You know those progress reports the OECD publishes from time to time about the anti-corruption enforcement among countries around the world? Well, the group just published its latest report on the United States and gave the country generally high marks.
That should come as no surprise to compliance officers, who have witnessed the U.S. government’s commitment to anti-bribery up close for years. The OECD report — its fourth report on the United States, and the first one published since 2010 — praised the United States for its sophisticated approach to enforcement, including cooperation among multiple government agencies (above all, the Justice Department); and the use of various statutes beyond the Foreign Corrupt Practices Act.
Another point of praise was how the Justice Department and Securities and Exchange Commission publish extensive commentary about anti-corruption settlements and expectations for corporate compliance, which has the practical effect of helping businesses understand how they should fight corruption. As the report said:
Increased guidance and transparency of enforcement policies have fostered voluntary disclosure and cooperation with foreign bribery investigations. The publication of non-trial resolution agreements, including information on fact patterns and the reasons for choosing a certain type of resolution instrument provides insight to companies on the DOJ’s expectations and guidance in designing compliance programs.
The OECD also praised U.S. officials’ efforts to foster more cooperation on anti-corruption enforcement with other countries, such as participating at international anti-corruption conferences and training law enforcement peers around the world.
One funny bit: The report also includes the line, “The explicit prohibition to deduct disgorgements from taxable income is also a positive achievement.” One would hope is no longer news in the civilized world, except Switzerland just moved to end tax deductibility of bribes last week, in a rule that won’t even go into effect until 2022. So apparently this still counts as progress worthy of mention. Yeesh.
So What Comes Next?
The full OECD report is 180 pages long, and much of it will be interesting only to anti-corruption devotees at law firms and law schools. The report includes a lot of history, plus a lot of exposition about how anti-corruption enforcement works in the United States — which most compliance officers have already learned through practical experience.
If you’re pressed for time, I’d suggest jumping to the conclusion on Page 111 of the report. That’s where you’ll find OECD recommendations on what else U.S. agencies can do to improve anti-corruption enforcement. From there we can suss out potential changes that could affect how corporate compliance programs should respond to anti-corruption enforcement in the United States.
Four recommendations in particular jumped out at me.
Better Protection for Whistleblowers
The OECD recommended that the United States adopt a stronger legal framework for whistleblowers who report foreign bribery. Right now those protections are divided between the Sarbanes-Oxley Act and the Dodd-Frank Act, and a few cracks do exist in that system.
For example, people who only report corruption allegations to internal compliance officers cannot claim anti-retaliation protections under the Dodd-Frank Act; they need to bring their concerns to the SEC. The OECD also fretted about whistleblowers at non-public companies, who only can only report to the Justice Department; they might not be able to claim protections either. So as advanced as our whistleblower protections are, they’re still a patchwork. The OECD recommends a single, solid framework.
Will that happen? I dunno. Whistleblowers do have powerful, bipartisan supporters in Congress. On the other hand, getting any significant legislation enacted in such a sharply divided Washington is difficult.
Better Guidance From SEC
In the OECD’s own words: “Consider having the SEC consolidate and publicise its policy and guidance on how it enforces the FCPA.”
In fairness, the SEC and Justice Department work together to publish the FCPA Resource Guide, and that guidance runs more than 100 pages. The SEC also publishes its settlement orders in FCPA cases, which go into fairly specific detail about how a company’s internal accounting controls unraveled and led to an FCPA issue.
Sure, the SEC could consolidate all things FCPA-related in the same way the Justice Department does with its Fraud Section. Compliance officers would also be thrilled if the SEC was more forthcoming about decisions not to prosecute, which is something else the Justice Department does. Will we see those changes? One can hope.
More Attention to FCPA Recidivists
Again, the OECD’s own words: “Continue to address recidivism through appropriate sanctions and raise awareness of the impact of recidivism on the choice of resolution in FCPA matters.”
From your lips to the (next) attorney general’s ears, OECD. I would love to see stronger penalties against recidivists, since that would send a stronger message to companies that they need to build and maintain effective compliance programs.
This would also answer my pet question: What happens with the first company to go through the FCPA Corporate Enforcement Policy and then violates the FCPA again? Because to my thinking, the second offense means you didn’t maintain the effective program you had when you resolved the first one; therefore you’re not eligible for more lenient treatment again. Right? Right?
More Disclosure for DPAs, NPAs
The OECD recommended that law enforcement agencies disclose more detail about how deferred- and non-prosecution agreements are concluded. Specifically, whenever a DPA or NPA is extended, the regulators “make public in an easily accessible manner the grounds for extension.”
Any new detail on what a company has done right or wrong is useful to the compliance community, so I’m all for this suggestion, too.
Will any of these ideas come to pass? We’ll need to wait for the Biden Administration to see. Even if Biden appointees support these ideas, making them happen is many months away, at best.
Now we can all wait for OECD’s fifth report on the United States sometime in the mid-2020s.