Amending the FCPA Will Strengthen It, Not Weaken It

This article originally appeared on Professor Koehler’s FCPA Professor website (www.fcpaprofessor.com) and is reprinted with his permission.

hilary clinton fcpa remarks

In a recent speech at Transparency International-USA’s Annual Integrity Award Dinner, Secretary of State Hillary Clinton stated:

“We [the Obama administration] are unequivocally opposed to weakening the Foreign Corrupt Practices Act. We don’t need to lower our standards. We need to work with other countries to raise theirs. I actually think a race to the bottom would probably disadvantage us. It would not give us the leverage and the credibility that we are seeking.”

The FCPA is a fundamentally sound, but not perfect, statute.

A way to strengthen the FCPA and best advance its objective of reducing bribery is to amend the FCPA to include a compliance defense.

The FCPA’s objective of reducing bribery is best accomplished not solely through ad hoc enforcement actions, but by also better incentivizing corporate compliance designed to prevent improper payments.  Existing incentives merely lessen the impact of legal exposure and are thus “baby carrots.”  What is needed to better incentivize more robust FCPA compliance are real “carrots.”

An FCPA compliance defense is a real “carrot” that will better incentivize compliance across the business landscape. Organizations with existing FCPA compliance policies and procedures will be incentivized to make existing programs better. Likewise, organizations currently without stand-alone FCPA policies and procedures—and statistics indicate there are many—will be incentivized to spend finite resources to implement FCPA compliance policies and procedures.  By better incentivizing organizations to implement more robust FCPA policies and procedures, an FCPA compliance defense can reduce instances of improper conduct and thereby advance the FCPA’s objectives.

I also argue in “Revisiting a Foreign Corrupt Practices Act Compliance Defense” that an FCPA compliance defense will also increase public confidence in FCPA enforcement actions (no more enforcement actions against the world’s most ethical FCPA violators – see here for the prior post) and allow the Department of Justice to better allocate its limited prosecutorial resources to cases involving corrupt business organizations and the individuals who actually engaged in the improper conduct thereby increasing the deterrent effect of FCPA enforcement actions.

That’s not weakening the FCPA, Secretary Clinton, that is strengthening the FCPA and best advancing its objective of reducing bribery.  That’s not a race to the bottom; that’s a race to the top.

State Department photo by Michael Gross.

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mike-koehlerAbout the Author

Mike Koehler is an assistant professor of business law at Butler University and is an expert FCPA columnist for Corporate Compliance Insights. He is a leading expert on FCPA and other anti-corruption laws and initiatives. Professor Koehler has testified before Congress on FCPA, and he is also frequently speaks about such topics before business and academic audiences.

About the Author

Mike Koehler

fcpa-professor-Mike-KoehlerAbout the Author Mike Koehler is an Assistant Professor at Southern Illinois University School of Law and is an expert FCPA columnist for Corporate Compliance Insights. Professor Koehler is a leading expert on the FCPA and other anti-corruption laws and initiatives and he founded and maintains the site FCPA Professor, an industry leading forum that has earned national and international recognition.