Can a corporation be criminally responsible under the FCPA’s anti-bribery provisions for payments it doesn’t know about? It sounds strange but the question comes up in a common scenario.
An employee pays bribes out of his or her own pocket to get more business for the company. There’s a strict policy forbidding all payments to foreign officials. And that policy is part of a compliance program that’s effective in every way — except it can’t stop the employee’s secret, self-funded pay-offs. We’ll assume the employee can be prosecuted. But what about the company?
Yes, it’s on the hook too, thanks to the American legal doctrine of respondeat superior. But before we get to that, let’s look at the FCPA itself.
The word “corruptly” is used in the statute every time an anti-bribery offense is described. Individuals and corporations, the law says, violate the FCPA when they act “corruptly.” When they pay or promise to pay a foreign official anything of value to assist anyone in obtaining or retaining business. See, for example, 15 U.S.C. § 78dd-2.
The Justice Department agrees that an offense under the antibribery provisions requires a corrupt intent: “Under the FCPA, the person making or authorizing the payment must have a corrupt intent.” See the United States Attorneys’ Manual, Title 9, Criminal Resource Manual (CRM) §1018 “Prohibited Foreign Corrupt Practices” (November 2000) here.
But there’s more. Although the FCPA doesn’t distinguish between human beings (natural persons) and corporations (juridical persons), American common law does. It holds corporations criminally responsible for secret behavior by an employee that violates the company’s compliance program. For juridical persons, in other words, respondeat superior takes the “corrupt” out of the Foreign Corrupt Practices Act and replaces it with strict liability.
Here’s how the Justice Department described respondeat superior as recently as August 2008:
The existence of a corporate compliance program, even one that specifically prohibited the very conduct in question, does not absolve the corporation from criminal liability under the doctrine of respondeat superior. See United States v. Basic Constr. Co., 711 F.2d 570, 573 (4th Cir. 1983) . . . As explained in United States v. Potter, 463 F.3d 9 (1st Cir. 2006), a corporation cannot “avoid liability by adopting abstract rules” that forbid its agents from engaging in illegal acts, because “[e]ven a specific directive to an agent or employee or honest efforts to police such rules do not automatically free the company for the wrongful acts of agents.” Id. at 25-26.
See 9 CRM §28.800 (B) Comment (here).
The DOJ says it wants companies to have compliance programs that work. And the Federal Sentencing Guidelines give companies credit when they have effective compliance programs. Despite that, corporations can still be charged with crimes committed by employees who acted in secret and in violation of company policies. An effective compliance program is always a good thing — but it’s no defense under the law.
Good topic to explore, but I'm not convinced that your 2008 quote supports a strict liability reading. The quote rules out a defence based on pro forma corporate policy; think Siemens. It doesn't seem to rule out a defence based on a risk-based, actively reviewed and effectively implemented corporate policy that the employee subverted to pay bribes. Maybe someone with insight into a relevant NPA can confirm whether this defence has ever found favour with DoJ?
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