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FCPA Blog Daily News

« Defending The Defense | Main | Watching For Whistleblowers »
Wednesday
Aug182010

The Law Ain't Broke

On Monday, Kyle Sheahen told us how useless the FCPA's two affirmative defenses are. He suggested that Congress fix the local-law and promotional-expenses defenses.

But at least two readers, one from the private sector and another from the DOJ (apparently), dissented. Both believe the defenses work, just not at trial. Here's what they had to say.

From Compliance Officer, August 16:

While the promotional expenses defense might not be useful at trial, it is the underpinning for a lot of companies' compliance programs around gifts. Companies must give gifts when operating internationally; it is simply too much a part of a lot of cultures to avoid. When operating in the public sector, however, these gifts present FCPA issues.

Companies use the promotional expenses defense to justify their permissive gift-giving policies.

From a compliance perspective, the problem with the defense isn't its utility---or lack thereof---at trial, but rather that it permits gifts during the course of the contracting process. When I'm analyzing a gift, I look at the potential for corrupt intent, and the affirmative defense. During the contracting process, you're more squarely under the defense, but to my mind, the optics are worse when looking at potentially corrupt intent. It looks like you're giving the gift to get the contract.

But if the gift is just to "maintain the relationship" (a phrase I hear quite often), you're less covered by the defense, but there's less chance that you're trying to get a quid pro quo.

And from Federal Prosecutor, August 17:

One cannot deduce from the lack of successful uses of statutory defenses at trial the conclusion that those defenses are meaningless.

In practice, trials take place in but a small subset of cases brought, cases brought are but a small subset of investigations, investigations look at but a small subset of real-life situations, and only a small subset of real-life situations are going to raise these particular factual issues in the first place. The ability of these statutory defenses to steer behavior within acceptable limits and to ward off prosecution cannot be judged by how many trial defendants get off on them. There is no need for a legislative fix just to even the odds for trial defendants.

That the law ain't broke is best exemplified by the author's dismissive discussion of OECD's suppression of affirmative defenses based on extortion. This is a considered policy choice to flush out corruption by giving no quarter to businessmen who wittingly profit from it. Permitting a defense based on extortion would simply take the heat off of businessmen to comply with the law, to report corrupt officials squeezing them, and to blow the whistle on their competitors who take the easy way. The end result of such a defense -- more corruption. Admittedly, though, there may be more exciting trials for law students to follow.

Reader Comments (1)

Anyone who has ever labored in the humble vineyards of criminal defense law knows that it is a non-sequitur to say that defenses "work" -- just not "at trial."

Defenses that do not work "at trial" are not defenses at all.

It is a tad disheartening that our federal prosecutor friend thinks it is good that everybody gets convicted under the statute. If he ever gets out into the real world, he might discover a need for nuance in this area of law.
August 18, 2010 | Unregistered CommenterHadley von Haddleburg

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