Finally, A Bit of a Safe Harbor in FCPA Enforcement. You’re Welcome.

You’re welcome. I’m saying, I’m taking credit for creating a safe harbor in FCPA prosecutions, and I’m sure you’d say thank you, so I’m saying, you’re welcome.

How did this come about, you ask? After all, I’m just a junior partner in the FCPA Commentariat. I’m not Tom Fox, I’m not Dick Cassin. How could I get the DOJ and the SEC to create a safe harbor all on my lonesome?

With one question.

Here’s the situation. Last week was the ACI FCPA Conference. If you didn’t go, then one of two things must be true: either you were tied up and being held by Somalian pirates, or you’re not part of the FCPA world. Maybe I’m exaggerating. A little. It really is the premier FCPA conference, and one which I take pains to attend, along with all my little FCPA friends. Dan Newcomb was there, Palmina Fava, Suzanne Fulsom, Andy Hinton & Therese Lee. Raja Chatterjee was there (the belle of the ball, as one participant said). Alexandra Wrage was there. Plus, plenty of DOJ and SEC people. Chuck, Koukios, Nat, Kara, Tracy, Kathryn Nickerson from Commerce, plenty of government people.

The Guidance was issued the day before (have you heard?) and of course it was a major topic of conversation. So much so, in fact, that Chuck Duross, Kara Brockmeyer, and Jeff Knox (Chuck’s immediate superior) were on an impromptu panel about the Guidance.

They were excellent. And I’m a fan of the Guidance. But then came the Q&A.

If you know anything about me at all, you know I’m not going to pass up that opportunity. Only with a real question, mind you. There were a lot of people in the room, and I’m not going to waste people’s time.

Here was my question:

I want to ask a question about foreign officials. Assume for a moment that a company engages in a good faith effort to decide whether a third party is a government instrumentality, using the multi-part, non-exclusive test you guys set up. Assume good faith. And using that test, the company comes to a decision that the third party is not a government instrumentality. That decision comes before you, and you decide differently. Can you see yourself bringing a case in those circumstances?

Jeff Knox’s answer was the one which created the safe harbor.

He said that in his opinion—speaking for himself, not the Department of course—the DOJ would have a tough time proving knowledge in those circumstances. Proving corrupt intent. In his opinion, there’s no crime.

What does this mean for practitioners? It means that if you ask the questions, and think about the issues (and, as Tom Fox always says, “document, document, document”) then you’re going to be okay, even if you’re wrong.

That’s important. Even if you’re wrong, your good faith matters a lot.

I would go so far as to expand the answer to other areas where you might be wrong, but where you went through the right process. The one that comes to mind is the idea of lavish. You provide entertainment, after going through a real process to decide if it’s the right thing to do. Or gifts.

The lesson is, just because the DOJ disagrees with you doesn’t mean they’re going to prosecute you, if you went through a good faith process to examine the issue. So spend some time and have real discussions about these issues. It’s as much of a safe harbor as you’re going to get.


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