CORPORATE CRIME REPORTER
White & Case’s Terwilliger Calls for FCPA Safe Harbor
25 Corporate Crime Reporter 25(14), June 17, 2011
You just have to admire the corporate community’s non-stop drive toward criminal amnesty.
Ten years ago, most cases against large corporations were resolved with plea agreements.
Today, most cases are resolved with deferred and non prosecution agreements.
Tomorrow, the captains of industry will park their behemoths in safe harbors – completely protected from criminal prosecution.
At least, that is the way it will be if it is left up to the U.S. Chamber of Commerce.
And George Terwilliger, a partner at White & Case in Washington, D.C.
Last week, Terwilliger went before the House Judiciary’s Subcommittee on Crime, Terrorism and Homeland Security.
And in his testimony, he laid out what big corporations want.
Their key demand?
A safe harbor from criminal prosecution under the Foreign Corrupt Practices Act (FCPA).
“A statutory safe-harbor provision in the law could provide companies that strive for anti-corruption compliance with increased certainty that their efforts will provide them with some level of protection from FCPA liability,” Terwilliger said. “Such a provision could shield from criminal liability companies that operate demonstrably robust compliance programs and that self-report the misconduct in question that arises despite their best efforts. It makes no sense to me to engage in criminal prosecution of a company that operates a state of the art compliance program and that investigates, corrects and self-reports non-compliant circumstances that do arise.”
“I think many if not most prosecutors would agree with me on that proposition and have so concluded in the context of enforcement decisions, at least in some cases. But doubt as to the precise benefits of voluntary disclosure under existing enforcement policy produces uncertainties. Such uncertainty could be replaced with a bright line providing that companies acting responsibly on the terms which I have outlined would have a safe harbor from criminal liability even where a violation arose despite their best efforts.”
“Providing for greater certainty in the terms of the statute and its enforcement promotes good corporate compliance practices and that helps secure further the statute’s objectives to promote corruption free markets. It has the added benefit of helping to allow business decisions to be grounded more in business terms rather than legal risk analysis.”
The day after his testimony, we interviewed Terwilliger.
Why should companies get a safe harbor in those situations?
“Because the fundamental objective of this statute is to promote fair and free competition in corruption free markets on a global basis,” Terwilliger told Corporate Crime Reporter. “Companies are well positioned to assist in achieving that objective with timely receipt of information about internal wrongdoing, by investigating it in a timely and thorough way, and by disclosing it to the government.”
“What I’m proposing is consistent with the fundamental objectives of this statute. It takes nothing away from its enforcement, because in many of these cases the government wouldn’t be aware of it but for the voluntary disclosure anyway.”
“And the government remains in a position to impose penalties, just not through a criminal prosecution.”
You are now saying there is no benefit to criminal prosecution under this law if the companies come forward and disclose?
“I’m not grounding my argument in that there is no benefit to criminal prosecution,” Terwilliger said. “My proposition is grounded in the notion that most companies, and particularly those that will internally investigate and self-report, share with the government the goal of achieving the objectives of the statute.”
But if you carve out this safe harbor, aren’t you saying – even if you violate the law, the government is not going to come down on you?
“That’s your characterization, not mine,” Terwilliger said. “My proposition is grounded in the notion that good enforcement policy and good public policy balances the desirable benefits of criminal prosecution against the desirable benefits of having companies and industries police themselves and keep the government informed about the results of these efforts.”
Terwilliger says he’s not advocating total amnesty for self-reporting – just amnesty from criminal prosecution.
“A presumption against criminal prosecution where companies operate robust compliance programs and voluntarily report their own misconduct would balance the interests of companies and enforcement agencies,” he testified. “I am not advocating amnesty for self-reporting. The government could still impose penalties, but the threat of criminal enforcement would be eliminated and standards can be adopted to produce more certainty as to reductions in penalties where companies self-report. Enforcement authorities would likely see an increase in the number of companies voluntarily disclosing and instituting remedial measures in a transparent manner and government resources would be conserved by avoiding expenditures on companies which, by their remedial conduct, demonstrate that they do not pose a significant corruption threat. Likewise, companies that have best-in-class compliance programs would be able to engage in
business operations without the lingering specter of unquantifiable FCPA compliance risk.”
[For the complete transcript of the Interview with George Terwilliger, see 25 Corporate Crime Reporter 25(14), June 20, 2011, print edition only.]
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