Page 126 - U.S. FOREIGN CORRUPT PRACTICES ACT

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

308 See SEC Enforcement Manual, available at https:// https://www.justice.gov/criminal-fraud/page/file/937501/
www.sec.gov/divisions/enforce/enforcementmanual.pdf. download.
309 See JM § 9-28.300.A; see also JM § 9-28.700.B 320 Debarment authorities, such as the Department of
(explaining benefits of cooperation for both government and Defense or the General Services Administration, may also
corporation). consider a company’s compliance program when deciding
whether to debar or suspend a contractor. Specifically, the
310 See JM § 9-28.1000 (discussing restitution and relevant regulations provide that the debarment authority
remediation). The commentary further provides that should consider “[w]hether the contractor had effective
prosecutors should consider and weigh whether the standards of conduct and internal control systems in place at
corporation appropriately disciplined wrongdoers and a the time of the activity which constitutes cause for debarment
corporation’s efforts to reform, including its quick recognition or had adopted such procedures prior to any Government
of the flaws in the program and its efforts to improve the investigation of the activity cited as a cause for debarment,”
program. Id. and “[w]hether the contractor has instituted or agreed to
institute new or revised review and control procedures and
311 See JM §§ 9-27.230, 9-27.420. ethics training programs.” 48 C.F.R. § 9.406-1(a).
312 U.S. Sentencing Guidelines § 8B2.1(b)(7) (2018). 321 Seaboard Report, supra note 314; U.S. Sec. and
Exchange Comm., Report of Investigation Pursuant to
313 Id. § 8C2.5(f)(2) (2011). Section 21(a) of the Securities Exchange Act of 1934 and
Commission Statement on the Relationship of Cooperation
314 U.S. Sec. and Exchange Comm., Report of to Agency Enforcement Decisions, SEC Release No. 44969
Investigation Pursuant to Section 21(a) of the Securities (Oct. 23, 2001), available at http://www.sec.gov/litigation/
Exchange Act of 1934 and Commission Statement on the investreport/34-44969.htm.
Relationship of Cooperation to Agency Enforcement
Decisions, SEC Rel. Nos. 34-44969 and AAER-1470 (Oct. 23, 322 JM § 9-28.300. When evaluating the pervasiveness
2001) [hereinafter Seaboard Report] available at http://www. of wrongdoing within the corporation, prosecutors are
sec.gov/litigation/investreport/34-44969.htm. advised that while it may be appropriate to charge a
corporation for minor misconduct where the wrongdoing
315 U.S. Sec. and Exchange Comm., Policy Statement was pervasive, “it may not be appropriate to impose liability
Concerning Cooperation by Individuals in its Investigations upon a corporation, particularly one with a robust compliance
and Related Enforcements Actions, 17 C.F.R. § 202.12 program in place, under a strict respondeat superior theory for
(Jan. 10, 2010), available at http://www.sec.gov/rules/ the single isolated act of a rogue employee.” Id. § 9-28.500.A
policy/2010/34-61340.pdf. (emphasis added). Prosecutors should also consider a
company’s compliance program when examining any
316 See U.S. Sentencing Guidelines § 8B2.1(a)(2). remedial actions taken, including efforts to implement an
effective compliance program or to improve an existing one.
317 U.S. Sentencing Guidelines § 8B2.1(b). As the commentary explains, “although the inadequacy of a
corporate compliance program is a factor to consider when
318 See generally Debbie Troklus, et al., Compliance deciding whether to charge a corporation, that corporation’s
101: How to build and maintain an effective compliance quick recognition of the flaws in the program and its efforts
and ethics program, Society of Corp. Compliance and Ethics to improve the program are also factors to consider as
(2008) 3-9 [hereinafter Compliance 101] (listing reasons to appropriate disposition of a case.” Id. § 9-28.1000.B.
to implement compliance program, including protecting Finally, the Principles of Federal Prosecution of Business
company’s reputation, creating trust between management Organizations provides that prosecutors should consider the
and employees, preventing false statements to customers, existence and effectiveness of the corporation’s pre-existing
creating efficiencies and streamlining processes, detecting compliance program in determining how to treat a corporate
employee and contractor fraud and abuse, ensuring high- target. Id. § 9-28.800.
quality products and services, and providing “early warning”
system of inappropriate actions); Transparency Int’l, Business 323 See JM § 9-28.800.B; see also U.S. Sentencing
Principles for Countering Bribery: Small and Medium Guidelines § 8B2.1(a) (2018) (“The failure to prevent or detect
Enterprise (SME) Edition 5 (2008) (citing benefits of anti- the instant offense does not necessarily mean that the
bribery program like protecting reputation, creating record program is not generally effective in preventing and detecting
of integrity enhances opportunities to acquire government criminal conduct.”).
business, protecting company assets otherwise squandered
on bribes); Mark Pieth, Harmonising Anti-Corruption 324 See Press Release, U.S. Dept. of Justice, Former
Compliance: The OECD Good Practice Guidance 45-46 (2011) Morgan Stanley Managing Director Pleads Guilty for Role
[hereinafter Harmonising Anti-Corruption Compliance] in Evading Internal Controls Required by FCPA (Apr. 25,
(citing need for compliance program to prevent and detect 2012) (declining to bring criminal case against corporate
in-house risks, such as workplace security or conflicts employer that had “constructed and maintained a system
of interest, and external risks, like anti-trust violations, of internal controls, which provided reasonable assurances
embargo circumvention, environmental hazards, and money that its employees were not bribing government officials”),
laundering). available at http://www.justice.gov/opa/pr/2012/April/12-
crm-534.html; Press Release, U.S. Sec. and Exchange
319 U.S. Dep’t. of Justice, Crim. Div., Evaluation of Comm., SEC Charges Former Morgan Stanley Executive with
Corporate Compliance Programs, at 1 (June 2020) [hereinafter FCPA Violations and Investment Adviser Fraud, No. 2012-
Evaluation of Corporate Compliance Programs], available at 78 (Apr. 25, 2012) (indicating corporate employer was not
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