Canada Should Say No

To DPAs

TI-Canada Legal Committee

June 17, 2015
Professor Mike Koehler
(C) FCPA Professor LLC
Cheerleaders
• Political Actors
• FCPA / Bribery Act / CFPOA Inc.
• Civil Society
• Corporate Actors

(C) FCPA Professor LLC

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

(C) FCPA Professor LLC

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

(C) FCPA Professor LLC