New Federal DOJ Guidance Not Likely To Relax "Aggressive" FCPA Stance, Says Attorney

ALEXANDRIA, Va., Sept. 25, 2012 /PRNewswire/ -- Tea-leaf readers who hoped that forthcoming federal Department of Justice (DOJ) guidelines would signal an eased approach to the enforcement of the Foreign Corrupt Practices Act  (FCPA) are likely to be disappointed, warned Michael Volkov, a shareholder in LeClairRyan's Alexandria office and a member of the national law firm's compliance, investigations and white collar criminal defense practice area team. But the DOJ may revisit some other aspects of its strategy, he noted.

"The DOJ will not retreat on its commitment to FCPA enforcement and encouraging anti-corruption compliance," the former federal prosecutor wrote in a Sept. 20 online column posted in the Expert Analysis section of White Collar, International Trade and Competition Law360. "The guidance will reiterate DOJ's public pronouncements and its aggressive enforcement program. It will deftly brush aside concerns that FCPA enforcement hinders U.S. companies' efforts to compete in the global marketplace."

However, the federal department will likely announce a relaxation in its policy regarding successor liability for the acquisition of firms that have previously violated the FCPA.

"The clues for this are all in DOJ's 2012 enforcement actions, including the recent Pfizer Inc. one," Volkov wrote. "The trend toward relaxation started in 2011 and has continued into 2012. Instead of holding acquiring companies accountable for the conduct of target companies, the DOJ will require companies to integrate target companies into compliance programs and impose a deadline in some situations. The DOJ will expect disclosures of any violations during this interim period but will be willing to forego any penalty so long as there is a commitment to addressing the problem through enhanced compliance measures and reporting obligations to the DOJ."

In the online article, "Predictions For DOJ's Upcoming FCPA Guidance," he also said there should be no surprises regarding Justice's definition of "Foreign Official," with the department maintaining the position that the term includes any private entity that is "controlled" through ownership or voting rights.

"Of course, depending on how the 11th Circuit rules, the DOJ may decide to change its analysis, although I expect the court to rule largely in the government's favor," Volkov wrote. "The DOJ's position will not be a shock to anyone but it will reflect only a slight retreat to the few cases in which parties agreed to settle with the DOJ where the state-owned enterprise did not have ownership or voting control of the entity defined as containing 'foreign officials."'

Volkov also said the odds are against a DOJ acceptance of a doctrine of "compliance defense" – or the argument that a company's pre-existing compliance policies and procedures and good faith efforts should be a defense if a non-executive employee or agent violates the FCPA. "A compliance defense will only come about if Congress adopts it and I see no chance of that in the foreseeable future," Volkov noted.

He also doubts that the DOJ will move to reform deferred prosecution agreements or non-prosecution agreements. "Assistant Attorney General Lanny Breuer recently defended the practice in a speech and the DOJ believes that critics of DPAs and NPAs have lost touch with reality," wrote Volkov. Although he thinks some re-examination may be warranted, "It is difficult to base such a program on a single result — the Anderson case and the collateral consequences," Volkov added. "However, in these difficult economic times where everyone is focused on jobs, there is little desire to re-examine this policy and the reasons for it."

The DOJ's forthcoming guidelines are also unlikely to address another matter that Volkov feels should be tackled: defining the benefits of voluntary disclosure. "It did not help the DOJ when a recent study was released showing that companies that decide to voluntarily disclose did not receive a tangible benefit in the ultimate penalty," Volkov noted. "That is a very disturbing finding and undermines an essential component of the DOJ's program. Some type of definition of the benefit is needed — prosecutors routinely do this in other criminal contexts, and the DOJ's FCPA prosecutors are more than capable of defining such benefits in advance."

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