FCPA Needs Fine Tuning, Says Former AG

Use of the Foreign Corrupt Practices Act to level the playing field among domestic companies doing business abroad has led to complaints that the statute places U.S. companies at a disadvantage with respect to their foreign competitors.

The FCPA gives prosecutors tremendous discretion in defining its scope, and thus tremendous leverage in charging decisions. Corporations are averse to being investigated, especially for FCPA violations , and as a result these cases often settle. But, according to the author, a former U.S. Attorney General, the more that American companies elect to settle and not force the DOJ to defend its aggressive interpretation of the Act, the more aggressive the DOJ has become in its prosecution decisions.

Prosecutions of individuals under the FCPA have been less successful than those targeting companies, but speculation that the DOJ will scale back its FCPA efforts based on such problems is unfounded, the author says. He notes that lessons learned in those cases become part of the Fraud Section’s institutional memory, and that cases such as the one pending against WalMart for its activities in Mexico make the public keenly aware of the problems caused by corruption.

The author suggests targeted reforms that add a compliance defense and a willfulness requirement for corporate criminal liability. He questions the fairness of going after a company for unknown violations by a foreign agent if it has complied with a list of conditions known as DOJ Principles of Prosecution.