A compliance lesson from middle school
Tuesday, December 4, 2012 at 12:52AM
Richard L. Cassin in Business Nexus Element, David Kay, Defenses, Douglas Murphy, FCPA Guidance

The seventh grade shop teacher said, 'Always cut the wood on the way side of the line. That protects against mistakes. You can shorten a board, but you can never make it longer.'

We thought of that wisdom while listening to some of the talk about the new FCPA guidance. Many are saying the DOJ and SEC didn't eliminate the 'uncertainty.' That there are still gray areas in the FCPA. That knowing what bribery is permitted or outlawed still isn't crystal clear.

What to do in the face of uncertainty about the FCPA? Always cut the wood on the way side of the line.

That was exactly the lesson from an FCPA case that went to the U.S. court of appeals. David Kay and Douglas Murphy, in their 2002 criminal trial on FCPA charges, argued that bribes to reduce their company's taxes in Haiti couldn't violate the FCPA. Those bribes, they said, weren't really about 'obtaining or retaining business' and so weren't covered by the antibribery provisions.

The trial court agreed and dismissed the case. But the Fifth Circuit shot them down.

'A man of common intelligence,' it ruled, 'would have understood that . . . in bribing foreign officials, [Kay and Murphy were] treading close to a reasonably-defined line of illegality. . . . Defendants took this risk, and splitting hairs . . . does not allow them to argue successfully that the FCPA’s standards were vague.'

When a federal appeals court calls defendants hair splitters, we should all understand that putting the FCPA under a lawyer's microscope is a bad idea. Risk-taking interpretations aren't wise when the margin of error throws you into felonious behavior.

So how are we to comply with an 'unclear' FCPA? By avoiding doing things that might violate it.

In other words, always cut the wood on the way side of the line.

Article originally appeared on The FCPA Blog (https://www.fcpablog.com/).
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