A Modicum Of Clarity: DOJ And SEC Shed Some Lighton The Foreign Corrupt Practices Act

On November 14, 2012, the Department of Justice and the Securities and Exchange Commission issued A Resource Guide to the U.S. Foreign Corrupt Practices Act.1 Although this resource breaks no new ground, it offers useful guidance to help lawyers and clients alike understand the government's interpretation of the FCPA.

Background

Congress enacted the Foreign Corrupt Practices Act (the "FCPA" or "Act") in 1977, but it remained an infrequently enforced statute until the last decade. Enforcement efforts by the Department of Justice ("DOJ") and the Securities and Exchange Commission ("SEC") have increased dramatically in recent years, leading to fines of hundreds of millions of dollars in some cases. These eye-catching penalties have prompted multinationals to adopt compliance programs and extensively investigate allegations of corrupt practices, particularly bribery of officials of foreign governments or public international organizations, either directly by company employees or indirectly through third-party agents.

Despite the surge in FCPA investigations and enforcement, few of these high-risk cases actually have been litigated, resulting in a scarcity of legal authority demarcating the reach of this vague, bluntly written statute. In addition, FCPA practitioners and regulated entities have perceived an inconsistency in the manner in which the government approaches possible violations of the Act, leading to uncertainty and heightened investigative and legal costs. In response, commentators and members of the regulated community have called for Congress to amend the law.

In a speech in Washington, D.C. on November 8, 2011, Assistant Attorney General Lanny A. Breuer, head of the DOJ Criminal Division, acknowledged the private sector's concerns but rejected calls for amending the Act.2 Instead, he stated that the Government would provide in 2012 a "lay person's guide" with transparent, detailed new guidance on the FCPA's criminal and civil enforcement provisions.3 One year later, the new Resource Guide to the U.S. Foreign Corrupt Practices Act ("FCPA Guide" or "Guide") partially fulfills its intended purpose.

Overview of the FCPA Guide

There is little in the FCPA Guide that is actually new. Substantively, it breaks no new ground, does nothing to moderate the law's harsh effects, and to be sure, purports neither to give rise to enforceable rights nor to offer binding legal interpretations. Indeed, much of its content will strike seasoned FCPA practitioners as common knowledge. Most problematically, it offers no bright-line rules, instead relying on checklists and multi-factor tests that leave ample room for the government to make case-specific decisions without running the risk of inconsistency with positions taken in the FCPA Guide. In this sense, the Guide still leaves regulated entities and their employees to rely on guesswork in assessing the difference between lawful and unlawful behavior.

At the same time, the FCPA Guide mitigates the vagueness of the FCPA's standards, to an extent, by providing extensive case studies and hypothetical scenarios. By comparing the...