Multinational companies that pay bribes may find themselves subject to prosecution by multiple jurisdictions. Some countries, including many in Europe, apply a double jeopardy bar (known there as ne bis in idem) that prevents one country from prosecuting an entity that has already been prosecuted elsewhere. Other countries, however—including the United States—have no such bar. US prosecutors may pursue those suspected of violating the Foreign Corrupt Practices Act (FCPA) even if the targets already have been, or are being, prosecuted in another country for the same bribe payments. Is this a problem? Some say no: the possibility of multiple prosecutions by different sovereigns might create a healthy “race to the top” and stronger deterrence. On the other hand, however, we might worry that multiple prosecutions risk over-punishing, thereby over-deterring risky but socially valuable conduct (like expanding into high-risk foreign markets). Companies also will not be sure when a matter is finally settled. In addition, there seems something arrogant about the US giving itself the power to evaluate whether a criminal prosecution in another country was adequate.
The US Department of Justice (DOJ), long a defender of its right to judge for itself whether to bring a parallel or follow-on prosecution in FCPA cases, recently signaled greater sympathy with those who take the latter side in this debate. Earlier this year, the DOJ unveiled a new policy meant to eliminate “unfair duplicative penalties” on corporate wrongdoers, including those participating in foreign bribery, and set out a number of factors that the DOJ can use to evaluate whether imposing multiple penalties serves “the interests of justice.” Describing the impetus for the policy update, Deputy Attorney General Rod Rosenstein echoed common complaints from the corporate community about how the “piling on” of multiple penalties for the same misconduct, from different regulatory and enforcement agencies, deprives the company and its stakeholders of the “the benefits of certainty and finality ordinarily available through a full and final settlement.”
It’s not clear, though, whether—at least with respect to FCPA cases—the new policy differs much from the approach that the DOJ’s FCPA Unit has been taking to joint and parallel investigations for many years. While formalizing the approach may seem to provide some relief to corporations, the new policy actually does little to address the “piling on” problem in the foreign bribery context:
- First, the new policy still leaves the US DOJ with the discretion to impose duplicative penalties, and doesn’t actually provide much additional guidance, beyond previous policy statements, about when this would be appropriate. In particular, under the new policy (as under pre-existing guidance) the DOJ may consider the “egregiousness” of a company’s wrongdoing and the “adequacy” of the company’s disclosures to a foreign government—and the DOJ retains wide latitude to determine whether a company’s disclosures to foreign prosecutors are sufficient and whether the penalty imposed in another jurisdiction is too lenient. The policy does not provide any guidance as to how the DOJ will evaluate these factors or whether there are certain objective criteria it must follow to make these determinations. So it’s still up to US prosecutors to decide, on a case-by-case basis, whether duplicative penalties from the US side of a foreign bribery investigation are warranted.
- Second, the new policy (insofar as it does affect corporate incentives) may interact with the 2017 FCPA Corporate Enforcement Policy (CEP) in ways that create unintended consequences. The CEP offers declinations (explained here and here) in exchange for voluntary disclosure of FCPA violations to the DOJ, provided that the disclosing firm also fully cooperates with an investigation, and disgorges all ill-gotten gains from the conduct. However, a US declination does not prohibit foreign countries from pursuing an investigation for the same conduct. Authorities in different jurisdictions often share information with one another, and full disclosure of an FCPA violation to the DOJ may prompt the US to share that information with a foreign jurisdiction. By approaching the DOJ first (and even receiving a declination), the company may inadvertently give the foreign jurisdiction enough ammunition to impose a higher penalty than it would have imposed had the company approached the foreign jurisdiction first. In contrast, even if a company makes a full disclosure to a foreign jurisdiction, and that jurisdiction shares information with the DOJ, the anti-piling on policy would cause the DOJ to credit the company for any penalties already imposed by the other country. Therefore, the anti-piling on policy combined with the CEP may encourage companies to wait for a foreign prosecutor to approach rather than self-disclose to the DOJ—contrary to the goal of the CEP to encourage self-disclosure. Some companies may prefer the predictability of the US anti-piling on policy and therefore choose to pay a decreased DOJ penalty rather than receive a US declination but expose themselves to potentially higher penalties from foreign jurisdictions.
- Third, the anti-piling on policy may in practice apply only to countries with which the US has favorable diplomatic relations. Because access to individuals is often key to gaining information about a company during an investigation, the DOJ’s efficacy in pursuing corporations for FCPA violations may depend on whether it can pursue foreign nationals. In fact, in 2017, the DOJ initiated FCPA prosecutions against 22 individuals, 15 of whom were foreign nationals. However, the DOJ’s ability to get access to foreign nationals depends on its diplomatic relations with other countries. While the new policy may encourage the DOJ to defer to foreign regulators in countries with which the US has favorable diplomatic relations and can coordinate parallel proceedings, in cases where information-sharing across borders is limited, the DOJ may choose to “pile on” penalties in response. Of course, this is only an assumption based on Mr. Rosenstein’s remark that poor diplomatic relations may “constrain” the DOJ’s ability to coordinate outcomes with other countries in joint and parallel proceedings. The problem with the US not applying the anti-piling on policy in certain cases is that corporate defendants will be at the mercy of shifts in the political landscape and resulting decisions by foreign prosecutors of whether to make individual defendants available to the DOJ. Even though relations between countries do not usually sour overnight, companies that have a stake in how the US applies the anti-piling on policy will lose predictability in cases where relations between the US and a relevant foreign jurisdiction are in flux.
Overall, while the new policy is a signal of the US increasing preference for cooperation in foreign bribery investigations and prosecutions, the US will need to address the practical challenges in the way of creating a norm of cooperation with foreign regulators and law enforcement.
Vicky, thanks for the great post. Reading it brought to mind a few questions. First, how does the double jeopardy bar applied by some European countries interact with your second point? If a company enters into a declination agreement with the DOJ, would that prevent a regulator in a country with such a bar from later bringing charges? Second, has there been any commitment or discussion similar to DOJ’s anti-piling on policy from other US regulators, such as the SEC? If not, the new policy might seem a cold comfort to corporate boards…
Really interesting post. I’m particularly interested in how you think the CEP counteracts with the anti-piling on policy. It seems to me that even if many foreign countries’ double-jeopardy policies don’t encompass declinations (as you say), how many countries actually pursue investigations once a declination has been made? If the answer is that most countries typically don’t investigate cases once a declination has been issued (even though their laws would permit said investigations) – the mixed incentives created might not be so significant. Relatedly, you say in bullet-one that the anti-piling on policy still provides the DOJ with a large degree of discretion regarding the penalties it imposes. I’m unclear then as to why DOJ would necessarily need to credit companies for penalties imposed by other countries in cases where companies wait until a foreign prosecution has commenced, rather than come forward in hopes of securing a declination.
Great post–thanks, Vicky! I wonder if there is much correlation between countries that have a common-law system and countries (like the US) that allow this quasi “international double jeopardy” (and conversely, whether there is correlation between countries that have a civil-law system and countries that disallow this quasi “international double jeopardy”). Indeed, the idea among civil law countries that the United States has an “arrogant” legal system because it allows “pile on” prosecutions reminds me of learning about the tension between choice of court / jurisdiction between common-law and civil-law countries. If I recall, courts in civil law countries practice lis pendens vis-a-vis forum selection (i.e., if the same matter is in two courts, wherever the matter was brought first is, by default, the “prevailing” forum”–whereas common-law courts disregard lis pendens and instead bases this determination on where it believes the correct jurisdiction actually is (which can lead to the common-law court filing an anti-suit injunctions against the civil-law court–which civil-law courts, unsurprisingly, find similarly arrogant).
Hey Vicky, excellent post! I think your fist point is really interesting in light of the increasing number of jurisdictions passing laws against bribing foreign officials (or starting to enforce them). As the international enforcement tend to grow in next years, the overlap of penalties could deter companies to self-report if they fear they cannot achieve workable settlements.
As you mentioned, it also poses a relevant legitimacy question on FCPA enforcement for cases where the link to US interests is not especially strong or direct but far-reaching extraterritorial rules make it virtually possible. In a world where the counties directly affected by the corruption schemes are taking relevant measures to punish wrongdoers and no direct US interest is involved, rethinking FCPA efforts could be interesting.
On a separate note, although many countries have a “ne bis in idem” rule, there are many ways to circumvent such rule resorting to different statutes, damage claims (instead criminal or administrative enforcement).