The SEC has a new chief to enforce the FCPA. His name is Charles Cain. And what’s important to him is leveling the playing field.
In an SEC statement Thursday announcing his promotion, Cain himself said:
“I look forward to building upon the important work the unit has done to combat corruption and level the playing field globally.”
In the FCPA world, leveling the playing field has a couple of meanings.
It can mean prosecuting any companies that pay bribes, so that compliant companies can compete fairly for business.
But to American companies, leveling the playing field also has a narrower meaning — prosecuting foreign companies that pay bribes so Americans can compete for business overseas.
Which of those two meanings did Cain have in mind Thursday when he talked about leveling the playing field globally?
He’s been at the SEC for 18 years and joined the FCPA unit when it was created in 2010. Thursday’s statement about his promotion listed some enforcement actions Cain “spearheaded.”
Mentioned were Telia (Sweden), VimpelCom (Dutch), Magyar Telekom (Hungary) and Deutsche Telekom (Germany). The statement also referred to enforcement actions against three former Magyar Telekom executives — all Hungarians.
None of the companies and people mentioned were American.
Cain co-authored the 2012 DOJ-SEC Resource Guide. For that work he was deservedly honored, winning a top SEC prize in 2013 for his “scholarship and professional expertise.” So we know he chooses his words with care.
In the Resource Guide that he co-wrote, the playing field plays a big role. Sometimes it clearly refers to everyone everywhere — “we want a level playing field for all honest companies.” Other times it’s a warning directed at foreign companies, telling them not to use bribery to hurt their U.S. competitors — “we want a level playing field for U.S. companies.”
The introduction to the Resource Guide talks to all companies:
Congress enacted the U.S. Foreign Corrupt Practices Act (FCPA or the Act) in 1977 in response to revelations of widespread bribery of foreign officials by U.S. companies. The Act was intended to halt those corrupt practices, create a level playing field for honest businesses, and restore public confidence in the integrity of the marketplace.
The next page again talks to all companies:
As Congress recognized when it passed the FCPA, corruption imposes enormous costs both at home and abroad, leading to market inefficiencies and instability, sub-standard products, and an unfair playing field for honest businesses.
A page later, however, foreign companies receive a special warning:
DOJ and SEC share enforcement authority for the FCPA’s anti-bribery and accounting provisions. They also work with many other federal agencies and law enforcement partners to investigate and prosecute FCPA violations, reduce bribery demands through good governance programs and other measures, and promote a fair playing field for U.S. companies doing business abroad.
The very next page again warns foreign companies:
Besides enforcement efforts by DOJ and SEC, the U.S. government is also working to address corruption abroad and level the playing field for U.S. businesses through the efforts of the Departments of Commerce and State.
The conclusion of the Resource Guide goes back to a more general tone:
The FCPA was designed to prevent corrupt practices, protect investors, and provide a fair playing field for those honest companies trying to win business based on quality and price rather than bribes.
So the Resource Guide is evenhanded. But it acknowledges a separate category of the level playing field that calls out foreign companies and executives. (And let’s remember that seven of the top ten FCPA cases of all time involve non-U.S. companies.)
We’ll see over the months and years ahead what comes out of the SEC under Cain’s leadership of the FCPA Unit.
For sure anyone who might use bribes to tilt the playing field their way should beware, whether they’re Americans or not. But perhaps non-U.S. companies and people should pay special attention. Because it seems that Charles Cain and others have been paying special attention to them.
Richard L. Cassin is the publisher and editor of the FCPA Blog.