The Eight Year Itch

Last week we wondered why there hasn’t been a new FCPA enforcement action from the DOJ since Daimler’s on April 1. Among our guesses were personnel changes, trial-team stresses, and strategic reviews. But here’s another — prep time for the Phase 3 Review under the OECD’s Anti-Bribery Convention.

The OECD holds members accountable by naming and shaming — what it calls “a dynamic process of mutual evaluation and peer pressure.” For each member, there’s a regular cycle of public review, starting with a questionnaire, followed by an on-site visit and more written questions.

The review cycle is eight years. That last inspection of the U.S. happened in 2002. That means the OECD’s group will descend on Washington again this year — next month according to the published schedule. After eight years, including the last five in FCPA hyperdrive, the DOJ (in tandem with the SEC) has plenty to report.

The OECD’s Phase 3 questionnaire is 13 pages of intense accountability — the instructions for it are 110 pages. In 2002 — still sleepy days for the FCPA — the OECD’s Working Group on Bribery Phase 2 evaluation report needed 53 pages for the U.S. response. This year’s inspection covers the busiest stretch in FCPA history. It’s easy to imagine the DOJ folks scrambling to assemble their Phase 3 deliverable by the month-end deadline. We’re guessing a fulsome response could bury the FCPA team for six to eight weeks at least.

Under OECD procedures, the country being inspected is supposed to assemble expert witness panels for the examiners to speak with during the onsite visit. And to supplement the questionnaire, the OECD’s lead examiners typically come up with country-specific questions that are eventually made public. It all takes work.

in 2005, the U.S. drafted its follow-up written report on its implementation of recommendations made during Phase 2. The report, authored by the U.S. government, can be found here.

Meanwhile, there are some signs of life. The DOJ’s FCPA unit doesn’t typically announce international cooperation. But a few days ago a member of the Russian Duma apparently leaked news that the Justice Department had just delivered to its Russian counterpart documents concerning the Daimler investigation.