George J. Terwilliger, head of White & Case's Global White Collar Practice and a former US Deputy Attorney General, testified Tuesday, June 14, before Congress about reforming the US Foreign Corrupt Practices Act (FCPA).
The hearing, which was held before the House Judiciary Subcommittee on Crime, Terrorism and Homeland Security, sought to identify ways to improve the FCPA. Terwilliger cited the need for reform due to uncertainty in the terms of the law and its application by enforcement officials, which carry a significant hidden cost to the American economy and adversely affects job creation. Reforms Terwilliger suggested or addressed include:
(1) A post-closing period of repose for companies involved in acquisitions during which they would be shielded from FCPA enforcement. This should occur in a period where companies are undertaking review of FCPA compliance in the acquired business and disclosing and remediating potential FCPA issues discovered as a result of that review.
(2) A safe-harbor provision would provide companies immunity from criminal prosecution and reduced civil penalties for FCPA violations where such violations arise despite a robust corporate anti-corruption compliance program and are discovered and disclosed to the government by the company.
(3) Clarification of the definition of a "foreign official." As with other provisions of the FCPA, the Department of Justice and Securities and Exchange Commission have adopted a broad interpretation of this provision that can make determination of the need for FCPA compliance measures difficult and costly to determine.
(4) Reforms to the the Dodd-Frank whistleblower bounty provisions, including the recent SEC rules implementing the provisions, to discourage whistleblowers from bypassing effective internal compliance systems that are meant to identify, detect, and prevent FCPA violations. As currently structured, the Dodd-Frank whistleblower program's incentives threaten to undercut internal compliance and reporting systems, rather than encourage and supplement such important systems.
"Stepped up enforcement combined with uncertainty of the precise legal parameters of conduct subject to the requirements and proscriptions of the FCPA imposes on our economic growth when companies forgo business opportunity out of concern for FCPA compliance risk," says Terwilliger. "This hurts the creation of jobs and the ability of US companies to compete with companies that do not have to concern themselves with the uncertainties of the terms and requirements of the FCPA."
"The business community is generally rejecting corrupt business practices in favor of free and fair markets and is making ongoing investments designed to promote those objectives," he says. "In the interest of both the fair administration of the law and in promoting the growth of American business, and the jobs such growth can engender, Congress should consider amending the FCPA to provide increased clarity in the law and certainty in its application for those companies that endeavor to comply with its dictates."
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