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Is The Government Listening?

By T. Markus Funk and Caryn Lara Trombino

U.S. enforcement efforts lead the charge against global public corruption. But as recent posts on the FCPA Blog suggest, America’s efforts are still, in many ways, a work in progress. Here’s why.

In the weeks following the October release of the OECD’s Phase 3 Report, praise of U.S. enforcement has been countered with sharp criticism from the U.S. Chamber of Commerce.

In its paper “Restoring Balance: Proposed Amendments to the Foreign Corrupt Practices Act,” the Chamber argues that the FCPA’s textual ambiguity, coupled with an overly-expansive interpretation of U.S. enforcement authority, has spawned an enforcement environment hostile to U.S. businesses. Notably, even the otherwise laudatory OECD report echoes some of the same critiques. 

The central theme of the Chamber of Commerce’s complaints is that, despite the explosive rise in FCPA enforcement, there is minimal judicial oversight over deferred prosecution agreements, and a shortage of substantive judicial rulings on the meaning of the FCPA’s more controversial (and broadly-worded) provisions. Indeed, the primary statutory interpreters of the FCPA’s provisions are the DOJ Fraud Section and the SEC—which effectively means that U.S. regulators serve not only as prosecutors of FCPA matters, and also in a sense as “judges,” in that they rather routinely control case disposition.

The Chamber of Commerce argues further that U.S. enforcement agencies are overly aggressive in their reading of the law, in their DOJ opinion releases, and in their exercise of prosecutorial discretion. (The DOJ, for example, has recently expanded its definition of criminal FCPA mens rea to encompass culpability based on “conscious avoidance,” and has also begun to expand its jurisdictional nexus.)

The modifications proposed by the OECD and the Chamber of Commerce are designed, at bottom, to help identify for businesses what conduct is legal and what is illegal. Many agree with the Chamber of Commerce’s position that the FCPA’s present ambiguity is chilling to U.S. business. Indeed, several companies have reportedly opted to cease foreign operations in the face of uncertain FCPA enforcement. 

Adding some fuel to the fire, the U.S. recently suffered a much-publicized drop in ranking in global anti-corruption watchdog Transparency International’s annual Corruption Perceptions Index. While the Index offers little substance or commentary to support the decline, and while its methodology can be questioned, some commentators have remarked that the drop in rankings can be read to point out an “integrity gap” between U.S. global anti-corruption efforts on the one hand, and domestic anti-corruption efforts on the other.  

America’s anti-corruption efforts are outstanding. As recent events make clear, however, there’s plenty of room for improvement.


Markus Funk is a partner and Caryn Lara Trombino is a senior associate in Perkins Coie’s Investigations and White Collar Defense Group. Markus can be reached here and Caryn here

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1 Comment

  1. The US Chamber of Commerce soils its credibility with its claim that DOJ is aggressively reading the FCPA and expanding the definition of the law's mens rea requirement. It was Congress that included the following provision in the statute itself:

    When knowledge of the existence of a particular circumstance is
    required for an offense, such knowledge is established if a person is aware of a
    high probability of the existence of such circumstance, unless the person
    actually believes that such circumstance does not exist.

    15 USC s 78dd-2(h)(3)(B).

    Moreover, outside of the FCPA, the "conscious avoidance" or "deliberate ignorance" doctrine is a longstanding, judicially-created gloss applied to all kinds of federal criminal statutes that require the government to prove the element of knowledge, e.g., importation of controlled substances.

    While it is possible that some of the Chamber's proposed reforms may have some merit, it should not seek to premise them on false notions of overreaching government agents.

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