When Kyle Sheahen wrote in this space about how useless the FCPA’s two affirmative defenses are, he kicked up a storm, especially about promotional expenses. Some readers agreed and others didn’t (here and here). Here’s Kyle’s reply:
Dear FCPA Blog,
My thanks to everyone who responded with posts and comments. As Tom Fox thoughtfully said, the debate about promotional expenses is both useful and important, particularly because many corporations construct compliance programs in accordance with the language of the defense.
My article attempts to identify the parameters of permissible conduct as defined by enforcement actions and DOJ opinions. But as another commenter said, determining what payments are “reasonable” for purposes of the defense remains an open question for individuals and corporations seeking to comply with the FCPA.
Further, while the promotional expenses defense is a useful (albeit flawed) compliance tool, it offers little protection for FCPA defendants facing an enforcement action. As I asked in my article, how would a defense permitting only “reasonable and bona fide” payments help FCPA defendants when the government must allege that the payments were made corruptly? Or as one commenter put it, “it is a non-sequitur to say that defenses ‘work’ – just not ‘at trial.’ Defenses that do not work ‘at trial’ are not defenses at all.”
While the promotional expenses defense provides some inconclusive guidelines for compliance with the FCPA, it doesn’t provide a meaningful defense to an enforcement action. That’s the problem Congress should fix.
Thanks again for providing a forum for this debate and I welcome any further comments or emails.
All the best,