This document summarizes a presentation arguing that Canada should reject the use of deferred prosecution agreements (DPAs) in foreign bribery cases. It notes that unlike in the US, Canada does not have strict liability for corporate crimes. Instead, a senior official must be involved for there to be corporate criminal liability. Therefore, Canada does not need an intermediate option like DPAs between full prosecution and declination. DPAs can represent an under-prosecution of corporate crime when senior officials are involved and no prosecution is needed when they are not. The presentation also challenges the rationales typically given for DPAs in deterring crime and incentivizing disclosure.
This document summarizes a presentation arguing that Canada should reject the use of deferred prosecution agreements (DPAs) in foreign bribery cases. It notes that unlike in the US, Canada does not have strict liability for corporate crimes. Instead, a senior official must be involved for there to be corporate criminal liability. Therefore, Canada does not need an intermediate option like DPAs between full prosecution and declination. DPAs can represent an under-prosecution of corporate crime when senior officials are involved and no prosecution is needed when they are not. The presentation also challenges the rationales typically given for DPAs in deterring crime and incentivizing disclosure.
This document summarizes a presentation arguing that Canada should reject the use of deferred prosecution agreements (DPAs) in foreign bribery cases. It notes that unlike in the US, Canada does not have strict liability for corporate crimes. Instead, a senior official must be involved for there to be corporate criminal liability. Therefore, Canada does not need an intermediate option like DPAs between full prosecution and declination. DPAs can represent an under-prosecution of corporate crime when senior officials are involved and no prosecution is needed when they are not. The presentation also challenges the rationales typically given for DPAs in deterring crime and incentivizing disclosure.
June 17, 2015 Professor Mike Koehler (C) FCPA Professor LLC Cheerleaders • Political Actors • FCPA / Bribery Act / CFPOA Inc. • Civil Society • Corporate Actors
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Time-Out Starting Premise • More enforcement of bribery and corruption laws is not necessarily an inherent good • In legal systems based on the rule of law, quality of enforcement is more important than quantity of enforcement
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Fact • Prior to NPAs and DPAs being introduced to FCPA enforcement in 2004, 90% of corporate FCPA enforcement actions resulted in a related enforcement action against company employees Fact • Since NPAs and DPAs were introduced to the FCPA context in 2004, 76% of corporate FCPA enforcement actions have not resulted in any related enforcement action against company employees Why These Facts Matter • A corporate action can only result from conduct by real human beings • The DOJ has long recognized that corporate FCPA enforcement alone is not effective and has stated on repeated occasions that individual enforcement is a “cornerstone” of its FCPA enforcement program and that it will “aggressively” charge individuals Two Ways To Analyze • Why was nobody charged? • Do NPA and DPAs necessarily represent provable FCPA violations? Relevant Data Point • Since NPAs and DPAs were introduced to the FCPA context in 2004, if a corporate DOJ FCPA enforcement action is resolved solely with an NPA or DPA, there is a 9% chance that criminal charges will be brought against a company employee. Conclusion • NPAs and DPAs do not necessarily represent provable FCPA violations and contribute to a façade of FCPA enforcement – A way for the DOJ to show results without proving anything • “[Companies] know that they will be answerable even for conduct that in years past would have resulted in a declination” (DOJ)
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Conclusion • Risk averse business organizations agree NPAs / DPAs regardless of the law or facts because it is easier, more certain, and more time and cost efficient than the alternative
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Policy Rationales For DPAs • Achieve deterrence • Incentivize companies to voluntary disclose • Avoid severe collateral damage
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Don’t Believe the Hype • Deterrence – “Legal persons” can’t be deterred – “Measuring the impact of NPAs and DPAs in deterring the bribery of foreign public officials would be a difficult task, save providing certain anecdotal and other circumstantial evidence” (DOJ) – Several companies that have resolved enforcement actions via NPAs or DPAs have since committed additional legal violations or been under scrutiny
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Don’t Believe the Hype • Incentivize voluntary disclosure – There is no evidence to support this and most FCPA violations are never disclosed by business organizations • In any given year, there are approximately 7-10 DOJ corporate FCPA enforcement actions
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Don’t Believe the Hype • Collateral Damage – The “Arthur Anderson Effect” is a Myth • “Arthur Anderson and the Myth of the Corporate Death Penalty” – DOJ officials have acknowledged the myth – Recent events have debunked the myth • Public companies that have been criminally indicted • Public companies that have agreed to DOJ plea agreements
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Corporate Criminal Liability • In the U.S., NPAs and DPAs were a reaction to the de facto strict liability feature of respondeat superior corporate criminal liability
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Corporate Criminal Liability • The U.K. and Canada do not have respondeat superior corporate criminal liability • In Canada, generally speaking, a "senior official" must be involved in the improper conduct for there to be corporate criminal liability
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Question to Address • Why does a legal regime with an exacting standard of corporate criminal liability need a third option (beyond the two options of prosecute vs. not prosecute)? – To the extent the conduct at issue was engaged by someone other than a senior officer, there is no need for a third option of DPAs because there is no corporate criminal liability as matter of law – To the extent the conduct at issue was engaged in by a senior officer, the binary option of prosecute vs. not prosecute is a just and reasonable option – a third option represents under prosecution of corporate crime
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Contact Information • www.fcpaprofessor.com • fcpaprofessor@gmail.com • @fcpaprofessor
President Uhuru Kenyatta's Speech During The Extraordinary Session of The Assembly of Heads of State and Government of The African Union, Addis Ababa, Ethiopia