DOJ guide and summary.docx

DOJ guide and summary.docx

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DOJguideandsummary

DOJ/SEC'sResourceGuidetotheU.S.ForeignCorruptPracticesAct:

JonesDaySummaryandAnalysis

December2012

Formanyyears,JonesDayhasadvisedmultinationalcorporationsandtheirboardsandexecutivesregardingcompliancewiththeU.S.ForeignCorruptPracticesAct.JonesDayhasled,andisleading,internationalinvestigationsregardingsuspectedviolationsoftheFCPA.OurexperiencedattorneyshaveappearedandarecurrentlyappearingbeforetheU.S.DepartmentofJustice,theU.S.SecuritiesandExchangeCommission,andotherfederal,state,andforeigngovernmententitiesonbehalfofclientsregardinganti-corruptionmatters.JonesDay'sbroadexperienceacrossawidevarietyofindustriesmakesuswellpositionedtounderstandtheparticularproblemscompaniesface.Moreover,ourexperiencedteamofformergovernmentattorneysandexperiencedtrialattorneys,our37officesaroundtheworld,andourOneFirmapproachprovideclientswithawealthofexperienceinhandlingglobalanti-corruptionmattersandcomplianceefforts.ThispublicationprovidesourcollectivethoughtsandobservationsontheDOJ'sandSEC'srecentFCPAguidancedocument.

JonesDayalsoregularlyassistsmultinationalcompaniesinavoidingproblemsbeforetheyarisebyhelpingthemtodesignandimplementeffectivecorporatecomplianceprogramsthatincludebest-in-classanti-corruptionmeasures.Weadvisecorporationsonhowtoconducteffectiveanti-corruptionduediligenceincorporatetransactions,andwedefendthecompany,theboardofdirectorsandindividualemployeesagainstallegationsofwrongdoingbythegovernmentorprivateplaintiffs.

TheJonesDayattorneyswhoworkontheseglobalanti-corruptionmeasuresandresponsesreviewedwithgreatinteresttherecentlyreleasedguidancefromtheDOJandSECregardingtheFCPA.MuchofwhatweseeinthedocumentechoestheconversationsthatwehaveonadailyandweeklybasiswithourcolleaguesintheU.S.enforcementcommunity,andcapturessomeofthemostfrequentquestionsposedtousbyourclients.Otherpiecesofinformationintheguidancearenewerand,wehope,willclarifyandmakemoreconsistentthepositionstakenbyprosecutorsandregulatorsinFCPAcases.

Enclosedforourclientsandfriendsareoursummaryobservationsregardingtheguidanceandourthoughtsaboutwherewegofromhere.Alsoenclosed,atthebackofthispublication,isashort"cribsheet"forclientsthatsummarizesthemainpointsintheguidanceandprovidespagenumbersforeaseofreference,asmanyclientshaveexpressedtousthattheyfindthe120-pagedocumenttoolongtodigest.

Wehopethatyouwillfindthesematerialshelpful,andthatyouwillcalloneofthemanyexperiencedJonesDaypractitionerslistedatthebackofthispieceifyouwishtodiscussfurther. 

CharlesCarberry

RichardDeane,Jr.

JonesDayCorporateCriminalInvestigationsPracticeLeaders

PeterRomatowski

RobertGaffey

JonesDaySecuritiesEnforcementandLitigationPracticeLeaders

DOJ/SEC'sRESOURCEGUIDETOTHEFOREIGNCORRUPTPRACTICESACT:

JonesDaySummaryandAnalysis

AfullyearafterpromisingwrittenguidanceregardingenforcementofandcompliancewiththeForeignCorruptPracticesAct,theU.S.DepartmentofJusticeandtheSecuritiesandExchangeCommissionissuedonNovember14,2012, AResourceGuidetotheU.S.ForeignCorruptPracticesAct （the"Guidance"）.The120-pagedocumenthasbeenrightlycriticizedforofferinglittlenewbywayofsubstance.Instead,theGuidanceisprimarilyacompilationofrestatedpolicypronouncementsissuedbyenforcementauthoritiesinothercontexts.Whileitaddresses"bigpicture"FCPAissues,theGuidanceisnotableprimarilyforwhatitdoes not say,belyingtheassertionbytheAssistantAttorneyGeneralthatthepublicationconstitutes"perhapstheboldestmanifestationof[thegovernment's]transparentapproachtoenforcement." 

TheGuidance:

WhatItSays

TheGuidancedoesnotbreaknewgroundbyofferinganynewpolicypronouncements,butitdoescontainusefulguidanceforcompaniesseekingtocomplywiththeFCPA.TheGuidanceprovidesacomprehensiveandeasilyreadsummaryofgovernmentpolicyontheFCPA.ItalsopullstogetherintoasinglelocationguidelinesthathadnotpreviouslybeenstatedclearlybyU.S.enforcementauthoritiesandguidelinesthathadonlybeenstatedorally.And,incertainrespects,theGuidanceprovidesavehiclefortheDOJandSECtostateexplicitlycertainpoliciesthatotherwisemustbeteasedoutofanecdotalinformationarisingfromcorporateprosecutions.

PermissibleBusinessCourtesies. Corporatecompliancedepartmentsoftenspendenormousamountsoftimeandeffortondefiningtheproperlimitstoandapprovingexpendituresontravel,entertainment,andgift-givinginvolvingputativeforeignofficials.Whenacompanyisdoingbusinessinaforeigncountrywithsubstantialgovernmentinvolvementintheprivateeconomy,theFCPAprovideslittlestatutorybasisfordistinguishingbetweenprohibitedcorruptpaymentsandlegitimatecorporatehospitality（allofwhichisintendedtoinfluencetherecipientforeignofficial）.Althoughtheamountsatissuetendtobesmall,thefrequencywithwhichtheissuearisesishigh,andtheavailablegovernmentguidanceontheissuehasbeenscant.

WhiletheGuidancedoesnotanswerallofthenaggingquestionsrelatingtobusinesscourtesies,itdoesforthefirsttimeprovideagovernment-sanctionedframeworkforevaluatingcorporatehospitality.Tostart,theGuidanceexplicitlyrecognizesthelegitimacyofthepractice,statingthat"[a]smallgiftortokenofesteemorgratitudeisoftenanappropriatewayforbusinesspeopletodisplayrespectforeachother."（pg.15）Ontheotherendofthespectrum,theGuidancestatesobviouslythatimproperbenefitsincludesuchthingsas"a$12,000birthdaytripforagovernmentdecision-maker"anda"triptoItalyforeight"officialsconsisting"primarilyofsightseeing"andincluding"$1,000in'pocketmoney'foreachofficial."（pg.16） 

Mosthelpfully,theGuidanceidentifiesthespecific"hallmarksofappropriategift-giving"asbeingthatthegiftis:

∙"[G]ivenopenlyandtransparently,"

∙"[P]roperlyrecordedinthegiver'sbooksandrecords,"

∙"[P]rovidedonlytoreflectesteemorgratitude,and"

∙"[P]ermittedunderlocallaw."

（pg.15）Inaddition,theGuidancespecificallysuggeststhatorganizations,particularlylargeones,useautomatedsystems"withclearmonetarylimitsandannuallimitations"inimplementingcomplianceprogramsrelatedto"routinegifts,travelandentertainment."（pg.58）Together,theseaspectsoftheGuidanceprovidearoadmaptocompaniesseekingtoavoid"[d]evotingadisproportionateamountoftimetopolicingmodestentertainmentandgift-giving,"therebyfreeingthecompliancedepartmenttofocusonmoresignificantexpendituresandriskareas.（pg.58）

Likewisewithrespecttotravel,theGuidanceprovidesusefuladvicetocompaniesseekingtocomplywiththeFCPA'saffirmativedefensefor"reasonableandbonafidetravelandlodgingexpenses…relatedtothepromotion,demonstration,orexplanationofacompany'sproductsorservices."（pg.24）Aswithgifts,thisisanareawherecompanieshavebeenhard-pressedtosetlimitsthatwillwithstandgovernmentscrutiny.TheGuidancethereforegatherstogetherandclearlystatesthesafeguardsthatithasdeemedinthepasttobeappropriateinrelationtotravelexpenditures:

∙Donotselecttheparticularofficialswhowillparticipateintheparty'sproposedtriporprogramorelseselectthembasedonpre-determined,merit-basedcriteria.

∙Payallcostsdirectlytotravelandlodgingvendorsand/orreimbursecostsonlyuponpresentationofareceipt.

∙Donotadvancefundsorpayforreimbursementsincash.

∙Ensurethatanystipendsarereasonableapproximationsofcostslikelytobeincurred and/orthatexpensesarelimitedtothosethatarenecessaryandreasonable.

∙Ensuretheexpendituresaretransparent,bothwithinthecompanyandtotheforeigngovernment.

∙Donotconditionpaymentofexpensesonanyactionbytheforeignofficial.

∙Obtainwrittenconfirmationthatpaymentoftheexpensesisnotcontrarytolocallaw.

∙Providenoadditionalcompensation,stipends,orspendingmoneybeyondwhatisnecessarytopayforactualexpensesincurred.

∙Ensurethatcostsandexpensesonbehalfoftheforeignofficialswillbeaccuratelyrecordedinthecompany'sbooksandrecords.

（pg.24（footnotesomitted））.

TheexamplesthattheGuidanceprovidesregardinggifts,travel,andentertainmentareequallyinstructive.Intheformofhypotheticals,theGuidanceadvisesreadersthattheFCPAisnotviolatedwhenrepresentativesofaU.S.company:

∙Payfora"moderatebartab"forcustomers,includinggovernmentofficialsatanindustrytradeshow.

∙Present"amoderatelypricedcrystalvase"totheGeneralManagerofagovernment-ownedcustomer"asaweddinggiftandtokenofesteem."

∙CoverbusinessclassairfareforemployeesofagovernmentcustomertoinspectcompanyfacilitiesintheUnitedStates,consistentwithinternalcompanyguidelinesforreimbursingthecostoflengthyinternationalflights.

（pgs.17-18）Bycontrast,theGuidancestatesthattheFCPAobviouslywouldnotpermitfirst-classairfarefortheofficialstotravel,withspouses,toLasVegasonavacation.AlloftheaboveisconsistentwithpriorguidancefromDOJandSECbutisnonethelesshelpfulinitsspecificity.Inparticular,theGuidance'suseofinternalpoliciesasayardstickforthereasonablenessoftravelexpenses（inthisexample,classoftravel）ratifiesacommoncompliancepracticeoftreatingexpendituresforvisitingofficialsinamannersimilar