The release of the Second Edition of the Resource Guide to the U.S. Foreign Corrupt Practices Act (the Guidance) comes nearly eight years after the DOJ and SEC published its inaugural guidance as to the scope and application of the FCPA in November 2012.
The issuance of the Guidance affirms that FCPA enforcement remains a governmental priority. However, because relatively few FCPA cases are litigated, the metes and bounds of the government’s FCPA enforcement approach are often discerned though publications such as the Guidance, policy pronouncements, and the specific circumstances of non-litigated FCPA enforcement actions and settlement agreements. For companies and practitioners alike, the Guidance is an important desktop resource tool. By including citations and details of recent enforcement actions and incorporating compliance guidance from other sources, the Guidance provides a valuable refresher on the government’s perspective of its enforcement approach and its views regarding FCPA compliance best practices.
There are several practical takeaways from the Guidance:
Successor liability in mergers and acquisitions
The Guidance provides useful affirmation of potential limitations to FCPA successor liability in the merger and acquisition context. Often, robust FCPA pre-acquisition due diligence is difficult due to timing, logistics and other circumstances. Recognizing these real world limitations, the Guidance underscores that most companies can address FCPA compliance concerns with prompt post-acquisition remediation efforts. (On the other hand, the DOJ and SEC have pursued a limited number of enforcement actions against successor companies in aggravating circumstances, including those involving blatant and repeated violations).
To protect against potential successor liability for pre-transaction misconduct by an acquired entity, the Guidance suggests due diligence, remediation, and integration as part of an effective compliance program, as well as self-reporting to authorities. A successor company’s voluntary disclosure, appropriate due diligence, and implementation of an effective compliance program may decrease the likelihood of an enforcement action regarding an acquired company’s post-acquisition conduct when pre-acquisition due diligence is not possible and the company may be eligible for a presumption of declination. See Guidance at 29-31.