President Elect Trump’s pick to lead the SEC is Jay Clayton. He wrote in a 2011 NYC Bar Association paper about the FCPA. The paper addressed the “lasting harm to the competitiveness of U.S. regulated companies” due to the “current anti-bribery regime.”
White-collar defense lawyer Matt Kaiser wrote in Above the Law that based on the 2011 paper, “there’s pretty good reason to think that Clayton may not be the biggest friend to continued aggressive enforcement of the FCPA.”
But isn’t all this similar to when Andrew Weissmann was appointed as Chief of the DOJ Fraud Section a year ago?
In 2010, Weissmann — in private practice after serving on the DOJ’s Enron Task Force — co-wrote a white paper for the U.S. Chamber of Commerce that said overzealous FCPA enforcement was hurting private citizens and corporations.
The 2010 paper advocated creating a compliance or so-called “good-faith” defense for the FCPA, and requiring “willfulness” for corporate criminal liability (that is, limiting the application of respondeat superior). The paper also suggested limiting successor liability for acquiring companies and narrowing the definition of “foreign official” to exclude employees of state-owned enterprises.
As reported by the FCPA Blog in 2009, Weissmann had also co-written an amicus brief for the Chamber of Commerce in an unsuccessful challenge to the doctrine of respondeat superior — i.e., holding companies responsible for a wide range of criminal acts of employees. In that case — United States v. Ionia Management, S.A.. in the U.S. Court of Appeals for the Second Circuit — Weissmann argued “that a misreading of a 100-year old Supreme Court case, New York Central v. U.S., had made it way too easy to impute criminal liability to corporations,” the FCPA Blog said.
(My thanks to the Editor of the FCPA Blog for his keynote talk about respondeat superior at the FCPA Blog NYC Conference 2016, which helped me better understand the issue and its impact on FCPA enforcement).
Because of Weissmann’s prior advocacy to limit the FCPA, many thought his appointment as Chief of the DOJ’s Fraud Section would result in less FCPA enforcement. That didn’t happen. Instead, at the close of his first year on the job, we saw the biggest 365 days in FCPA enforcement history.
Weissmann is also credited with creating the DOJ Pilot Program in April 2016. That program is intended to encourage companies to self report FCPA offenses and cooperate with the DOJ. How do we know Weissmann was involved in the creation of the Pilot Program? He signed the memo!
I heard Andrew Weissmann speak last year, after his appointment as Chief of the DOJ’s Fraud Section. If you were a latecomer to the panel, you might have wondered if you were listening to a compliance or enforcement leader. It was clear in Weissmann’s discussion that his experience from both the public and private sectors were brought to his current work as a proponent for robust FCPA enforcement.
When he was a lawyer for the Chamber, Weissmann was a strong advocate. When he led the publication of the FCPA Pilot Program, he was again a strong advocate. That doesn’t mean there are two Andrew Weissmanns. Rather, it means he’s a skilled and experienced lawyer who’s a champion for his client, be it public or private.
Now Jay Clayton is leaving his partnership at Sullivan & Cromwell to lead the SEC. In private practice, as part of his governance and regulatory work, he represented companies in FCPA investigations. So he certainly has a deep understanding of both sides of the enforcement challenge.
In theory, that would seem to be a great asset going in as the Chair of the SEC. In 2011, when he wrote the NYC Bar Association paper, it was a good time for a lawyer in private practice to ask if U.S. companies were being adversely impacted by FCPA enforcement, and by countries that had weak or non-existent anti-bribery regimes.
But Clayton wrote that 2010 paper well before the wave of global anti-bribery cooperation that has largely focused on non-U.S. entities, including Alstom, VimpelCom, Odebrecht, 1MDB and FIFA. Let’s remember that in 2010 Switzerland was still the icon of tax avoidance and is now a robust partner to AML enforcement and law enforcement cooperation. The UK Bribery Act was only months old and its future was uncertain. Much of Europe was still resisting overseas bribery enforcement, leaving the United States to fight corruption on its own. It’s a much different world today.
I’m not wading into any partisan debate about FCPA enforcement after January 20. The better course, I think, is to wait a bit and see what actually happens.
Richard Bistrong is a contributing editor of the FCPA Blog and CEO of Front-Line Anti-Bribery LLC. In 2010 he pleaded guilty to a conspiracy to violate the FCPA and served fourteen-and-a-half months at a U.S. federal prison camp. He now consults, writes and speaks about compliance issues. In 2015 he was named one of Ethisphere’s 100 Most Influential in Business Ethics. He can be contacted by email here and on twitter @richardbistrong.