By Anne Sherry, J.D.
Assistant Attorney General Brian A. Benczkowski said that prosecutorial discretion and the strictures of the Foreign Corrupt Practices Act itself will prevent the Criminal Division from pursuing every company affiliate under an agency liability theory.
Addressing the recent criminal prosecution of a U.K. national as an agent of a U.S. company, Assistant Attorney General Brian A. Benczkowski reassured attendees at a conference on the Foreign Corrupt Practices Act that the matter does not represent an expansion of the use of agency principles. Benczkowski also said that this insight into the DOJ’s thinking and approach to cases was intended to prevent a "black box approach" to the principles guiding the department’s decisions.
Benczkowski highlighted the record number of individual FCPA charges and guilty please in 2019. The nine resolutions and declinations of corporate FCPA cases, including one yet to be announced, represent a record $1.6 billion in recovery, and $2.8 billion recovered globally through coordinated resolutions. The Criminal Division’s Kleptocracy Asset Recovery Initiative reached a "striking" settlement of forfeiture actions against assets acquired by Low Taek Jho, who allegedly misappropriated funds from Malaysia’s investment development fund, 1MDB. The United States will have recovered or assisted in the recovery of more than $1 billion in assets associated with the 1MDB scheme, the largest civil forfeiture ever concluded by the Justice Department.
While touting the DOJ’s successes, Benczkowski also reassured the crowd that its prosecution of Lawrence Hoskins does not represent a sea change in the agency’s enforcement approach. Hoskins was convicted earlier this year of FCPA violations, money laundering, and conspiracy. Hoskins, of the United Kingdom, was a senior vice president with Alstom S.A., a French company. While Hoskins never personally took any actions within the United States, the DOJ pursued the case on the theory that in conspiring to bribe Indonesian officials, Hoskins acted as an agent of the U.S.-based Alstom Power, Inc.
The prosecution raised some concerns about how it may have expanded the landscape of FCPA enforcement, but Benczkowski attempted to dispel those worries. First, he noted that the FCPA’s jurisdictional provisions specifically reach conduct by "any officer, director, employee, or agent" of entities covered by those provisions. The use of agency principles is, accordingly, black-letter statutory law. Benczkowski said, though, that the Criminal Division will not suddenly take the position that every subsidiary, joint venture, or affiliate is an agent of its parent company, nor conversely that every parent is automatically liable for the acts of the entities it owns. Rather, "the law requires more." For example, the instructions to Hoskins’ jury required proof of an agency relationship specifically related to the conduct at issue.
Beyond what it is allowed to do under the law, federal prosecutors will exercise appropriate prosecutorial discretion. If the evidence supports an agency relationship, the DOJ will still apply both the Principles of Federal Prosecution of Business Organizations and the FCPA Corporate Enforcement Policy to assess whether it is appropriate to apply the agency principle in that particular case. One factor weighting strongly in favor of prosecution would be evidence of the use of corporate structures to shield a parent from criminal liability or the use of agents to shield an individual executive.
Benczkowski intended these remarks on the agent theory to provide transparency into the Justice Department’s thinking. He believes a "black box approach" can interfere with the department’s goals and mission. For example, transparency on the department’s approach to compliance deficiencies is important because the DOJ wants to encourage companies to invest heavily in compliance. To that end, it published the Criminal Division’s compliance evaluation guidance earlier this year and reinforced the guidance through enhanced training for prosecutors. Benczkowski also cited the department’s improved voluntary self-disclosure guidance and policy against piling-on. "Whether our policies are designed to incentivize or deter certain behaviors, or to pull back the veil to demystify processes or clear away confusion, they can only be effective if they are trusted," he said.
MainStory: TopStory Enforcement InternationalNews
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