Gifts, travel and entertainment, foreign officials, successor liability, and effective compliance programs.
They’re among the topics covered by the new 120-page joint DOJ and SEC guidance on the FCPA.
In the fact sheet accompanying the guidance, the DOJ summarized its position on those topics.
Today we’re using the DOJ’s words — because we can.
The guidance includes:
o An extensive discussion regarding the provision of gifts, travel and entertainment, including a hypothetical addressing the issue. This discussion includes the fact that DOJ and SEC have not focused our enforcement efforts on the payment of reasonable travel and entertainment expenses, instead bringing cases where the corrupt payment of travel and entertainment expenses occurred in conjunction with other conduct reflecting systemic bribery or other clear indicia of corrupt intent.
o A section addressing the question “Who is a Foreign Official” and what constitutes a department, agency or instrumentality of a foreign government. Among other things, this section notes that, as a practical matter, an entity is unlikely to qualify as an instrumentality of a foreign government if a government does not own or control a majority of its shares. The section also explains the limited circumstances in which DOJ or SEC enforcement actions have involved foreign officials employed by entities in which a foreign government has less than 50 percent ownership. In those actions, there have been clear indicia that the foreign governmental controls the entity at issue.
o A lengthy discussion of successor liability that includes two hypotheticals – one in which the acquired company was not previously subject to the FCPA, one in which it was – as well as practical tips to reduce the risk of FCPA violations in the merger and acquisitions context. The discussion includes the fact that DOJ and SEC only take action against successor companies in limited circumstances, generally in cases involving egregious and sustained violations or where the successor company directly participated in the violations or failed to stop the misconduct from continuing after the acquisition. More often, DOJ and SEC only bring enforcement action, if any, against the predecessor company.
o A section addressing effective corporate compliance programs that discusses the hallmarks of an effective compliance program while making clear that there is no one-size-fits-all program, and that effective compliance programs are usually tailored to a company’s specific business and to the risks associated with that business. The section discusses the common-sense and pragmatic factors that DOJ and SEC consider when evaluating a company’s compliance program.
‘A Resouce Guide on the Foreign Corrupt Practices Act’ from the DOJ and SEC is available here.