We're With You On This One, Prof Koehler

Scholarship at its best can change things. It can cause judges to take a fresh look and lawmakers to fix problems. We hope Mike Koehler's new scholarship will do just that.

Koehler, an assistant professor of business law at Butler University, writes the excellent FCPA Professor blog. His latest work tackles the good faith defense for FCPA offenses.

As things now stand, the good faith defense doesn't exist. Koehler thinks it should.

Current U.S. law holds that if an employee violates the FCPA, his or her company is automatically responsible. It's called the doctrine of respondeat superior. Even if the employee went rogue, broke the company's own rules, and hid everything from others, the company is still on the hook. It can't fight and win so it settles. It may get 'sentencing credit' in the settlement for its compliance program. But it still usually has to admit wrongdoing and pay a big penalty.

Koehler wants to change that. In his opening paragraph, he gets right to it:

This article asserts that the current FCPA enforcement environment does not adequately recognize a company’s good faith commitment to FCPA compliance and does not provide good corporate citizens a sufficient return on their compliance investments. This article argues in favor of an FCPA compliance defense meaning that a company’s pre-existing compliance policies and procedures, and its good faith efforts to comply with the FCPA, should be relevant as a matter of law when a non-executive employee or agent acts contrary to those policies and procedures and in violation of the FCPA. This article further argues that a compliance defense is best incorporated into the FCPA as an element of a bribery offense, the absence of which the DOJ must establish to charge a substantive bribery offense.

We agree with Prof Koehler on the need for the good faith defense. It would give companies the best incentive to work hard at compliance. And if there's a downside to more compliance, we don't see it.

Mike Koehler's "Revisiting a Foreign Corrupt Practices Act Compliance Defense" (January 10, 2012), Wisconsin Law Review, forthcoming, can be downloaded at SSRN here.

Shifting The FCPA Reform Debate Into High Gear

By T. Markus Funk and M. Bridget Minder

Simmering throughout 2011, the robust FCPA reform debate can now be divided into a number of distinct drafting and public policy battle fields.

Our hope in writing a recent Bloomberg Law Report piece (available in pdf here) was to advance the dialogue. We examine (1) the core criminal law theory assumptions and (2) some of the public policy objectives driving the debate, including whether reforming the FCPA is advisable on public policy grounds, and the extent to which the position that foreign governments will view even modest FCPA reform as a signal to abandon wholesale their domestic anti-corruption efforts are justified.

(Having served two years in a post-conflict environment for USDOJ/State setting up domestic anti-corruption laws and enforcement mechanisms, the latter issue was of particular concern to one of the authors). 

In the article, we also make four suggestions for reforming the FCPA.

They are:

• Provide a sensible “adequate compliance procedures” defense

• Appropriately limit successor liability

• Establish a fitting scope of corporate liability for acts of a subsidiary

• Properly define “foreign official”

To round out the analysis, we take a closer look at the theoretical assumptions grounding recent critiques of the U.S. Chamber of Commerce's calls for reform.

In the end, all sides of the debate undeniably have a genuine, well-intentioned interest in balancing the noble pursuit of a corruption-free world against the values of fairness and transparency in our domestic laws and enforcement policies. 

We hope that 2012 will see us come closer to reaching consensus.

___________________

T. Markus Funk, a former federal prosecutor who is now in private practice and is the Co-Chair of the ABA's Global Anti-Corruption Task Force, and his Perkins Coie colleague M. Bridget Minder just authored "Bribery of Foreign Officials: The FCPA in 2011 and Beyond: Is Targeted FCPA Reform Really the “Wrong Thing at the Wrong Time”? in the Bloomberg Law Reports. It is available in pdf here.

The New Mens Rea: Guilt By Association

On his D&O Diary, Kevin LaCroix always hits the ball straight and long.

But for our money, his post yesterday, Liability Without Culpability: A Deeply Troublesome Trend, was one of his best shots ever.

He started from this week's Wall Street Journal article about Congress' enactment of numerous new laws imposing criminal liability regardless of intent. Then he moved on to examine what strict liability means to officers and directors not involved in the criminal conduct 'and of which they were not even aware.'

It's a troubling trend, LaCroix says, and is 'inconsistent with some of the most basic assumptions of a well-ordered society governed by law.'

Hear, hear.

Scholarship That Rocked The Boat

A few years ago, after a dozen or so enterprising law students asked me what FCPA-related topics were ripe for research, I answered with a post on the FCPA Blog.

My suggestions included: (1) respondeat superior—the legal doctrine imputing to corporate employers the criminal acts of employees; (2) the sad state of the Department of Justice’s Opinion Procedure Releases; and (3) the confusing condition of the FCPA’s promotional-expenses affirmative defense.

That was in the summer of 2008, six months before the blockbuster Siemens enforcement action and before the general explosion of FCPA enforcement. But law students, especially those editing and writing for law reviews, are always ahead of the curve. They can somehow sniff out the next big practice area. This time they were right again.

By the end of 2010, FCPA enforcement had increased tenfold and criminal penalties in FCPA-related cases amounted to half of all criminal penalties collected by the DOJ that year. . . .

-- From Courageous Correspondents: Recent Foreign Corrupt Practices Act-Related Scholarship that Rocked the Boat by Richard L. Cassin, 46 New Eng. L. Rev. On Remand 21 (2011), © 2011 New England School of Law, Boston, Massachusetts, available here.

On News Corp, Some Recommended Reading

Ellen Podgor on her White Collar Crime Prof Blog posted commentary called Murdoch and the Foreign Corrupt Practices Act: A Minefield.

As usual from Podgor, a professor at Stetson Law, it's a thoughtful post, full of the practical wisdom and technical knowledge that sets her apart.

Her take? Building an FCPA case against Murdock "would be like entering a minefield."

Issues abound, such as the intent behind the statute, extraterritoriality ('would this really be a case of policing U.S. actors'?), and the good-faith defense or lack thereof (one of her favorite topics), among others.

On due process, she quotes her contributing blogger, Lawrence S. Goldman: "As much as I would enjoy seeing Murdoch in the dock, so to speak, I think it would be a terrible stretch to punish conduct committed in Britain by British citizens bribing British citizens to invade the privacy of British citizens in Britain. Even Murdoch and News Corp. deserve due process."

The post is no defense of News Corp's alleged practices.

But it's Ellen Podgor once again defending the rule of law.