because one of the things companies do during the voluntary process to demonstrate theircooperation is either toll the statute of limitations or agree to waive statute of limitationdefenses. So this basically gives the DOJ and the SEC the green light to take their time.
When you dig into the details of most FCPA enforcement actions, the conduct takes placelonger than 5 years ago, sometimes longer than 10 years ago and sometimes longer than15 years ago. The DOJ and the SEC are not bound by the statute of limitations as apractical matter, and that is part of the leverage they have.
The Dangers of Self-Reporting
FCPAR: Is there anything companies can do once the internal investigation beginsto avoid having this gray cloud over them for so long and to move more quicklytowards settlement?
Koehler: Given that the vast, vast majority of enforcement actions in the corporate
context are the result of voluntary disclosure, the most obvious thing is don‟t voluntarily
disclose. Now this is an issue that I know people struggle with. The DOJ and the SECclearly want companies to voluntarily disclose. There may be some unique situationswith publicly traded companies where there may be affirmative disclosure obligations,but very few FCPA issues are material. However, the SEC takes the rather ridiculousposition (in my opinion) that all improper payments are qualitatively material,notwithstanding the dollar amount of the revenue associated with those payments.Companies struggle with this voluntary disclosure decision.
One message companies should hear is that in most cases, there‟s nothing wrong with
doing a complete and thorough internal investigation and based upon the results of thatinvestigation effectively remediating the issues through enhanced compliance policiesand procedures, through discipline or termination of wrongdoers. That is all acceptablewithout the voluntary disclosure.
Although empirical evidence is lacking on this issue because it‟s kind of a black hole
issue, you do read and hear from the FCPA bar that there has been a pushback against
voluntary disclosure where companies are saying we don‟t necessarily have to disclose
this if we take these otherwise proactive and effective steps to deal with the situationinternally. [For more on the calculus of self-reporting, see
,” The FCPA Report, Vol.1, No. 1 (Jun. 6, 2012) and“
,” The FCPA Report, Vol. 1, No. 2 (Jun. 20, 2012).
]Another way to avoid that gray cloud, which is nice to talk about but as a practical matteris a non-starter, is that a company could just
agree to toll the statute of limitations orcould
agree to waive statute of limitations defenses. But then the DOJ and SEC
would take the position that that‟s not cooperating and we know what the DOJ and the
SEC might do with companies that do not cooperate. At the end of the day, both