However, the business community has been successful in changing the debate and focusing on the impact such laws have on American businesses.

Larry Thompson, the former Pepsi General Counsel, has unique credibility in this debate given his business role and his position as the former Deputy Attorney General in the Justice Department.  His proposals were reasonable and measured: (1) a safe harbor, post-closing period in which an acquiring company is allowed to review, fix and report any FCPA violations committed by an acquired company before the acquisition; and (2) a compliance defense where the actions of a few violators are contrary to a significant compliance program. 

Reform should focus on corporate criminal liability

The real issue with respect to corporate criminal liability boils down to the doctrine of respondeat superior.  Based on this doctrine, the actions of a single corporate actor can be imputed to a company despite the overall compliance efforts of the law-abiding corporate actors.    Reform needs to focus on this issue and the impact on businesses.

The debate needs to focus on measured and reasonable issues – not exaggerated arguments on loss of American competitiveness or claims that American businesses cannot compete.  Those arguments are not persuasive.  Practical and common sense solutions to specific problems and issues will, in the end, carry the day.

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Original version is located here - http://corruptioncrimecompliance.com/2012/04/fcpa-reform-the-latest-developments.html

michael volkov attorney with LeClairRyan and FCPA compliance expertMichael Volkov is a former federal prosecutor with almost 30 years’ experience in a variety of government positions and private practice. Michael’s practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters.

Michael has experience in the Foreign Corrupt Practices Act, compliance counseling, special committee representations, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and other regulatory enforcement issues.