On November 14, 2012 the Criminal Division of the Department of Justice and the Enforcement Division of the Securities and Exchange Commission issued a long promised “Resource Guide” on the U.S. Foreign Corrupt Practice Act (“FCPA”). As previously reported here, DOJ announced this guide was coming a year ago – and it is worth the wait. The Guide provides a comprehensive survey of the anti-bribery and accounting provisions of the FCPA and how allegations of violation of the Act are evaluated, investigated and enforced. It also contains brief summaries of other U.S. laws that may be implicated when companies make payments to foreign government officials. While the Guide does not provide much in the way of new information about how the SEC and DOJ resolve an FCPA action, it is quite useful to have the policies of both agencies summarized in a single document.
The 120 page Guide appears to be written primarily for use by counsel and others who are experienced in handling FCPA issues. Although it fails to provide many of the concrete definitions of critical terms sought by industry groups such as the U.S. Chamber of Commerce, it nevertheless may serve as a practical tool to companies in assessing situations involving foreign gifts, travel and entertainment experiences, “facilitating payments” to foreign government officials, and the use of third party representatives. Particularly useful are several hypotheticals that concern situations commonly experienced by U.S. businesses doing business abroad. The hypotheticals illuminate how both the SEC and DOJ view conduct that arguably falls within the prohibitions of the FCPA.
The Guide features an analysis of the factors the DOJ and SEC consider in evaluating conduct that falls within the FCPA. It is clear that a thorough examination of a company’s compliance and ethics program is among the most critical elements of that evaluation. According to the guidance, an effective compliance program must be tailored to an organization’s specific needs rather than consisting of “standard” provisions. Periodic and routine updates to a compliance program as well as demonstrable upper management involvement in the program are considered essential to an effective program. It is noteworthy that under DOJ and SEC policy the fact that a company’s compliance program fails to detect an FCPA violation does not necessarily mean that prosecution will result.
Interestingly, the Guide also includes summaries of the SEC and DOJ policies on due diligence expectations and successor liability in situations where an acquired company is found to have violated FCPA requirements before its acquisition.
Jackson Kelly PLLC has experience advising companies and individual about the requirements of the FCPA and in representing parties in disputes with the government involving the anti-bribery and accounting provisions of the Act.
Pete Hoffman is the attorney responsible for the content of this article.