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Despite some expectations to the contrary, policyholders are generally finding little change in the Trump administration’s pursuit of potential violators of the Foreign Corrupt Practices Act, the federal law that prohibits bribing foreign government officials.
In a 2012 interview, President Trump had described the FCPA as a “horrible law” that “puts us at a huge disadvantage.” But the U.S. Department of Justice and the Securities and Exchange Commission, which jointly enforce the law, continue to actively pursue FCPA cases, experts say.
The administration’s motivations in continuing past administrations’ policies include maintaining a level playing field for U.S. companies, keeping pace with foreign regulators’ own enforcement activities and the revenue FCPA fines can generate, according to experts.
One development that may affect FCPA cases is an adjustment to the Justice Department’s focus on pursuing individuals in civil and corporate enforcement issues, experts say.
“It’s hard to say that there’s a particular Trump administration FCPA policy that’s somehow markedly different from prior administrations’ policies,” said Mark Mendelsohn, a partner with Paul, Weiss, Rifkind, Wharton & Garrison LLP in Washington. “Enforcement of the FCPA remains overall a high priority of the DOJ.”
Machua Millett, Boston-based chief innovation officer for Marsh LLC’s FINPRO unit, said, “Overall, the general interest in enforcing the FCPA remains very strong.” There is a desire to try “to maintain a level playing field for companies’ competitiveness in jurisdictions where bribery might be considered more common.”
The FCPA has generated billions of dollars in revenue for the U.S., much of it from foreign countries, said M. Scott Peeler, New York-based head of Arent Fox LLP’s government enforcement group and white-collar co-practice leader.
Another factor is “many other countries have increased their level of enforcement internationally,” which has created an “institutional inertia” from a global perspective, said Jared E. Dwyer, a shareholder with Greenberg Traurig LLP in Miami.
Countries with which the United States has been cooperating in bribery cases include France, Brazil, Germany, Spain and the United Kingdom, he said.
U.S. regulators “are putting a lot of energy” into building and strengthening relationships with foreign regulators in corruption cases, Mr. Mendelsohn said.
The U.S.’s remission of some of the money collected to foreign governments “has been a powerful incentive to cooperate with the U.S.,” Mr. Peeler said.
“It’s really hard to put yourself in the position that you’re trying to combat terrorism, prohibit bribes and corruption,” and be critical of the FCPA, said Shawn M. Wright, a partner with Blank Rome LLP in Washington.
Meanwhile, Deputy Attorney General Rod J. Rosenstein announced an adjustment of the department’s policy with respect to individuals in a Nov. 29 speech before the American Conference Institute’s 35th International Conference on the FCPA in Oxon Hill, Maryland.
In her 2015 memo, then-Deputy Attorney General Sally Quillian Yates had stressed individual responsibility in corporate wrongdoing.
Mr. Rosenstein said while the department will continue to pursue individuals responsible for wrongdoing, it is no longer necessary to identify every employee who played a role in the alleged misconduct to receive cooperation credit. “We want to focus on the individuals who play significant roles in setting a company on a course of criminal misconduct,” he said.
The change affects False Claims Act as well as FCPA cases.
There “has been a debate now for years in the FCPA legal and compliance space about the value of cooperation and when should a company cooperate and when should it resolve things itself,” Mr. Millett said. The Rosenstein speech sends “the right message to encourage companies to do appropriate compliance and investigations,” he said.
The idea is to encourage self-disclosure by companies, without requiring them to “chase down every rabbit hole,” said Anthony J. Phillips, a principal with McKool Smith P.C. in Houston.
However, “We’re going to have to ferret out what ‘substantial’ individuals really means,” said Ms. Wright.
“It remains to be seen whether that, in practice, is much of a change or not,” said Laura N. Perkins, a partner with Hughes Hubbard & Reed LLP in Washington and former assistant chief of the FCPA unit of the DOJ’s criminal division’s fraud section.
Best practices to avoid FCPA claims include having written policies and procedures, designating a corporate official who is held responsible for compliance, training employees and establishing whistleblower hotlines, said Daniel B. Pickard, a partner with Wiley Rein L.L.P. in New York.
At least 80% of FCPA-related claims are somehow tied to third parties or joint venture partners, experts say.
In working with third parties, firms must employ effective due diligence, said Kevin T. Abikoff, a partner with Hughes Hubbard.
“There has to be a clear understanding of what the person or entity is going to be doing for you,” he said.
Coverage for Foreign Corrupt Practices Act claims is generally available under directors and officers liability policies.