U.S. Chamber Lists What it Wants in DOJ's Upcoming FCPA Guidance

The U.S. Chamber of Commerce, together with more than 30 trade associations and business groups, sent a letter to the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) on DOJ’s expected guidance on enforcement under the Foreign Corrupt Practices Act. The letter calls for DOJ to address key definitions under the statute, corporate compliance programs in enforcement decisions, and parent-subsidiary and successor liability, and to establish an exception for de minimis gifts, among other considerations.

(On November 8, 2011, Assistant Attorney General Lanny Breuer stated, among other things, that the DOJ expects to release a detailed new guidance on the FCPA’s criminal and civil enforcement provisions in 2012. See ITT’s Online Archives 11110932 for summary of Breuer’s remarks, including a statement that successor liability is necessary.)

Letter Requests Clarification on “Foreign Official”, Enforcement, Liability, Etc.

According to the Chamber, detailed guidance on certain matters would enhance companies’ compliance with FCPA by clarifying the “rules of the road” and by mitigating the significant interpretive challenges that companies face when applying the text of the statute to complex real-world situations. The letter requests that the following areas be addressed:

Definitions of “Foreign Official” and “Instrumentality.” The FCPA prohibits corrupt payments or offers of payment to foreign officials, including “instrumentalities” of foreign governments and public international organizations. The Chamber is calling for the guidance to: (1) identify the percentage ownership or level of control by a foreign government that ordinarily will qualify a corporation as an instrumentality; (2) state that, in order for a company to be considered an instrumentality, it typically must perform governmental or quasi-governmental functions, and define what those functions may include; and (3) identify exceptions to the foregoing general principles.

Consideration of Compliance Programs in Enforcement Decisions. The Letter requests that the guidance: (1) explain what would be considered an effective FCPA compliance program that would merit favorable consideration in enforcement decisions; (2) establish compliance standards that businesses may adopt; and (3) describe how the DOJ and SEC factor companies’ voluntary disclosures of FCPA violations into enforcement decisions.

Parent-Subsidiary Liability. The Chamber is calling for confirmation that both the DOJ and the SEC consider parent company liability under the FCPA’s anti-bribery provisions to extend only to circumstances in which the parent actually authorized, directed or controlled the improper activity of its subsidiary.

Successor Liability. The letter requests that the guidance state that the DOJ and SEC ordinarily will not pursue an enforcement action against a company for pre-acquisition violations by an acquiree, particularly in cases where a company conducts reasonable due diligence prior to an acquisition. The Chamber further calls for standards for such diligence and factors that will be considered in determining whether diligence was adequate, as well as standards for post-acquisition due diligence where pre-acquisition due diligence could not be undertaken or was significantly limited.

De Minimis Gifts and Hospitality. DOJ has stated that it does not prosecute conduct involving de minimis gifts and hospitality for foreign officials, but, according to the letter, such gifts and hospitality remain subject to prosecution. The letter requests that the guidance provide a clear standard for gifts and hospitality that will ordinarily not be subject to enforcement action.

Corporate Criminal Liability (Mens Rea Standard). The FCPA limits an individual’s liability for violations to situations in which the individual has committed the violations willfully, but contains no such language with regard to corporate criminal liability. The Chamber is calling for the guidance to address the standard for corporate criminal liability, including a statement on whether a company may be criminally sanctioned for violations of which the company had no direct knowledge.

Info on Investigations Closed Without Enforcement Action (Declination). The letter requests that the DOJ change its policy and make information available about its decisions to close FCPA investigations with no enforcement action.

Other Recurring Issues. The Chamber’s letter also requests that the guidance: (1) outline best practices for business relationships with relatives of foreign officials; (2) define standards to govern corporate donations to charities that have connections with foreign governments; and (3) state how U.S. companies should treat apprentice programs in which their employees are assigned to work for a foreign customer in which a foreign government holds an interest.

(See ITT’s Online Archives 10110809 for 2010 Chamber report proposing amendments to FCPA, including compliance defense, successor liability, corporate criminal liability, parent-subsidiary liability, and the definition of foreign official. See ITT’s Online Archives 11051032 for summary of DOJ official’s speech detailing, among other things, the DOJ’s position on how self-disclosures can reduce penalties. See ITT’s Online Archives 11061612 for summary of Congressional hearing detailing plan to draft an FCPA reform bill, including clarifications of “foreign official”, successor liability, etc. See ITT’s Online Archives 11070109 for summary of a DOJ Lay Person’s Brochure on the FCPA addressing, among other things, successor liability.)

See Chamber of Commerce press release, dated February 21, 2012, here.