"We're in this for the long haul."
That was the message to corporate counsel from Nathaniel Edmonds, assistant chief of the Justice Department's fraud section, who stressed that “Enforcement of the [Foreign Corrupt Practices Act] is something DOJ is committed to.”
Edmonds and Kara Brockmeyer, who heads the 30-lawyer FCPA unit at the U.S. Securities
and Exchange Commission, spoke on a panel Thursday at Georgetown University Law Center’s annual Corporate Counsel Institute.
The FCPA of late has been a hot area for enforcement, though DOJ last month suffered a major setback when a Washington federal judge dismissed the government’s largest-ever FCPA case against 22 people in the military and law enforcement products industry. In December 2011, a federal judge in Los Angeles dismissed DOJ’s FCPA case against two executives at Lindsey Manufacturing due to prosecutorial misconduct.
Edmonds acknowledged “some challenges” in the past couple of months, but said that the “baseline of what we’ve learned…is that the challenge is not to the statute itself,” but rather to specific facts in the cases.
For companies, an effective FCPA compliance program is crucial, Brockmeyer said – one that goes beyond “a check-the-box mentality.”
“You can never stamp out someone who wants to pay a bribe somewhere,” she said. But if a company has strong internal controls, they can find the problem and fix it quickly. “If you’ve lost control of your books for one purpose, it’s likely you’ve lost control for other purposes as well,” she warned. “Think of it as an overall financial risk issue, not just FCPA.”
Or as Edmonds put it, if someone is willing to bribe “they’re willing to steal from you.”
Audience members questioned the panel about the benefits and logistics of self-reporting a violation of the act. The SEC uses its Seaboard Report to weigh the value of corporate cooperation, Brockmeyer said, and the result “could run the gamut from no action at all…to a reduced penalty.”
Edmonds said companies that want to self-report need to contact Main Justice directly (not a local U.S. Attorneys office) as well as the SEC. The benefits of self-reporting are spelled out in sentencing guidelines that use a specific numerical formula to come up with the reduction of culpability.
“There are a lot of ways we get information besides self-reporting,” he added. “A lot of other people want to tell us what happened inside your company,” such as whistleblowers and competitors. He also stressed that FCPA violations are “not a regulatory offense. It’s a criminal violation. You cannot assume it’s a cost of doing business. People go to jail…it’s not just a regulatory fine.”
In October, the former president of Terra Telecommunications Corp. was sentenced to 15 years in prison – the longest ever for a FCPA violation.
Audience members also asked about pending FCPA guidelines, which are due to be issued in 2012. Edmonds declined to provide specific information. The U.S. Chamber of Commerce in February sent a letter requesting guidance from the agencies, citing “the significant interpretive challenges that companies face when applying the text of the statute to complex real-world circumstances.”
Comments