On July 3, 2020, the US Department of Justice and the US Securities and Exchange Commission released the second edition of A Resource Guide to the US Foreign Corrupt Practices Act. The Resource Guide, first published in November 2012, is intended as a public overview of Foreign Corrupt Practices Act and its enforcement. It lays out the statutory elements of the FCPA, including definitions and jurisdiction, describes the elements of an effective corporate compliance program, and discusses the enforcement of the FCPA, including the factors considered by the DOJ and the SEC when evaluating potential charges and penalties.
The second edition of the Resource Guide maintains a similar structure to the first edition, and much of the substance remains the same. However, there are some significant developments. First, and most significantly, the Resource Guide incorporates and refers to a number of enforcement policies that the DOJ has adopted or updated since the first edition, including guidance on the appointment of independent monitors, guidance as to how the DOJ evaluates corporate compliance programs, and the FCPA Corporate Enforcement Policy, which sets forth the factors that the DOJ will consider in determining whether to issue a declination or reduce penalties when a company self-discloses misconduct, cooperates with the DOJ, and remediates the misconduct.
Second, the new edition of the Resource Guide contains an updated discussion of the essential elements of an FCPA offense based on court decisions since the first edition. For example, the Resource Guide discusses the Eleventh Circuit’s decision in United States v. Esquenazi, which set out an analytical framework for determining when an entity will qualify as an “instrumentality” of a foreign government, such that its employees will be considered foreign officials for purposes of the FCPA. The updated Guide also has a discussion of the Second Circuit’s decision in United States v. Hoskins, in which the court held that individuals not directly covered by the FCPA’s anti-bribery provisions cannot be held liable for conspiracy to violate or aiding and abetting a violation of the FCPA’s anti-bribery provisions. The Guide also notes that a Northern District of Illinois case, United States v. Firtash, declined to follow the Hoskins line of reasoning.
Third, the Resource Guide contains additional examples from new cases and settlements. These key cases or settlements illustrate how the DOJ and the SEC have expanded the reach of the FCPA beyond traditional cash payments. For example, the second edition highlights one of a series of cases brought against financial institutions for providing internships or jobs to the sons and daughters of government officials. The DOJ and SEC brought these cases despite the fact that the primary benefit from the job or internship was to a family member of a government official and not to the government official himself or herself.
Fourth, the Resource Guide has added language to emphasize that in the mergers and acquisition context, an acquiring company may be able to avoid penalties when the target company has committed FCPA violations by swiftly integrating the target company into the acquiring company’s compliance program and remediating any past misconduct. Indeed, the second edition of the Resource Guide explicitly states that the DOJ and the SEC recognize that in some circumstances “robust pre-acquisition due diligence may not be possible” and that in such instances, the DOJ and the SEC will examine the “timeliness and thoroughness of the acquiring company’s post-acquisition due diligence and compliance integration efforts.”
Fifth, the updated Resource Guide clarifies the statute of limitations for criminal internal controls and books and records offenses. Under 18 USC. § 3301, enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, several offenses, including criminal violations of the accounting provisions, were deemed to be “securities fraud” offenses, with a statute of limitations of six years rather than the generally applicable five-year statute of limitations for criminal offenses. The Resource Guide also acknowledges the Supreme Court decision in Kokesh v. SEC, in which the Court held that because disgorgement is punitive in nature, it is subject to the five-year civil statute of limitations.
Sixth, the Resource Guide discusses the increasingly global nature of anti-corruption enforcement. It highlights in particular the DOJ and SEC’s stated goal of avoiding duplicate penalties, including penalties collected by foreign enforcement authorities, for the same conduct, which the Resource Guide notes the DOJ has memorialized in its policy against “piling on.” The Guide also discusses the enactment of a new anti-corruption law, Sapin II, in France and the adoption of “DPA-like” resolutions by the UK and French governments.