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Has Fix-It Time Arrived?

What are the odds the next Congress will amend the FCPA?

Not bad, we think.

The U.S. Chamber of Commerce is pushing for it, and Andrew Weissmann, formerly from the DOJ’s Enron Task Force and now in private practice, is helping out. Most important, the DOJ is doing its part by clocking lots of mega-settlements that are making headlines.

Echoing our Top Ten list (here and here), Weissmann’s paper, co-written with Alixandra Smith, says the overall dollar amount of the top ten FCPA settlements has reached $2.8 billion. And five of the top ten have occurred in 2010, with the remaining five since 2007.

If Andrew Weissmann’s name is familiar, it’s because he’s the guy who co-wrote the excellent amicus brief for the Chamber in United States v. Ionia Management, S.A., an unsuccessful challenge in the U.S. Court of Appeals for the Second Circuit to respondeat superior.  He argued, among other things, that a misreading of a 100-year old Supreme Court case, New York Central v. U.S., has made it way too easy to impute criminal liability to corporations.

In his new paper, Weissmann argues that overzealous FCPA enforcement is hurting private citizens and corporations.

Citing Frederic Bourke’s prosecution and conviction — currently under review by the Second Circuit — he says “the DOJ has pressed the limits of enforcement.”

The government introduced circumstantial evidence to demonstrate that Bourke should have known that his business partner was paying bribes in Azerbaijan. The DOJ received a jury instruction that allowed the jury to convict Bourke based not on what he actually knew, but rather on what he “suspects.” This jury instruction reflects the expansive reading the DOJ has been giving to the FCPA’s knowledge requirement.

As for corporate defendants, he uses “the DOJ’s aggressive pursuit of BAE Systems PLC [as] a further indication of how far the DOJ is willing to expand the scope of FCPA enforcement.” BAE’s bribery occurred entirely outside the U.S., he says, throwing into question the jurisdictional nexus.

“The DOJ nevertheless aggressively pursued the BAE investigation as an FCPA matter and ultimately obtained a costly settlement for BAE along with a felony plea,” Weissmann says.

He also raises the problem of follow-on private civil litigation. As we’ve said, corporations are completely defenseless in FCPA prosecutions because of respondeat superior. And once they settle criminal and civil charges with the government, which they’re always forced to do, they’re sitting ducks for private civil litigation.

Among the changes to the FCPA the paper suggests are:

Creating a compliance or so-called “good-faith” defense

Requiring “willfulness” for corporate criminal liability (that is, limiting the application of respondeat superior)

Limiting successor liability for acquiring companies

And narrowing the definition of “foreign official

“Restoring Balance: Proposed Amendments to the Foreign Corrupt Practices Act” can be downloaded here.

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1 Comment

  1. Andrew Weissmann's name is familiar because he was not only the director of the Department of Justice's Enron task force but also the DOJ prosecutor that indicted Arthur Andersen. I suspect he knows a lot about prosecutorial abuse and the ease of prosecuting corporations (and the follow-on civil liability). It's interesting to note that he and Mr. Thompson, he of the famous DOJ "Thompson memo," have changed their points of view in dramatic fashion since joining the private sector.

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