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DOJ Responses - Senate Hearing Examining Enforcement of the FCPA

DOJ Responses - Senate Hearing Examining Enforcement of the FCPA

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Published by: Mike Koehler on Apr 14, 2011
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11/23/2012

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SenateCommitteeontheJudiciary,SubcommitteeonCrimeandDrugsHearingon"ExaminingEnforcementoftheForeignCorruptPracticesAct"QuestionsfortheRecordbySenatorChristopher
A.
CoonsQuestionsforGregAndres1.WhatstepscouldCongresstaketohelpensurebroaderapplicationofanti-briberylaws,asexemplifiedbytheFCPAandtheUK'sBriberyAct,toallcompaniesengagedintransnationalbusiness?
RESPONSE:WebelievethattheDepartmentofJustice'scriminalenforcementoftheFCPAhashadasignificantimpactinpreventinganddeterringtransnationalbribery.Tohelpensurethiscontinuedlevelofenforcement,webelievethatCongresscoulddothreethings:first,continueitssupportforexistingcriminalenforcementmechanisms;second,continueitssupportoftheWorkingGrouponBriberyoftheOrganisationforEconomicCo-operationandDevelopment(OECD),whichencouragesotherOECDmembercountriestoenforcetheirtransnationalbriberylaws,andoftheG20AnticorruptionWorkingGroup;andthird,supporttheAdministration'seffortstoengageinbilateralnegotiationswithkeytradingpartnerstoencouragethemtopassandenforcetransnationalbriberylaws.
2.Wouldamandatory,conduct-based,debarmentremedyforcompaniesthatengageinegregiousbriberyfurtherthedeterrenteffectoftheFCPA?
RESPONSE:Whileitispossiblethatamandatory,conduct-baseddebarmentremedyforcompaniesthatengageinegregiousbriberymighthavesomedeterrenteffect,thatremedywouldlikelybeoutweighedbytheaccompanyingdecreaseinincentivesforcompaniestomakevoluntarydisclosures,remediateproblems,andimprovetheircompliancesystems.Assuch,mandatorydebarmentwouldlikelybecounterproductive,asitwouldreducethenumberofvoluntarydisclosuresandconcomitantlylimitcorporateremediationandtheimplementationofenhancedcomplianceprograms.
3.Wouldamandatory,conduct-based,debarmentremedyforcompaniesthatengageinegregiousbriberycurtailprosecutorialdiscretioninamannerthatwouldbedamagingtotheDepartment'senforcementoftheFCPA?
RESPONSE:Asnotedabove,amandatoryconduct-baseddebarmentremedyforcompaniescouldwellhaveanegativeimpactontheGovernment'sabilitytoinvestigateandprosecutetransnationalcorruptioneffectively.Thepurposeofdebarmentproceedingshistoricallyhasbeentoprotectthepublicfisc,nottodeterorpunishwrongdoing.Linkingmandatorydebarmenttoacriminalresolutionwouldfundamentallyaltertheincentivesofacontractor-companytoreachanFCPAresolutionbecausesucharesolutionwouldlikelyleadtothecessationofrevenuesforagovernmentcontractor-avirtualdeathknellforthecontractor-company.Similarly,mandatorydebarmentwouldimpingenegativelyon
 
prosecutorialdiscretion.
If
everycriminalFCPAresolutionweretocarrywithitmandatorydebarmentconsequences,thenprosecutorswouldlosethenecessaryflexibilitytotailoranappropriateresolutiongiventhefactsandcircumstancesofeachindividualcase.
4.DoessomeaspectofeithertheFCPAorthenatureofcorporatebriberyschemesmakeitmoredifficulttoestablishpersonalcriminalliabilityagainstexecutivesatlargercompanies,ascomparedtoexecutivesatsmallercompanies?
RESPONSE:Thechallengesinestablishingpersonalcriminalliabilityvarysubstantiallyfromcasetocase.Incertaincases,itmaybethatseniorexecutivesatalargecompanymaynotbeasdirectlyinvolvedinobtainingbusinessforthecompanyasseniorexecutivesatasmallerone.Consequently,insuchcases,itmaybethattheseniorexecutiveswerenotinvolvedintheforeignbribery.Asageneralmatter,themoreremovedanexecutiveisfromthebribery,themoredifficultitcanbetoestablishtheexecutive'scriminalliability.Furthermore,thereareotherchallengestoprosecutingsmallandlargecompanies'corporateofficials,includingtheneedtosecureevidenceofwrongdoinginforeigncountriesthatnecessarilyrequiresthecooperationofforeignlawenforcementauthorities.Tobesure,foreignbriberyschemesareoftencomplexandtheypresentarangeofchallengesforprosecutors.
5.WhatistheDepartment'spositiononaddingaformalcompliancedefensetotheFCPA?
RESPONSE:TheDepartmentopposestheadoptionofaformalcompliancedefense.Tobegin,ineverycase,theDepartmentalreadyconsidersacompany'scomplianceeffortsinmakingappropriateprosecutorialdecisions,andtheUnitedStatesSentencingGuidelinesalsoappropriatelycreditsacompany'scomplianceeffortsinanysentencingdetermination.Further,theestablishmentofacompliancedefensewouldmarkasignificantdeparturefromtraditionalprinciplesofcorporatecriminalliability,onethatcoulddetractfromeffectiveenforcementoftheFCPA.Amongotherthings,thecreationofsuchadefensewouldtransformcriminalFCPAtrialsintoabattleofexpertsoverwhetherthecompanyhadestablishedasufficientcompliancemechanism.Againstthisbackdrop,companiesmayfeeltheneedtoimplementapurelypapercomplianceprogramthatcouldbedefendedbyan"expert,"evenifthemeasuresarenoteffectiveinstoppingbribery.
If
theFCPAwereamendedtopermitcompaniestohidebehindsuchprograms,itwoulderectanadditionalhurdleforprosecutorsinwhatarealreadydifficultandcomplexcasestoprove.
6.WhatistheDepartment'spositiononaddinganamnestyprogram,similartotheoneproposedbyMr.VolkovandJudgeSporkin?
RESPONSE:TheDepartmentdoesnotsupporttheideaofanFCPAamnestyprogram.Amnestyprograms,suchastheoneusedinantitrustenforcement,aretypicallyestablishedtoassistlawenforcementtoidentifyandprosecutecriminalbehaviorthatwouldotherwisebeundetected.Becauseantitrustcrimesbydefinitioninvolvesomeformofcollusion,thosecrimesareoftennotdisclosedor
 
revealedwithoutthecooperationofatleastonepartyinvolvedinthecriminalactivity.Forthatreason,anantitrustamnestyprogramprovidesmeaningfulbenefitstolawenforcement,notjustcorporatewrongdoers.ThechallengesinFCPAinvestigationsandprosecutionsaredifferent,andanamnestyprogramisnotwarranted,orpreferable,toasystemthatisalreadydrivenbysignificantincentivesforself-disclosure.Indeed,numerousmechanismsalreadyexisttoensurethatFCPAviolationsarebroughttotheDepartment'sattention,includingrequireddisclosurestothemarketpursuanttoSarbanesOxley,internationallawenforcementcooperation,reportingfrom
u.s.
embassypersonnel,reportingbycivilsociety,thenewlyestablishedDodd-FrankSECwhistleblowerprogram,andvoluntarydisclosuresbycompanies.Asthebeneficiaryoftheseestablishedsourcesofinformation,theDepartmentdoesnotpresentlyfacedifficultyinidentifyingsourcesofinformationofFCPAcriminalviolations.Consequently,anamnestyprogramwouldprovideprotectionforcorporationswhoviolatethelawwithoutprovidingaccompanyingmeaningfulbenefitstolawenforcement.Finally,consistentwiththeUnitedStatesSentencingGuidelinesandtheDepartment'sPrinciplesofFederalProsecutionofBusinessOrganizations,theDepartmentalreadyprovidesmeaningfulcreditforvoluntaryself-disclosures,extraordinarycooperation,andsubstantialremediationbycorporationswhereappropriateanddeserved.
7.Intheabsenceofacomplianceand/oramnestyprogram,doyouagreethatwell-meaningbusinessesarefacedwithsignificantuncertaintyastotheirpotentialexposuretocivilandcriminalpenaltiesundertheFCPA?Whyorwhynot?
RESPONSE:TheDepartmentbelievesitprovidesclearguidancetocompanieswithrespecttoFCPAenforcementthroughavarietyofmeans.Tobegin,theDepartmenthaspublisheda"LayPerson'sGuidetotheFCPA,"aplain-languageexplanationoftheFCPA,whichisavailableontheDepartment'sFCPAwebsite:http://www.justice.gov/criminal/(raud/fcpa/.Thatwebsitealsoincludesdocumentsrelatedtomorethan140FCPAprosecutionsdatingbackto
1998,
chargingdocuments,pleaagreements,deferredprosecutionandnon-prosecutionagreements,pressreleases,andrelevantpleadingsandorders.Thesedocumentsarelengthyanddetailed.Moreover,totheextentthatacompanyisuncertainastowhetheracontemplatedactionislawful,itcanavailitselfoftheFCPAopinionproceduresetforthin15
u.s.c.
§§
78dd-l(e)and78dd-2(f)-auniquefeatureoftheFCPA.ThisprocedureallowsthecompanytorequestadeterminationinadvanceastowhetheritsproposedconductwouldconstituteaviolationoftheFCPA.Theopinions,whicharealsoavailableontheDepartment'sFCPAwebsite,providesignificantadditionalguidanceontheDepartment'sinterpretationoftheFCPA.Intheend,areviewoftheDepartment'sFCPAenforcementactionsmakesclearthatcompanieshaveneverbeenchargedforminororincidentalissues.Bycontrast,theDepartment'sprosecutionsinvolvedextensiveandoftenwidespreadcorruptionoversignificantperiodsoftime.

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