On February 21, 2012 The U.S. Chamber of Commerce Institute for Legal Reform (ILR) sent a letter to the DOJ requesting guidance on “several issues and questions of significant concern to businesses seeking in good faith to comply with the FCPA.” The ILR raised the following issues:
“Instrumentalities”: The ILR sought clarification on what types of entities are considered “instrumentalities” of a foreign government, noting that courts currently treat this issue as a matter of fact for the jury to decide, which results in a “chilling effect on legitimate business activity” and a “costly miscalculation of compliance resources.” To that end, the ILR suggested that the forthcoming guidance from the DOJ identify the percentage ownership or level of control by a foreign government that ordinarily will qualify as an instrumentality, clarify that in order for a company to be considered an instrumentality it must perform governmental or quasi-governmental functions, and identify any exceptions to the foregoing general principles. Days before the ILR letter was sent, Senators Klobuchar and Coons sent a letter to the DOJ also requesting guidance on the definition of “instrumentality.”
Compliance programs: The ILR requested that the DOJ and SEC provide guidance regarding what would be considered an effective FCPA compliance program that would merit favorable consideration in enforcement actions.
Parent company liability: The ILR requested clarity on when a parent company may be held liable for a foreign subsidiary’s violations of the anti-bribery provisions of the FCPA. The ILR noted that the “lack of statutory clarity has been compounded by an apparent difference in enforcement policy between the Department and the SEC,” as the SEC’s approach (charging parent companies with civil violations based on actions by a subsidiary of which the parent is merely ignorant) is contrary to common law principles of corporate liability as well as the statutory language of the anti-bribery provisions. The SEC’s approach “remains a source of significant concern for U.S. companies with foreign subsidiaries.”
Successor liability: The ILR requested that the government’s forthcoming guidance outline “reasonable standards for [pre-acquisition] diligence and identify factors that will be considered in determining whether diligence was adequate.” Additionally, any guidance should provide “realistic” standards for post-acquisition due diligence, as the current guidance requires companies to conduct diligence on a scale “equivalent to a massive internal investigation.”
“De minimis”: Recognizing that the DOJ has stated that it does not prosecute conduct involving de minimis gifts and hospitality, the ILR requested a “clear standard for gifts and hospitality that ordinarily will not be subject to enforcement action.”
Mens rea standard for corporate criminal liability: The FCPA limits an individual’s liability for willful violations, but does not contain any similar language with regard to corporate criminal liability. The ILR requested that the DOJ clarify its position on the mens rea standard for corporate criminal liability.
Declination decisions: The ILR requested that the DOJ reconsider its practice of not providing information about its decisions to close investigations with no enforcement action. The ILR noted that knowledge of declinations would be “tremendously useful to companies seeking to comply with the FCPA,” particularly in the development of compliance programs.