Business Community Responds to FCPA Enforcement Guidance

Today, the the U.S. Chamber Institute for Legal Reform (ILR) and more than 30 state, national, and international business and advocacy groups sent a letter responding to guidance released by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) regarding their enforcement of the Foreign Corrupt Practices Act (FCPA).

The DOJ and SEC guidance was a positive step forward that clarifies many of the agencies’ enforcement positions, but critical issues remain unresolved.  The agencies have provided clear rules of the road in some circumstances, but the business community is left guessing on others.

Specifically, the coalition’s letter praises the agencies for identifying components of an effective compliance program and acknowledging thresholds that must generally be met before an entity is considered a government instrumentality.  The letter also applauds the guidance’s alignment of the agencies’ positions on subsidiary liability, its favorable treatment of voluntary reporting, its clear acceptance of a mens rea standard for corporate criminal liability, and its inclusion of specific examples of enforcement actions that the agencies declined to pursue, and why.

However, the letter also observes that the guidance fails to assure the business community that the agencies will give sufficient weight to strong compliance programs, falls short of clearly defining who is a “foreign official,” and introduces new uncertainty with respect to the agencies’ expectations in the wake of a merger or acquisition.  Furthermore, the letter points out that the guidance does not illustrate, through examples or hypotheticals, the level of due diligence expected when businesses hire outside vendors and contractors to engage in foreign markets.  Finally, the letter asks the DOJ and the SEC to make disclosure of their declination decisions a routine practice.

In February 2012, a similar business coalition sent a letter to the DOJ and the SEC that identified numerous areas of ambiguity, uncertainty, and inconsistency that the FCPA guidance could address.  In April 2012, ILR hosted a roundtable discussion with officials from DOJ and the SEC to discuss the guidance and the business community’s need for certainty and clarity under the law.