We conclude our Arthurian themed week with the Holy Grail, which has fired the imagination of artists for millennia. What was the Holy Grail? According to Professor Dorsey Armstrong in her Teaching Company lecture series, entitled “King Arthur: History and Legend”, the Holy Grail has taken various forms over the years. For Chrétien de Troyes, it was a fancy serving dish; for Wolfram von Eschenbach, it is a magical stone; for Robert de Boron, it is the cup that Christ drank from at the Last Supper; for the comedy troupe Monty Python, it is a cartoon sketch that no one ever finds; and for the modern-day author Dan Brown, it is both a person, who is a descendant of Mary Magdalene, and a bloodline which leads to the Merovingian kings of France. In other words, it means many things to many people. The quixotic quest for the Holy Grail informs the same quest to append a compliance defense to the FCPA.
One of the articulated reasons for the creation of King Arthur’s Round Table was tied to the Holy Grail, since it was allegedly used at the Last Supper, it seems only natural that Arthur would seek it from his table as well. Indeed, in Robert de Boron’s account of Arthur, the wizard Merlin tells Arthur the Round Table was established to identify the one Knight, who was pure of heart, who could find the Holy Grail. Only after the great quest for and locating of the Holy Grail was achieved could Arthur’s other ambitions come to pass.
Another interesting twist on the Grail legend is that it was in Britain. Curiously it was first ‘discovered’ by some enterprising Monks in Glastonbury, England in the late 12thcentury. They just happened to come across a well that ‘bled’ water around the time of an annual pilgrimage. Going viral in the Middle Ages was tough but the Monks built upon their initial find by claiming that both King Arthur and his Queen Guinevere were also buried at their abbey. Do you believe any of the above? Are you on your own Grail Quest, however dreamy that quest might be?
I thought about the quest for the Holy Grail in the context of the renewed call for a compliance defense addition to the FCPA, which would give companies a pass if they had sustained a FCPA violation. I see this quest for a compliance defense for companies that violate the FCPA to be as quixotic as the quest for the Holy Grail. As there were two requirements for the Knight who was destined to find the Grail, we will begin pureness of heart. Recognizing that it might be difficult to find a corporation that is ‘pure of heart’, the appropriate analogy might be more than simply spending what may appear to be a large dollar amount on a compliance program.
How about the second part of the Grail quest that requires a ‘chaste’ Knight? Once again it is somewhat difficult to understand how a corporation could be chaste but I think the appropriate analogy is the doingof compliance. Put another way, it is not having a compliance program in place but having an effective compliance program. So not only does the amount of money a company spends become immaterial to our quest but also the same can be said to the claim that having a written program should entitle you some type of defense to any FCPA violations. Just as questing for the Holy Grail is seeking something that does not exist, affording companies a defense from their own FCPA violations by having a written program in place is not a temporal reality.
The 2017 FCPA Corporate Enforcement Policy, sounded the death-knell, once and for all time, of the call for a compliance defense. The protocol set up by the DOJ is certainly creative and perhaps even unique in federal criminal law enforcement. The enforcement aspects, coupled with the incentives provided to corporations and the detailing of a best practices are much more comprehensive to advance compliance than any argument for a compliance defense.
In considering the new Policy, most practitioners have started with the presumption that if a company meets the requirements under the new Policy, they will receive a declination. There are a variety of factors present in FCPA enforcement actions which would lead the DOJ to make this blanket offer. As stated in the new Policy “The investigation and prosecution of particular allegations of violations of the FCPA will raise complex enforcement problems abroad as well as difficult issues of jurisdiction and statutory construction.”
Finally, as with all quests, what will it bring you if you actually achieve it? As with the Holy Grail, it is a good story but that is about it. I find this view best articulated by Matthew Stephenson, in a blog post entitled “The Irrelevance of an FCPA Compliance Defense”, where he gave three reasons why a compliance defense is not warranted. First (and perhaps almost too obvious to state) is that if your company is invoking a compliance defense, there has been a FCPA violation. The second is “The U.S. Department of Justice (DOJ) already takes into account a corporation’s good-faith efforts to implement a meaningful compliance program when the DOJ decides whether to pursue an FCPA action against the corporation, and what penalties or other remedies to impose. Indeed, the adequacy of the corporation’s compliance program is a standard subject of negotiation between the DOJ and corporate defendants.” Third is that “An FCPA compliance defense would only alter the DOJ’s bargaining position if a corporation unhappy with the DOJ’s position could either (1) convince the DOJ lawyers that the DOJ’s position is unreasonable in light of the corporation’s compliance program, or (2) credibly threaten to go to court and defeat the DOJ’s enforcement action altogether by successfully invoking the compliance defense before a federal judge.”
Stephenson discounts subpart 1 because DOJ lawyers already take a company’s compliance program into account. But his second subpart is even more important because no company will go to trial against the government using a compliance defense to a demonstrable FCPA violation. Simply put, no company is going to risk losing at trial when they can control their own fate through settlement. The modern-day Knights seeking the Holy Grail of a compliance defense will never find it because of this last fact. Moreover, just as there were no real Knights who could meet the requirements to actually find the Holy Grail after their quest, there are no companies which can meet the same criteria; that being that a compliance defense could or even should trump a FCPA violation.
We leave our King Arthur with our quest intact, bringing a message I hope that you have ascertained about some of the things you need to do around the nuts and bolts of anti-corruption compliance. I also hope that you might be able to look at the tales surrounding the King Arthur myth for your own inspiration.