The U.S. .Securities and Exchange Commission (“SEC”) and U.S. Department of Justice (“DOJ”) issued a long-delayed Foreign Corrupt Practices Act (“FCPA”) Resource Guide in November 2012. While the Guide was preceded by years of pressure to clarify the enforcement of the FCPA, it generally does little to break new ground as a matter of policy and is not legal precedent. The Guide functions best as a single-reference source of preexisting agency enforcement actions and opinion letters. In this regard, it is a useful resource for the long-held interpretations of the FCPA by the agencies tasked with enforcement and offers a single source for the ounce of prevention that may be worth a pound of cure. It is important that companies review the Guide to assess whether current compliance programs or measures will pass the watchful eye of the SEC or DOJ and for insight into how the agencies are likely to view future compliance issues and potential misconduct. With that in mind, one legal services firmed pulled together 12 important takeaways that can be drawn from the Guide. Read one per day or all at once.
The First Day: ‘Tis the Season for Enforcement
Takeaway number one is simple: the focus on FCPA enforcement is unlikely to change in the near future. The 120-page Guide divides into ten chapters, ranging from a discussion of the anti-bribery provisions themselves to a description of the types of resolutions available to the SEC and DOJ. The amount of time and energy that the agencies have put into the Guide make it clear that FCPA enforcement is here to stay.
The Second Day: Two Clear Defenses
Takeaway number two is that the Guide will not satisfy the many observers and commentators who have pushed for additional affirmative FCPA defenses. The Guide repeats only the two statutory provisions: “(1) that the payment was lawful under the written laws of the foreign country (the ‘local law’ defense), and (2) that the money was spent as part of demonstrating a product or performing a contractual obligation (the ‘reasonable and bona fide business expenditure’ defense).” The local law defense is notoriously difficult to invoke and requires more than the mere absence of criminalization – the law must actually authorize the payments. As for the reasonable and bona fide business expenditure defense, the Guide offers only the few examples already recognized in the past:
- travel and expenses to visit company facilities or operations;
- travel and expenses for training; and
- product demonstration or promotional activities, with accompanying travel and expenses for meetings.
The Third Day: Expansive Theories of Jurisdiction
Takeaway number three is that the long arm of the law isn’t going to get shorter anytime soon. One of the first hot spots touched on by the Guide is the enforcement reach of the FCPA. As expected, the SEC and DOJ continue to take a broad view of FCPA jurisdiction. One communication to, from, or through the United States or one wire transfer through a U.S. bank is sufficient to establish jurisdiction. What’s more, despite recent skepticism by commentators and one court, the Guide advances the theory that co-conspirators fall under the FCPA “even if they themselves” were not present and never took action in the United States.
Read more …
DOJ and SEC Resource Guide to the U.S. Foreign Corrupt Practices Act for more in-depth details on specific provisions.
12 Days of Christmas • to provide cultural background on why there are “12 Days of FCPA”