Sheppard Mullin’s Hengsbach on FCPA, Uncertainty, and a Growing Reluctance to Self-Report
24 Corporate Crime Reporter 13(12), March 30, 2011

Corporate defense counsel are becoming more and more reluctant to self-report Foreign Corrupt Practices Act (FCPA) problems to the government.

Bethany Hengsbach is a partner at Sheppard Mullin in Los Angeles.

And she says that she’s sensing a growing reluctance to self-report among her colleagues in the white collar defense practice.

“This is an area where we need to push the government for some clear guidelines,” Hengsbach told Corporate Crime Reporter in an interview last week.“We want to tell our clients that there is a firm benefit to self-disclosure.”

“For example – one times the bribe is the maximum of your penalty. And I just throw that out there as an example. But now, there is no certainty,” Hengsbach said.

“What we are seeing instead is a regime where there are no clear incentives.”

“It is just not at all clear what disclosure and self-reporting get you.”

“If you talk to the government – and there are several public statements available on this – they will tell you that they absolutely take it into consideration and that the penalties are reduced for companies who come forward and self-report.”

“The problem is that when you are trying to advise a client on whether to self-report, there are no clear guidelines. And when you are in that situation, it is all about what is going to happen, not what might happen.”

“The point is that it should be clearly delineated so that we can tell our clients – here is what disclosure gets you,” Hengsbach said.

“The question about whether and when to report – that question is even more difficult now than it ever was,” Hengsbach said.

“Our clients want to do the right thing,” Hengsbach said. “And they are spending tremendous resources to comply.”

“And everybody knows that there will always be issues, in spite of the company’s best efforts.”

“And we would like a situation that allows us to advise our clients that they can self-report and that there will be tangible benefit and some certainty in exchange for that self-reporting.”

“And at this point, we are just not able to do that.”

And despite government budget cuts, enforcement of FCPA across the country continues to grow.

“We are seeing FBI agents almost wholly devoted to FCPA investigations,” Hengsbach said. “We see the opening of a new FCPA unit at the SEC’s office in San Francisco. So, in an era of tightening budgets, the government moves forward.”

Hengsbach says 2011 will be marked by implementation of the UK Bribery Act, the rise of FCPA whistleblower complaints under the new Dodd-Frank law, and push back by the business community.

I’m starting now to see a significant lobbying push in the U.S. against this incredible explosion of FCPA enforcement,” Hengsbach said. “I believe that the Chamber of Commerce is starting to push back. It just becomes incredibly difficult for companies who want to do the right thing. So, we are going to see some more push back from the business community in the coming year.”

[For the complete q/a format Interview with Bethany Hengsbach, see 24 Corporate Crime Reporter 13(12), March 28, 2011, print edition only.]



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