Legislative Changes to the FCPA: What Can We Expect?

Michael Volkov testifies before the Senate Judiciary Committee on FCPA EnforcementBy Michael Volkov
 
At the November 30, 2010 hearing before the Senate Judiciary Committee on FCPA Enforcement, Senators Klobuchar (D-MN) and Coons (D-DE) both indicated their intent to work on modifications to the Foreign Corrupt Practices Act to address some of the concerns raised by the business community.
 
They are close to introducing a bill. What will the bill do?  It may be a mixed bag of modifications, some that business like and some they may not. I expect the bill to include: (1) a “de minimis” exception for in-kind  gifts or other benefits which would create some type of safe harbor for gifts and hospitality; (2) a clarification of the term “instrumentality” as part of the definition of “foreign official” to reduce the application of the FCPA to private businesses which are partially owned by foreign governments.
 
Senators Klobuchar and Coons have indicated their concern that companies convicted of FCPA “conduct (not necessarily the specific offense to which they plead guilty (e.g. BAE’s plea to a false statement offense).  Congress has proposed modifications of the law to provide mandatory debarment of companies convicted of an FCPA offense. The House passed such a bill last year but the proposal died in the Senate. Senators Klobuchar and Coons may include such a proposal in their bill. 
 
What are the prospects for Congress to enact the bill? I think extremely low. Senate Judiciary Committee Chairman Leahy is unlikely to push such a bill.  Business may get more traction in the House, and I expect the House Judiciary Committee to hold a hearing on the subject. Whether it will turn into legislation or not, is not clear. Nor is the prospect for such a change likely to occur in the House.
 
The proposed legislation, however, is intended for another audience – the Justice Department. The hope is that as support gathers behind legislation and hearings that the Justice Department may address some of the problems identified by business by clarifying and changing its prosecution policies.  I will keep you posted on developments in this fast changing area.
 
Michael Volkov is a partner at Mayer Brown LLP in Washington, D.C. His practice focuses on white collar defense, compliance and litigation. He regularly counsels and represents clients on FCPA and UK Anti-Bribery Act issues. He can be contacted here.