Washington, DC (June 14, 2011) – There was little disagreement at a Congressional hearing today that there has been a significant ramp up in recent years of prosecutions and fines under the Foreign Corrupt Practices Act of 1977 (FCPA), a law whose original purpose was to prohibit American people and corporations from bribing foreign officials in exchange for business opportunities. Indeed, by the close of testimony, Rep. Jim Sensenbrenner (R-WI), chairman of the Subcommittee on Crime, Terrorism and Homeland Security of the House Judiciary Committee, expressed an intention to pursue legislation to address FCPA issues raised at today’s hearing.
With the Department of Justice deploying this instrument of the criminal law with ever greater frequency and consequences, the FCPA’s significant shortcomings have come into starker relief and have become a cause of increasing concern in America’s legal and business communities. Shana-Tara Regon, the director of white collar crime policy at the National Association of Criminal Defense Lawyers (NACDL), brought the attention of Congress to the manifest lack of predictability of conduct that runs afoul of the FCPA. Regon’s testimony also explored the absence of clarity concerning key terms in the law, including the fundamental issue of who qualifies as a “foreign official,” an issue that arises in jurisdictions the world over where, for example, corporations with whom Americans are doing business are themselves state-owned in whole or in part. Regon also called attention to applications of the law that undermine a key element in the criminal law – an intent, or mens rea, requirement.
In addition to NACDL’s Regon, the subcommittee also heard testimony from Hon. Michael Mukasey, former attorney general now partner at Debevoise & Plimpton LLP; Greg Andres, deputy assistant attorney general, Criminal Division, U.S. Department of Justice; and Mr. George Terwilliger, partner at White & Case LLP.
Regon explained the manifold legal problems with the FCPA, including the “vast disagreement and uncertainty about the meaning of many of the key provisions”:
Because there has been so little judicial scrutiny of FCPA enforcement theories, right now the FCPA essentially means whatever the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) say it means….In addition, because the reach of the FCPA is so vast and its provisions so amorphous, DOJ now oversees and regulates virtually all American companies and individuals seeking to do business abroad in ways those who created the FCPA surely never intended or envisioned.
In addition to lack of clarity concerning what conduct is proscribed by the FCPA, Regon pointed out the very real practical, economic consequences that flow from this type of flawed legislation:
[P]unishing American businesses who are acting in good faith and throwing in jail supervisors who had no way of knowing about a payment half a world away could not have been what Congress intended thirty years ago when it drafted this law. Nor can that be a good-sense approach in this difficult economic climate that has cost many Americans their jobs and imperiled our nation’s status in the global economy.
A copy of NACDL’s testimony is available at: https://judiciary.house.gov/wp-content/uploads/2011/06/Regon05142011.pdf
All of the witnesses’ testimony are available at: https://judiciary.house.gov/hearing/hearing-on-the-foreign-corrupt-practices-act-0/.
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