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66–886 PDF 2011

FOREIGN CORRUPT PRACTICES ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CRIME, TERRORISM, 

AND HOMELAND SECURITY 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 14, 2011 

Serial No. 112–47 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

[Vacant] 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

SEAN MCLAUGHLIN, Majority Chief of Staff and General Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON CRIME, TERRORISM, AND HOMELAND SECURITY

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman 

LOUIE GOHMERT, Texas, Vice-Chairman 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

J. RANDY FORBES, Virginia 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

SHEILA JACKSON LEE, Texas 

MIKE QUIGLEY, Illinois 

DEBBIE WASSERMAN SCHULTZ, Florida 

CAROLINE LYNCH, Chief Counsel 

BOBBY VASSAR, Minority Counsel 

(III) 

C O N T E N T S 

JUNE 14, 2011 

Page 

OPENING STATEMENTS 

The Honorable F. James Sensenbrenner, Jr., a Representative in Congress 

from the State of Wisconsin, and Chairman, Subcommittee on Crime, Terrorism, and Homeland Security .......................................................................... 1 

The Honorable Robert C. ‘‘Bobby’’ Scott, a Representative in Congress from 

the State of Virginia, and Ranking Member, Subcommittee on Crime, Terrorism, and Homeland Security .......................................................................... 2 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 4 

WITNESSES 

Greg Andres, Deputy Assistant Attorney General, Criminal Division, U.S. 

Department of Justice 

Oral Testimony ..................................................................................................... 6 

Prepared Statement ............................................................................................. 8 

The Honorable Michael Mukasey, former Attorney General, Partner, 

Debevoise & Plimpton LLP 

Oral Testimony ..................................................................................................... 18 

Prepared Statement ............................................................................................. 20 

George J. Terwilliger, III, Partner, White & Case LLP 

Oral Testimony ..................................................................................................... 37 

Prepared Statement ............................................................................................. 39 

Shana-Tara Regon, Director, White Collar Crime Policy, National Association 

of Criminal Defense Lawyers 

Oral Testimony ..................................................................................................... 46 

Prepared Statement ............................................................................................. 48 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of Global Witness .................................................................. 78 

Prepared Statement of Karen Lissakers, Director, Revenue Watch Institute ... 81 

Prepared Statement of Global Financial Integrity ............................................... 84 

Prepared Statement of Citizens for Responsibility and Ethics in Washington 

(CREW) ................................................................................................................. 87 

(1) 

FOREIGN CORRUPT PRACTICES ACT 

TUESDAY, JUNE 14, 2011 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON CRIME, TERRORISM,

AND HOMELAND SECURITY, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:03 a.m., in room 

2141, Rayburn Office Building, the Honorable F. James Sensenbrenner, Jr. (Chairman of the Subcommittee) presiding. 

Present: Representatives Sensenbrenner, Gohmert, Goodlatte, 

Poe, Marino, Gowdy, Adams, Quayle, Scott, Conyers, Johnson, Chu, 

Jackson Lee, and Quigley. 

Staff present: (Majority) Sam Ramer, Counsel; Lindsay Hamilton, Clerk; Joe Graupensberger, Counsel; Sam Sokol, Counsel; 

and Veronica Eligan, Professional Staff Member. 

Mr. SENSENBRENNER. The Subcommittee will come to order. 

Without objection, the Chair is authorized to declare recesses 

during votes today, which I don’t anticipate. 

I would like to welcome the witnesses today. 

In 1977, the world was a very different place. The Soviet Union 

was continuing to expand its reach around the world, China had 

only recently been visited by President Nixon, and profit-making 

enterprises were forbidden in that country. Back then, the concerns 

arose about the level of bribery that American companies engaged 

in abroad. The revelations of slush funds and secret payments by 

American corporations were blamed for adversely affecting American foreign policy. 

In response, Congress passed the Foreign Corrupt Practices Act, 

or the FCPA. The law sent a strong signal that bribery would not 

be tolerated and businesses would not be able to look the other 

way. The law addressed the issue of foreign bribery in three ways. 

First, it required all publicly held corporations, whether U.S. or foreign, to keep accurate books, records and accounts. Second, it required these issuers to maintain a responsible internal accounting 

control system. Third, it prohibited bribery of foreign officials by 

U.S. corporations and issuers, and these provisions applied to corporations as well as to individuals. 

Thirty-four years later, the world has turned upside-down. The 

Soviet Union is shattered, leaving in its wake autonomous republics. China has become a global manufacturing power. The nature 

of overseas businesses has changed. Many of these countries have 

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some degree of state control over their businesses, bringing new 

relevance to the enforcement of our foreign bribery laws. 

In the last few years we have seen a dramatic increase in the 

number of cases prosecuted by the Justice Department under the 

FCPA, including a record number of fines with staggering sums. 

The Wall Street Journal pointed out that FCPA fines made up half 

of all DOJ Criminal Division penalties in fiscal year 2010. This is 

a considerable windfall for the Federal Government. 

Significant concerns about the FCPA and its enforcement by the 

Justice Department are being expressed by the business community, and business is already in trouble. Under the Obama Administration, America is suffering through a severe and prolonged economic downturn. Businesses that are trying to comply with the 

FCPA assert that the law is being enforced in a vague and impenetrable manner. Because the risks of prosecution are so great, with 

million-dollar fines and possible prison sentences, companies would 

rather settle with the Justice Department than go to court. 

The result is a shortage of court decisions determining the limits 

of the law. Companies must then analyze cases prosecuted by the 

Justice Department and the settlements reached to determine how 

to do business in foreign markets. 

The business community complains that the absence of case law 

interpreting the breadth and scope of the FCPA inflates the Department’s prosecutorial discretion and confounds industries’ ability to conform to the law. For instance, there is no clear rule on 

what qualifies as a foreign official, nor what percentage of state 

ownership qualifies a company as an instrumentality of the state. 

Companies lack guidance on how expensive a gift must be to be 

considered a bribe. 

Businesses and corporations are bracing for thousands of new 

regulations from Obamacare and Dodd-Frank. The NLRB is trying 

to tell companies where they are allowed to build things in the U.S. 

We are expecting more onerous regulations from the EPA as it administratively legislates where Congress has chosen not to. It is no 

wonder that the business community suspects that the Administration is hostile to free enterprise. How are businesses supposed to 

hire when they do not know what their costs or legal exposure will 

be? 

FCPA prosecutions should be effective and fair, and they must 

be predictable. The rules of the road must be communicated clearly. Companies should have the same ability to guide themselves as 

motorists do, so that business can start moving again. 

As a part of its oversight functions over the Justice Department 

and the criminal laws of the United States, this Committee is well 

suited to examine the impact of the FCPA and to ask hard questions about whether the act is succeeding in its mission or is needlessly hurting American job creation. I look forward to hearing 

more about this issue and thank all of our witnesses for participating in today’s hearing. 

It is now my pleasure to recognize for his opening statement the 

Ranking Member of the Subcommittee, the gentleman from Virginia, Mr. Scott. 

3 

Mr. SCOTT. Thank you, Mr. Chairman, and I am pleased to join 

you for the Subcommittee hearing on Foreign Corrupt Practices 

Act. 

The Foreign Corrupt Practices Act contains provisions that make 

it unlawful for individuals and corporations to make payments or 

bribes to foreign officials for the purpose of obtaining or retaining 

business opportunities abroad. At the time of its passage in 1977, 

Congress was concerned that such bribery harms American businesses, erodes confidence in the economic system, rewards corruption instead of efficiency, and creates foreign policy problems. 

These concerns remain. 

In recent years, the Department of Justice has substantially increased the number of prosecutions against corporations and individual executives and has collected more in criminal fines than any 

other period in the history of the law. As a result of the collective 

efforts of the Department of Justice, Department of Commerce, and 

the Securities and Exchange Commission, the United States has investigated and prosecuted many foreign bribery cases. In fact, it 

has investigated and prosecuted more cases than any of the other 

38-member countries of the OECD, the Organization of Economic 

Cooperation and Development Convention on Combating Bribery of 

Foreign Public Officials in International Business Transactions. 

That is an international agreement aimed at reducing corruption 

in developing countries by encouraging sanctions against bribery in 

international business transactions carried out by companies based 

in the Convention member countries. These increased enforcement 

efforts have raised concerns regarding certain provisions of the 

statute among some in the business and legal community. They 

argue that some of the prosecutions are unfair and actually harm 

U.S. companies and ultimately our economy by stifling incentives 

to do business abroad. Some feel that overly-aggressive enforcement places U.S. companies at a disadvantage in the global marketplace when competing against companies not subject to the U.S. 

law. 

Specifically, they cite problems with current statutory definitions 

of ‘‘foreign official’’ and ‘‘instrumentality.’’ One of the problems is 

the contention that the Justice Department and the SEC are interpreting the definition of ‘‘foreign official’’ too broadly, especially 

when it comes to payments to companies that are state owned or 

state controlled. Under those circumstances, it may not be immediately apparent whether a manager or other employee is to be 

considered a foreign official in the sense contemplated by the law. 

Other recommendations for amending the law include having the 

ability to cite a company’s compliance program as an affirmative 

defense against criminal liability. Having this would allow companies to rebut the imposition of criminal liability for violations if employees or contractors responsible for the violation were found to 

have circumvented compliance measures that were in place to identify and prevent violations. 

As we speak, many companies invest substantial sums, perhaps 

even millions of dollars, in developing sophisticated compliance programs in an effort to train employees and in an effort to identify 

actual or potential problems and prevent them. They may retain 

in-house compliance officers and monitors, all without the ability to 

4 

be certain as to what conduct is safe and which isn’t. The result 

may often be over-compliance, but many feel that it is better to be 

safe than sorry. 

Lack of clear standards and guidance, even the availability of the 

Justice Department’s opinion release procedure, may often result in 

companies declining to engage in an array of legitimate business 

activities which not only stifles business growth but ultimately our 

economy. Punishing those companies and individuals who are acting in good faith and who are already doing everything they can 

to identify and prevent violations of the law runs counter to our 

basic tenets of fairness and justice. 

Another recommendation for change includes limiting successor 

liability. Why should a company be held criminally liable for actions of a company that it acquires or merges with, especially when 

actions occurred prior to the acquisition or merger and were entirely unknown to the acquiring company which had conducted its 

due diligence review of the offender company’s operations? This, 

too, runs counter to our system of justice and the principle for punishing only the guilty party. 

Other recommendations have included adding willfulness and 

materiality requirements and limiting parent liability for subsidiary’s conduct not known to the parent. 

Effective enforcement of the law is crucial to protecting and preserving the integrity of international business and economic development. As we applaud aggressive enforcement of our laws, we 

must also acknowledge the necessity of periodically reviewing those 

laws in order to ensure that they remain fair and just, as well as 

effective tools against crime and corruption, and that is what our 

witnesses will discuss today and why we look forward to their testimony. 

Thank you, Mr. Chairman. I yield back. 

Mr. SENSENBRENNER. I thank the gentleman from Virginia. 

The gentleman from Michigan, Mr. Conyers, the Ranking Member of the full Committee, is recognized for 5 minutes for an opening statement. 

Mr. CONYERS. Thank you, Chairman Sensenbrenner. 

You observed that under the dawdling of the Obama administration, when we went into an economic decline, I would just like to 

put into the record that in the first year, the first month of President Obama being sworn in on January 20, 2009, the unemployment rate was 598,000. I suppose you are not going to blame him 

for that. 

But in December, when he wasn’t in office, the unemployment 

rate was 524,000 people out of work; and in November, it was 

584,000, the people who lost their jobs and were unemployed, a 

small detail. 

Now, to my tremendously competent Subcommittee on Crime 

Chairman, Bobby Scott, about this overly aggressive enforcement, 

there have been 140 cases in 10 years. Will somebody explain to 

me what makes that overly aggressive? I don’t think so. 

And so I would like to just shed a little different view about this 

thing. To me, there are six points that I wanted to mention. 

First of all, I want to tell you a suggested amendment that I can 

support, and that is the addition of a compliance defense which 

5 

would permit companies to fight the imposition of criminal liability 

for these FCPA violations if individual employees or agents had circumvented compliance measures that were otherwise reasonable in 

identifying such violations. 

But let’s look at the clarification of foreign official and instrumentality provisions. Without a clear understanding of who is a 

foreign official, this could create a problem, and I think I can support that one. 

But now let’s start looking at limiting successor liability and limiting the parent company liability for acts of subsidiary. You don’t 

get—if you buy a house and there is a mortgage on it that you 

didn’t find, your liability isn’t limited. You have got to pay for it. 

And so why should companies with pretty good sized legal assistance have to get off because there was something going on that 

they didn’t know about? There is no such exception or modification 

made in the general practice of law, and I don’t see why it should 

be here. Limiting the parent company liability for acts of the subsidiary. Oh, they didn’t know they were doing wrong. Yeah, right. 

They have got all the lawyers that they need, and to now tell me 

that they didn’t know that their subsidiary was engaged in wrongdoing is pretty hard for me to swallow this morning. 

Adding a willfulness requirement for corporations, I am against 

that, too. If they do something wrong, whether we can find out who 

is willful or not, that is up to them to find out in court. 

Thank you, Chairman Sensenbrenner. 

Mr. SENSENBRENNER. Thank you very much, Mr. Conyers. 

It is now my pleasure to introduce today’s witnesses. 

Mr. Greg Andres has served as Acting Deputy Assistant Attorney 

General in the Criminal Division at the Department of Justice 

since late 2009. In that capacity, he supervises the fraud section, 

the appellate section, the capital case unit, and the organized crime 

and racketeering section. He joined the Division on detail from the 

U.S. Attorney’s Office for the Eastern District of New York, where 

he has been an Assistant United States Attorney since 1999. He 

graduated from the University of Notre Dame and the University 

of Chicago Law School, where he was a member of the University 

of Chicago Law Review. 

Judge Michael Mukasey served as Attorney General of the 

United States from November 2007 to January 2009. He joined 

Debevoise as a partner in the litigation practice in New York in 

February 2009, focusing his practice primarily on internal investigations, independent board reviews, and corporate governance. 

From 1988 to 2006, Judge Mukasey served as a district judge in 

the U.S. District Court for the Southern District of New York, becoming Chief Judge in 2000. Prior to his work with the U.S. District Court, he was in private practice for 11 years. From 1972 to 

1976, he served as an Assistant United States Attorney for the 

Southern District of New York and chief of the Official Corruption 

Unit in 1975 to 1976. He received his LLB from Yale Law School 

in 1967, and his B.A. from Columbia College 4 years earlier. 

George Terwilliger is a senior partner at White & Case LLP and 

global head of the firm’s White Collar Practice Group. Mr. 

Terwilliger served 15 years in public service as a Federal prosecutor in the U.S. Justice Department. He served as U.S. Attorney 

6 

for the District of Vermont and as Deputy Attorney General. He 

earned his Juris Doctor from the Antioch School of Law in 1978, 

and his Bachelor’s degree from Seton Hall University in 1973. 

Ms. Shana-Tara Regon serves as director of White Collar Crime 

Policy for the National Association of Criminal Defense Lawyers. 

She focuses on monitoring and attempting to prevent over-criminalization and over-federalization. She also coordinates the NACDL’s 

strategic partnership with other organizations on multiple Federal, 

legislative and agency initiatives. Prior to joining NACDL, Ms. 

Regon practiced as a white-collar defense lawyer for Shipman and 

Goodwin LLP in Hartford, Connecticut, representing individual 

and corporate clients in state and Federal civil and criminal investigations. Before her work at Shipman and Goodwin, Ms. Regon 

clerked for Justice Joette Katz of the Connecticut Supreme Court. 

She is a former president of the District of Connecticut’s chapter 

of the Federal Bar Association and a former pupil of the Oliver 

Ellsworth Inn of Court. She received her Juris Doctor degree from 

Western New England College of Law, where she was a Note Editor for the Law Review. She also holds a Master of Fine Arts and 

Fiction Writing from the University of New Orleans and a B.A. in 

English from Sweet Briar College. 

Each witness will be recognized for 5 minutes to summarize their 

written statement. Without objection, the full written statements 

will be included in the record at the point of each witness’ testimony, and the Chair now recognizes Mr. Andres. 

TESTIMONY OF GREG ANDRES, DEPUTY ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF 

JUSTICE 

Mr. ANDRES. Good morning, Chairman Sensenbrenner, Ranking 

Member Scott—— 

Mr. SENSENBRENNER. Can you pull your mic up a little bit closer 

and make sure that it is turned on? We will reset the clock. 

Mr. ANDRES. Okay. Good morning, Chairman Sensenbrenner, 

Ranking Member Scott, and distinguished Members of the Subcommittee. Thank you for providing me with the opportunity to 

speak to you today about the Department of Justice’s enforcement 

of the Foreign Corrupt Practices Act. I am privileged to appear before you on behalf of the Department of Justice. 

As the FCPA’s legislative history made clear, corporate bribery 

is bad for business. In our free market system it is basic that the 

sale of products should take place on the basis of price, quality, and 

service. The Department of Justice is committed to fighting foreign 

bribery through continued enforcement of the FCPA, and by providing guidance to corporations and others on our enforcement actions. 

Foreign corruption remains a problem of significant magnitude. 

The World Bank estimates that more than $1 trillion in bribes are 

paid each year, roughly 3 percent of the world economy. Some experts have concluded that bribes amount to a 20 percent tax on foreign investment. In the end, corruption undermines efficiency and 

good business practices. 

Recently, a Federal jury in the Central District of California 

heard evidence of bribes paid by an American company to Mexican 

7 

officials. At issue were bribes, including a $297,500 Ferrari Spyder, 

a $1.8 million yacht, and payments of more than $170,000 toward 

one official’s credit card bills. This conduct does not amount to good 

business practice. 

In recent years, the Department has made great strides in prosecuting foreign corruption in all corners of the globe, against both 

foreign and domestic companies. These cases have often involved 

systematic, longstanding schemes in which significant sums of 

money were paid. They did not involve single bribe payments of 

nominal sums. For example, the Department’s prosecution of 

Daimler AG involved hundreds of improper payments worth tens of 

millions of dollars to foreign officials in almost two dozen countries. 

Similarly, the Department’s prosecution of Siemens AG, a German 

corporation, and three of its subsidiaries involved over $800 million 

in improper payments in a variety of countries. 

When the Department seeks to enforce the FCPA against corporate entities, we do so pursuant to the internal procedures 

known as the Principles of Federal Prosecution Of Business Organizations. These Principles require Federal prosecutors to consider 

nine factors when assessing whether to pursue charges against a 

business entity. Those factors include the existence and effectiveness of a corporation’s pre-existing compliance program, as well as 

remedial actions and a company’s cooperation. 

Many have commented about the recent increase in FCPA enforcement actions. At least one likely cause for this increase in 

cases is disclosures by companies consistent with their obligations 

under the Sarbanes-Oxley Act, which requires senior corporate officers to certify the accuracy of their financial statements. This has 

led to more companies discovering FCPA violations and making the 

decision to disclose them to the SEC and the Department of Justice. 

Of note, the United States’ treaty obligations also impact the Department’s enforcement of the FCPA. 

The Department also takes seriously our obligation to provide 

guidance in this area. Our goal is not simply to prosecute FCPA 

violations, but also to prevent corruption at home and abroad and 

promote a level playing field in business transactions. Senior officials from the Department and others often speak publicly about 

our enforcement efforts, highlighting relevant considerations and 

practices. In addition, through our Opinion Release Procedure, the 

Department advises companies on how to comply with the FCPA. 

This procedure is unique in U.S. criminal law. 

The Department is proud of our FCPA enforcement record, and 

of our continued partnership with the SEC and the Departments 

of State and Commerce. We look forward to working with Congress 

as we continue our important mission to prevent, deter, and prosecute foreign corruption. 

Thank you. 

[The prepared statement of Mr. Andres follows:] 

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Mr. SENSENBRENNER. Thank you, Mr. Andres. 

Judge Mukasey? 

TESTIMONY OF THE HONORABLE MICHAEL MUKASEY, 

FORMER ATTORNEY GENERAL, PARTNER, DEBEVOISE & 

PLIMPTON LLP 

Judge MUKASEY. Thank you, Mr. Chairman. 


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Good morning, Chairman Sensenbrenner, Ranking Member 

Scott, and Members of the Committee. Thank you very much for 

hearing me today on behalf of the U.S. Chamber Institute for Legal 

Reform on the important subject of the Foreign Corrupt Practices 

Act. 

I should say at the outset that none of us is against—or I should 

say none of us favors the kinds of cases described by Mr. Andres. 

The question is what can be done to detect, deter, and prevent the 

incidence of that kind of behavior. 

For all the merits of the FCPA in curbing corrupt business practices, and they are substantial, more than 30 years of experience 

have shown ways in which the law and its enforcement can be improved. In my written testimony I describe six possible amendments to help do that. Today I would like to concentrate and highlight two in particular, the addition of a compliance defense, and 

a clarification of the meaning of the terms ‘‘foreign official’’ and ‘‘instrumentality’’ in the FCPA. These improvements I think are likely 

to raise the standards that businesses follow and will give more 

focus and certainty to help them better comply with the FCPA. 

The law does not now provide a compliance defense—that is, an 

affirmative defense that would allow companies to rebut criminal 

liability for violations if the people responsible evaded compliance 

measures that were otherwise reasonably designed to identify and 

prevent such violations. A company can now be held liable for violations committed by rogue employees, agents or subsidiaries even 

if the company has a state-of-the-art FCPA compliance program. 

It is true that the DOJ or the SEC may look more favorably on 

a company with a strong FCPA compliance program when deciding 

whether to charge the company or what settlement terms to offer, 

and a compliance program can be taken into account by a court at 

the sentencing of a corporation convicted of an FCPA violation. But 

those benefits are subject to unlimited prosecutorial discretion, or 

are available only after the liability phase of a prosecution is over, 

or both. There is also no guarantee that a strong compliance program will be given the weight it deserves. 

The system now in place has conflicting incentives. On the one 

hand, an effective compliance program can hold out a qualified 

promise of indeterminate benefit should a violation occur and be 

disclosed. On the other hand, if all that can be achieved is a qualified and indeterminate benefit, there is a perverse incentive not to 

be too aggressive lest wrongdoing be discovered, and there is a resulting tendency of standards to sink to the level of the lowest common denominator, or at best something that is only a slight improvement over it. This Catch-22 policy doesn’t really serve anyone’s interest. 

Here I think it is useful to look for guidance to another statutory 

system in which companies now do have a compliance defense 

under U.S. law, and I am speaking of the system we use to combat 

improper workplace discrimination based on race, sex, religion, and 

national origin. Under Title 7 of the Civil Rights Act of 1964, there 

can be no corporate liability if a company has an anti-discrimination policy and provides a way for employees who have been subject 

to workplace discrimination to get redress. Dozens, if not hundreds, 

of cases are resolved every year based on this compliance program 

20 

defense. I think the lesson here is that having a compliance defense 

actually diminishes the overall incidence of discrimination because 

it encourages employers to have robust systems of compliance. Otherwise, it would look like the interests that are served by the FCPA 

are given more weight in a statutory scheme than the interests 

served by the Civil Rights laws, which of course is not the case. 

And I think we should draw a lesson from Title 7 on how best to 

achieve the goals of the FCPA statute. 

The FCPA prohibits corrupt payments or offers of payment to 

foreign officials, but it does not provide adequate guidance as to 

who is a foreign official. The term is defined to include any officer 

or employee of a foreign government or any instrumentality thereof, but the FCPA doesn’t define what an instrumentality is. The 

DOJ and the SEC considers everyone who works for an instrumentality, from the most senior executive to the most junior mailroom 

clerk, to be a foreign official. Two judges recently rejected defense 

motions arguing that employees of state-owned enterprises are not 

foreign officials under the FCPA, and in doing so, the courts indicated that there are limits on the definition of instrumentality, but 

neither court clarified what those limits are. 

If the definitions of these fundamental statutory terms vary by 

circumstance and by case, and therefore have to be decided by a 

jury rather than as a matter of law, it becomes impossible for companies to figure out in advance what conduct may and may not provide a meaningful risk of violating the FCPA. This approach creates uncertainties and puts up barriers to U.S. businesses trying 

to sell their goods and services abroad, particularly in countries 

where many companies are partly owned or controlled by the state. 

It also makes it difficult for companies to focus their monitoring 

and compliance programs on clearly identifiable situations involving foreign officials and foreign instrumentalities. 

The FCPA therefore should be amended to clarify the meaning 

of ‘‘foreign official,’’ indicate the percentage of ownership by a foreign government that would qualify the entity as an instrumentality. We think majority ownership is the most plausible threshold. 

The reforms that I described today and in my written testimony, 

by providing greater clarity and certainty to the business community, would reinforce incentives for compliance and help ensure 

that companies operating in the U.S. or listed on its securities exchanges adhere to high legal and ethical standards when they do 

business abroad. The result will be a statute that is both stronger 

and fairer. 

Thank you very much. 

[The prepared statement of Judge Mukasey follows:] 

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Mr. SENSENBRENNER. Thank you, Judge Mukasey. 

Mr. Terwilliger? 


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TESTIMONY OF GEORGE J. TERWILLIGER, III, 

PARTNER, WHITE & CASE LLP 

Mr. TERWILLIGER. Thank you, Mr. Chairman, Ranking Member 

Scott, Mr. Conyers. 

Mr. SENSENBRENNER. Mr. Terwilliger, could you move the mic 

closer and make sure it is on? And reset the clock, please. 

Mr. TERWILLIGER. Thank you. Mr. Chairman, Ranking Member 

Scott, Mr. Conyers, it is always a privilege to be asked to join the 

Committee in this room. I thank you and the Committee Members 

for the privilege of coming back. 

At the outset, I would like to put my further remarks in this context. I favor the fair enforcement of sensible anti-corruption statutes because corrupt markets cannot be free markets. In international commerce specifically, a level playing field is essential to 

free market competition, and I believe American businesses are 

well positioned to succeed in free and fair competition. 

Today I endeavor to bring to our discussion my experience both 

in public service and in the private practice of law which you so 

kindly made reference to, Mr. Chairman. 

The Department of Justice and the Securities and Exchange 

Commission are realizing the enforcement goal of driving companies into far greater compliance with the FCPA than has ever before been achieved. But there is another less desirable effect that 

results from the combination of greatly stepped up enforcement 

combined with the uncertainty of the precise legal parameters of 

conduct subject to the requirements and proscriptions of this statute. That hidden effect is the cost imposed on our economic growth 

when companies forgo business opportunity out of concern for 

FCPA compliance risk. This hurts the creation of jobs and the ability of U.S. companies to compete with companies elsewhere that do 

not have to concern themselves with uncertainties of the terms and 

requirements of the FCPA. 

I and the practice group which I chair at White & Case guide 

companies through comprehensive FCPA risk assessments and 

counsel companies seeking to create or improve robust compliance 

programs. We also advise companies on FCPA matters in the context of contemplated or ongoing business transactions and projects. 

I am able to draw on this personal experience and with confidence 

convey to the Committee that there is hidden cost borne of the uncertainties attached to FCPA compliance risk. In calculating the 

risk arising from FCPA compliance obligations against the benefits 

of a given business venture, uncertainties exist as to the requirements of the FCPA and its interpretation and application by enforcement authorities. 

When faced with that uncertainty, companies sometimes forgo 

deals they could otherwise do, take a pass on contemplated 

projects, or withdraw from ongoing projects and ventures. Companies making such decisions are not doing so because they are generally risk-averse. They are doing so by the simple reasoning that 

the risk of non-compliance, as defined by the statute and those 

charged with its enforcement, cannot be calculated with sufficient 

certainty. 

Thus, I commend consideration of legislative reform that can 

help to clarify ambiguity in the statute and its application. Others, 

38 

both here today and in other fora, have suggested terms of the statute that would benefit from further definition or clarification. I 

would add to those suggestions these further considerations. 

First, I believe it is worthy to consider providing by statute a 

post-closing period of repose for companies involved in acquisitions 

during which they would be shielded from FCPA enforcement while 

undertaking a review of FCPA compliance in the acquired business 

and undertaking steps to remediate potential FCPA issues that are 

discovered as a result of that review. 

Providing that an acquiring company would have a period of time 

from the date of acquisition to conduct a thorough assessment, remediate existing misconduct and impose its compliance policies 

upon the acquired company is consistent with the core objectives of 

FCPA enforcement and presents no hazard to the fundamental objectives of the statute itself. 

Second, a statutory safe-harbor provision in the law could provide companies that strive for anti-corruption compliance with increased certainty that their efforts will provide them with some 

level of protection from FCPA liability. Such a provision could 

shield from criminal liability companies that operate demonstrably 

robust compliance programs and that self-report any misconduct 

that arises despite their best efforts. It makes no sense to me to 

engage in criminal prosecution of a company that operates a stateof-the-art compliance program and that investigates, corrects and 

self-reports its own non-compliant circumstances. 

My written statement contains additional detail as to these suggestions and further observations on proposals outlined by others. 

I look forward to answering any questions the Subcommittee may 

have and to discussing these matters with Members today or members of staff on any other occasion. 

Thank you. 

[The prepared statement of Mr. Terwilliger follows:] 

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Mr. SENSENBRENNER. Thank you, Mr. Terwilliger. 

Ms. Regon? 


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TESTIMONY OF SHANA-TARA REGON, DIRECTOR, WHITE COLLAR CRIME POLICY, NATIONAL ASSOCIATION OF CRIMINAL 

DEFENSE LAWYERS 

Ms. REGON. Thank you. Good morning, Chairman Sensenbrenner, Ranking Member Scott, and distinguished Members of the 

Subcommittee. My name is Shana Regon, and I am director of 

White Collar Crime Policy for the National Association of Criminal 

Defense Lawyers. 

NACDL is the country’s largest organization of criminal defense 

lawyers, and we work to ensure justice and due process for all of 

those accused of crimes. 

Despite its more than 30-year history, there is vast disagreement 

and uncertainty about the meaning of many of the FCPA’s key provisions. Because there has been so little judicial scrutiny of FCPA 

enforcement theories, right now the FCPA essentially means whatever the DOJ and SEC says it means. 

Significantly, DOJ has been allowed to use the law as if it were 

virtually a strict liability statute, meaning that actual knowledge 

of wrongdoing does not need to be proved. Such an application is 

inconsistent with notions of fundamental fairness. In addition, because the reach of the FCPA is so vast and its provisions so amorphous, DOJ now oversees and regulates virtually all American 

companies and individuals seeking to do business abroad in ways 

those who created the FCPA never could have envisioned. 

The purpose of the FCPA is laudable. It was originally designed 

to prohibit U.S. companies and individuals from offering bribes to 

foreign government officials for the purpose of unfairly obtaining 

business opportunities. But explicit commercial bribery is not the 

only kind of situation in which the FCPA can be applied. Because 

the law vaguely prohibits giving anything of value, it can unfortunately be used to criminalize all kinds of perfectly legitimate business activities. 

Also, DOJ, as you have heard from my other colleagues this 

morning, has taken a very broad view of who qualifies as a foreign 

official. Recent prosecutions have involved payments to mid-level 

employees of state-owned companies. This expansive definition of 

foreign official makes doing business in many areas of the world 

automatically rife with potential criminal exposure. 

Take this example. A U.S. company is trying to win a contract 

with a partially state-owned Chinese hospital in order to provide 

it with rubber gloves. In an effort to create goodwill and foster a 

business relationship between the parties, managers of the U.S. 

company take their Chinese counterparts out to dinner to talk 

about the potential deal. Maybe they pay for the car service in 

order to pick everyone up. Are these FCPA violations? Perhaps 

they fly the Chinese managers to the U.S. for a site visit to the factory, and provide them with a hotel room during their stay. While 

they are close by, they take their guests to visit a famous landmark 

or tourist destination. What about a small gift when, months into 

the negotiations, one of the Chinese managers announces the birth 

of his son? What about giving a contribution to their favorite charitable cause in China? 

The truth is, U.S. companies and the individuals working for 

them do not have any real way of knowing whether any of these 

47 

activities could expose them to criminal liability under the FCPA. 

Right now, a careful criminal defense lawyer would advise her client that it depends entirely on the opinions of the DOJ or SEC at 

a particular moment in time. 

It is also worth emphasizing that, although the statute contains 

a willfulness requirement for individuals in the anti-bribery provisions, the government has increasingly relied on the willful blindness doctrine as a substitute for proving willfulness and knowledge 

in FCPA prosecutions. This doctrine has been extended to cases 

where no actual knowledge existed. 

The practical effect of this doctrine is that the CEO of an American company can be held personally, criminally liable for the actions of his employee halfway across the world, whether he knew 

about them or not. This doctrine dangerously eviscerates the mens 

rea requirements Congress meant for the statute to provide. 

NACDL is not advocating that American companies or individuals be permitted to bribe officials in other countries in order to get 

business done. Commercial corruption is a very real problem in the 

global marketplace, and advocating for reform in the FCPA context 

is absolutely not advocating for commercial bribery. But here is the 

reality: right now, Americans cannot ascertain with any degree of 

confidence what kinds of conduct are legal. The result is that companies are over-complying at great cost, and individuals have no 

real idea of what is prohibited and what is not. 

We need more clarity in the law. While it is true that the government has yet to prosecute someone solely for a $100 dinner, nothing in the statute prevents them from doing so, and nothing in 

their own enforcement policies or procedures prevents them from 

doing so. Punishing American businesses who are acting in good 

faith and throwing in jail supervisors who had no way of knowing 

about a payment half a world away could not have been what Congress intended, nor can that be a commonsense approach in this 

difficult economic climate that has cost many Americans their jobs 

and imperiled our Nation’s status in the global economy. 

The FCPA is emblematic of the general problem of over-criminalization. While the FCPA properly seeks to prevent serious misconduct, its language and application have led to unintended consequences. NACDL appreciates your efforts to consider and address 

these issues, and we join many organizations, on both the left and 

the right, in the call for some much-needed commonsense reform 

in this area, particularly reforms that will strengthen the mens rea 

requirements of the statute and bring clarity, uniformity and fairness to its enforcement. 

Thank you. 

[The prepared statement of Ms. Regon follows:] 

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Mr. SENSENBRENNER. Thank you very much. 

The Chair is going to defer his questions until the end. 

And to begin, the Chair recognizes the gentleman from Pennsylvania, Mr. Marino, for 5 minutes. 

Mr. MARINO. Thank you, Mr. Chairman. 

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Deputy Andres, I am going to begin with you, and then we will 

go to your left. What is the number one obstacle in the way of enforcement today on corruption, and what is your recommendation 

to alleviate that obstruction? 

Mr. ANDRES. Foreign bribery cases are difficult for a variety of 

reasons. Obviously, in prosecuting those cases, we need to rely on 

evidence from abroad, which takes time. We make MLAT requests 

from our foreign partners to get that evidence. But they take 

longer, and they are harder to detect than domestic cases, because 

much of the conduct often takes place abroad. 

So I think the statute of limitations, I know the Department has 

discussed recommendations in the past to extend the statute of limitations so that we had a longer period of time to investigate those 

cases, so that we could root out the problem of foreign corruption, 

which is a substantial problem. There has been much discussion 

about the increased enforcement of foreign bribery, but I think that 

discussion fails to recognize the size and magnitude of the problem, 

which are substantial. 

Mr. MARINO. Thank you. 

General Mukasey, the same question, but could you expand a little bit on—you brought up two points that you would like to see 

implemented? 

Judge MUKASEY. Yes. 

Mr. MARINO. Please. 

Judge MUKASEY. I think the availability of a compliance defense 

actually might help the problem that Mr. Andres just identified by 

allowing companies to generate more information on a voluntary 

basis to help prosecute those cases that have to be prosecuted 

abroad. If companies have vigorous enforcement and oversight 

mechanisms that they can rely on to avoid prosecution themselves, 

they are perfectly available to provide information with respect to 

foreign actors who may very well deserve to be prosecuted. 

The definition, the issue of definition I think is a major problem 

for reasons that were referred to in Ms. Regon’s testimony. If we 

don’t know who a foreign official is, everything from providing a 

cab ride to somebody who worked late on up is going to make it 

very difficult for a company to function, and as she pointed out, a 

defense lawyer has to err on the side of caution in advising her clients on what they can and can’t do, which inhibits the conduct of 

business. 

Mr. MARINO. Thank you. 

Attorney Terwilliger, do you want me to repeat the question? I 

saw you jotting some notes, so I think you know what I am looking 

for. 

Mr. TERWILLIGER. Thank you. Actually, I think a point worth 

making in terms of obstacle to enforcement and achieving the objectives of the statute is that companies are actually much better 

positioned to gather more information more quickly overseas than 

the Justice Department or the SEC is. And as a result of that, policies that favor companies who do investigate themselves and who 

do engage in voluntary disclosure is an aid to enforcement rather 

than an obstacle. 

I believe, frankly, the Justice Department could do more to encourage such self-investigation, voluntary disclosure and so forth. 

55 

And frankly, the Congress ought to pay attention to things like 

Dodd-Frank and the SEC whistleblower program, which are undercutting internal compliance measures, including the self-reporting 

which can lead to voluntary disclosure. 

Mr. MARINO. Thank you. And Attorney Regon, you brought out 

some good points as to where this type of investigation would go. 

But where do you draw the line when it comes to gifts, between 

that and corruption? 

Ms. REGON. Thank you, Congressman Marino. That is an excellent question, and I think probably DOJ might know it when they 

see it. I think Ferraris and water ski jets and millions of dollars 

of payment for direct quid pro quo can be strong evidence of explicit commercial bribery. But unfortunately, with a statute that is 

written so broadly, all sorts of legitimate business activities and 

normal legitimate business payments can get swept into this. And 

I think that three out of the four witnesses today have spoken to 

the Committee about our fear that the language is providing DOJ 

with the ability to bring in too much of this legitimate business activity. 

Certainly, I don’t think you heard any of the witnesses today advocate on behalf of direct explicit commercial bribery. It does harm 

American businesses. But there is a line, and it is recognizable between that and perhaps giving a charitable donation to someone 

because they asked and you have been in a business dealing with 

them for 5 years, or giving a cab ride home to an employee. 

Mr. SENSENBRENNER. The time of the gentleman has expired. 

The gentleman from Virginia, Mr. Scott, is recognized for 5 minutes. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Judge Mukasey, you talked about the compliance defense. Are 

you asking for a total defense or required mitigation? 

Judge MUKASEY. I think we are asking for a defense, but it 

would be an affirmative defense. Understand that the state of play 

in a trial would be that there would be a proved violation, and then 

the question would be whether the compliance mechanism that the 

company had in place was reasonably designed, if complied with, 

to have detected the violation that took place. 

It is an uphill climb for a company to establish that defense. All 

that we are asking is that they should be allowed to try. 

Mr. SCOTT. What should be the mens rea requirement for an individual, the CEO, and for the corporation? 

Judge MUKASEY. The mens rea requirement should be what it is 

in connection with crimes generally, that you have to—what I used 

to say when I was a prosecutor and when I was AG is you 

shouldn’t prosecute any case in which you can’t tell yourself that 

the person who is accused of committing it, when he put his head 

on the pillow that night, didn’t tell himself or should not have told 

himself, hey, I committed a Federal crime today. If you can’t say 

that somebody knew that and had every reason to know it, then 

the case should not be prosecuted. 

That is the mens rea requirement. It has to be something that 

somebody can clearly identify with a straight face as having been 

a criminal act. 

Mr. SCOTT. What about the corporation? 

56 

Judge MUKASEY. The corporation, in a sense there is no such 

thing as the corporation. They are just a bunch of people. So there 

has got to be somebody who identifiably had the knowledge or who 

knew facts to which he voluntarily and purposely closed his eyes, 

and this trenches on the willful ignorance issue that has come up 

recently. 

Mr. SCOTT. You can have a rogue individual who commits the 

crime. When should the corporation be responsible for that? 

Judge MUKASEY. When that individual is in a policymaking position. 

Mr. SCOTT. Mr. Andres, you have mentioned six-figure bribery 

cases, and we have also heard about free meals and cab rides. Are 

de minimis cases ever brought? 

Mr. ANDRES. They are not, sir. And just to clear the record, the 

Department of Justice has never prosecuted somebody for giving a 

cup of coffee to a foreign official, a martini, two martinis, a lunch, 

a taxi ride, or anything like that. And it is not clear that those acts 

in and of themselves would evidence an intent to bribe somebody. 

If one looks at the Department’s actions—— 

Mr. SCOTT. Would you object to a provision excluding de minimis 

transactions? 

Mr. ANDRES. I would, for a few reasons. One, small de minimis 

payments paid over time on multiple occasions can amount to a 

more significant bribe if, in fact, there is an intent to bribe. I think 

the relevant consideration is not the amount of the bribe but rather 

the intent, whether it is an intent to bribe. I think that both the 

Department of Justice and the government need to be clear that all 

bribery, just as in domestic bribery, is inappropriate. 

So I don’t think it is appropriate to have an exception for a 

smaller bribe. But I would also note that this talk of taxis and 

meals is not reflected in our enforcement actions. The cases that 

we have prosecuted—— 

Mr. SCOTT. But one of the things we are hearing is people don’t 

know where the line is, and if you were to put something in the 

code to help people ascertain where that line is, it would be helpful. 

That is why I asked about a de minimis, and you have suggested 

you don’t want that in there, which brings the cab rides and meals 

back in play. 

Mr. ANDRES. I believe that a reflection of the Department’s enforcement actions, our public comments on our website provide adequate guidance with respect to the statute. I don’t think anybody 

seriously believes that providing a taxi ride to somebody is, in fact, 

a violation of the Foreign Corrupt Practices Act. We have prosecuted cases in which people have turned over suitcases full of 

cash, hundred-dollar bills amounting to a million dollars. How 

someone would have the impression that we are prosecuting—— 

Mr. SCOTT. Well, let me have Judge Mukasey comment on it. 

Judge MUKASEY. The taxi ride example is for real. It occurred at 

a company in which somebody worked overtime, was given a taxi 

because the trains had stopped running, and then some nervous 

counsel found out about it, reported it to the Justice Department 

and was told that it probably wasn’t a violation but to go back and 

investigate the entire circumstances of the relationship with that 

company and come up with a result of that investigation to deterVerDate Aug 31 2005 18:35 Sep 05, 2011 Jkt 000000 PO 00000 Frm 00060 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\061411\66886.000 HJUD PsN: 66886
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mine that no illegal payments had been made. A couple of hundred 

thousand dollars later it was determined that, in fact, there had 

been no violation. But that couple of hundred thousand dollars 

could have been used for a lot better purposes than conducting an 

unnecessary investigation. 

Mr. SENSENBRENNER. The gentleman’s time has expired. 

The Vice-Chairman of the Committee, the gentleman from Texas, 

Mr. Gohmert? 

Mr. GOHMERT. Thank you, Mr. Chairman. 

I would like to follow-up on that, General Mukasey. One of the 

problems that I hear—and, of course, you have been a judge, and 

you listen for little words that prick up your ears. When I hear 

words like ‘‘I don’t think that would be a violation,’’ that doesn’t 

give companies much assurance if somebody in a legal position 

with the government says I don’t think it is, or I think it is. It 

seems like we ought to have a clear enough line that people don’t 

have to think. They can say yes, it is or it isn’t. 

And I appreciate the statement that all bribery is illegal, Mr. Andres, and there should not be an exception for smaller bribery. The 

thing is, we can define bribery. And as in the example that General 

Mukasey has mentioned, a taxi ride, if you say, for heaven’s sake, 

anything under this amount obviously is not bribery, then that 

gives companies a clear line where they know they can do this and 

not have to spend $200,000 because there may be a young prosecutor or a young FBI agent that thinks I can make a name going 

after this big company. 

And, of course, we know that because of the Director’s 5-year up 

or out policy, we eliminated thousands and thousands of years of 

experience in the FBI supervisory positions. So like in many cases, 

or some cases at least, you go from people with 25 years or more 

to 5 or 6 years being the supervisor. When you had experienced 

people in charge they would say, ‘‘Give me a break. You know, a 

$10 taxi ride is not bribery. We are not going to do that.’’ When 

you have got a 5-year supervisor going I have got a career in front 

of me, I want to get the Director’s attention, then it seems like 

there is more room to have FBI agents or prosecutors more aggressive than they should be. 

I am for punishing crime. I was known as a hang ’em high-type 

judge. But I do believe in having the law clear enough so people 

don’t have to worry about it. 

General Mukasey, let me ask you. If the DOJ doesn’t give information about how it is making charging decisions, is that in effect 

treating every company as a potential law breaker where they can’t 

make adequate plans for the future? 

Judge MUKASEY. Obviously, I think the more information that is 

available on how these decisions are made, the easier it is for people to function. But there is a difference between saying this is how 

we do it on a general and non-binding basis, and actually having 

a legal provision in the statute that is clear to everybody as a basis 

for governing your behavior going forward. It is one thing for somebody like Mr. Andres, who is very experienced and makes sane and 

rational decisions, to say, well, this is not the way I would do it, 

but that doesn’t necessarily govern the behavior of everybody out 

there, and it certainly doesn’t control what goes through the mind 

58 

of a corporate attorney who is worrying about the possibilities for 

his company going forward. 

Mr. GOHMERT. Have you ever drafted specific language that you 

think would help make the law tighter? 

Judge MUKASEY. I believe the Chamber has submitted a bill. 

Mr. GOHMERT. Did you participate in that? 

Judge MUKASEY. I did not participate in it. I reviewed it. 

Mr. GOHMERT. Okay. Saying you reviewed it doesn’t tell me anything. 

Judge MUKASEY. Well, it says—— 

Mr. GOHMERT. You can review it and think it is crazy. 

Judge MUKASEY. The language is that $250 is presumptively 

proper. 

Mr. GOHMERT. So you like the language? 

Judge MUKASEY. Which seems about right. I do. 

Mr. GOHMERT. Okay. Thank you. 

Mr. Andres, why should a company ever be criminally prosecuted 

if it does a compliance program that meets all the reasonable 

standards of Chapter 8 guidance? I mean, obviously they can have 

rogue people that do things, but I believe in holding the people accountable that commit crimes and make mistakes. But if the company has done everything appropriately and legally, why not go 

after individuals instead of a company that didn’t know about the 

incident? It seems like it is a strict liability standard. Please. 

Mr. ANDRES. Congressman, the Department does not prosecute 

corporations based on the acts of a single rogue employee. It hasn’t, 

certainly not in this field. And again, when you—— 

Mr. GOHMERT. But it could. 

Mr. ANDRES. Not under the guidelines that are provided under 

the Principles of Federal Prosecution of Business Organizations. 

We look at how pervasive the conduct is. If the employee is a highranking official in the company, that is a different issue. But if it 

is a rogue employee on a lower level, we would not prosecute that 

under our own principles. 

Let me address your point about the compliance defense. The Department would oppose an affirmative compliance defense for a few 

reasons. First, we already take into consideration a company’s compliance program. We take it into consideration and review it, and 

it is a serious consideration. Over the last 20 years the Department 

has developed a series of broader factors that we consider that includes compliance, that includes cooperation and self-disclosure. To 

review only compliance would be a substantial change in the way 

that the Department has done business over several Attorney Generals for more than 20 years. 

The affirmative defense of compliance is also a novel concept. It 

is not one that is well defined, either here or otherwise, and it 

could lead to paper compliance; that is, a company having a compliance program on paper that is not rigorous and that doesn’t help 

to prevent bribery. 

And one last point. Critics or proponents of the compliance defense have relied on foreign law to support that position. They have 

turned to the UK Bribery Act, which has been criticized by many 

in the business community here in the United States. But more importantly, it is not yet in effect. So there is no precedent to follow 

59 

to say that the UK Bribery Law and its affirmative compliance defense would be effective here in the United States. 

Secondly, they point to Italian law and their Foreign Corrupt 

Practices Act, which also has a compliance defense. That provision 

has been roundly criticized in the international circles. The OECD 

said that that defense provided little assistance in determining 

what an acceptable model is in a particular case. That defense has 

actually never been applied in practice. 

So if we take on this affirmative compliance defense, we, in effect, create a loophole, because as even the proponents of the defense say, no compliance program is perfect. It would allow necessarily for some bribery to occur. So I think that given that it is 

a novel and somewhat risky approach, the time is not right to 

adopt such a compliance defense. 

Mr. GOHMERT. Thank you, Mr. Chairman. 

Mr. SENSENBRENNER. The gentleman from Michigan, Mr. Conyers, is recognized for 5 minutes. 

Mr. CONYERS. Thank you, Chairman Sensenbrenner. 

Welcome back to the Committee, General Mukasey. 

Judge MUKASEY. It is a pleasure to be here. 

Mr. CONYERS. You have a few more lawyers than you had when 

we last saw you before us. Let’s see, you are down to only 700 now. 

And you were up over 100,000 the last time I saw you here. 

Judge MUKASEY. I had the benefit of 100,000 then, only 700 now. 

Mr. CONYERS. Yeah. Let me ask you, was it during—was it when 

you were Attorney General that we had this taxi ride case happen 

that cost a couple of hundred thousand bucks? 

Judge MUKASEY. I don’t know precisely when that happened. 

Mr. CONYERS. But it could have been during your watch. 

Judge MUKASEY. It is conceivable. 

Mr. CONYERS. Okay. Now, of all people, I know you are not telling us here today that ignorance of the law is an excuse. If you 

don’t know that it is against the law, if you don’t know that something you are doing is against the law, does that excuse you? 

Judge MUKASEY. No. The—— 

Mr. CONYERS. Right. Ignorance of the law is no excuse. So how 

can you say that you didn’t prosecute anybody if they went to bed 

at night and they didn’t know they were violating the law? You ask 

people before they are indicted whether they ever went to bed and 

thought they were violating the law? 

Judge MUKASEY. That they either knew or should have known by 

the standards of society as we accept them. We didn’t—— 

Mr. CONYERS. Right. So ignorance of the law is no excuse. 

Judge MUKASEY [continuing]. Is okay to sell drugs or rob banks. 

Mr. CONYERS. Yeah. Ignorance of the law is no excuse, is it? 

Judge MUKASEY. No. 

Mr. CONYERS. All right. Now, why in the cases of bribery do we 

need to have a de minimis rule? In local law enforcement, prosecutors statewide, Feds—look, you mean that if there is just a little 

bit of bribery and it is really low, that we ought to have a threshold? What on earth—corporations have more lawyers than anybody 

else, the ones sitting here. What do they need to know how low the 

crime has got to be before it is prosecutable? I don’t think that they 

deserve to know that. Nobody is prosecuting people for how many 

60 

drinks or a meal that you brought them, or gave them a ride. Everybody knows that that doesn’t have any logic. 

And so I ask the Association of Criminal Defense Lawyers witness, give me some examples of over-criminalization of the Foreign 

Corrupt Practices Act. 

Ms. REGON. Certainly, Mr. Conyers. I think the problem that we 

all—— 

Mr. CONYERS. Just give me the examples. 

Ms. REGON. Sure. The example is that the law is written so expansively that—— 

Mr. CONYERS. No. Give me the examples. Give me an instance 

of where one case was ever brought by the Department of Justice 

which it would constitute over-criminalization. 

Ms. REGON. Respectfully, sir, I am probably not aware of absolutely every single—— 

Mr. CONYERS. No, of course you are not. I will tell you why you 

are not. 

Ms. REGON. A number of them—they have increased their enforcement. 

Mr. CONYERS. I will tell you why you are not, is because only 140 

cases have been brought in 10 years. 

Ms. REGON. And they have increased their enforcement 10-fold 

in the last 5 years, and so I did not—— 

Mr. CONYERS. And that averages 14 cases a year. Is that overcriminalization to you? 

Ms. REGON. A statute that allows the government to prosecute 

someone as broadly as the statute currently allows is—— 

Mr. CONYERS. I said is 14 cases a year over-prosecution to you? 

Ms. REGON. A statute with no reasonable limitation is over-criminalization. 

Mr. CONYERS. Just answer my question, okay? 

Ms. REGON. I am, sir. A statute that provides no reasonable limitation to prosecutorial discretion is over-criminalization. I have testified here today that I am concerned more about the prosecutions 

to come than the prosecutions—— 

Mr. CONYERS. You haven’t—— 

Mr. SENSENBRENNER. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Texas, Mr. Poe? 

Mr. POE. Thank you, Mr. Chairman. 

Thank you for being here. 

Similar to my friend, Mr. Gohmert, in my other life I was a felony court judge for 22 years in Texas, heard everything from stealing to killing, and several death penalty cases, and I don’t like 

crooks. But on this situation, I want to talk about the world as it 

is, not the way that we wish that it were. 

Let me start with China. China seems to have, to me, through 

their government, a systematic philosophy of corruption. They will 

do anything they can, anywhere in the world, to get their way. 

They will steal from the United States. They will pay bribes. They 

will do it all. They are dealing with a philosophy that any means 

necessary to get it the Chinese way. 

We, on the other hand, believe in the rule of law, that some 

things are actually things we shouldn’t do, like bribery. The Chinese are effective in their philosophy. Here we are building the naVerDate Aug 31 2005 18:35 Sep 05, 2011 Jkt 000000 PO 00000 Frm 00064 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\061411\66886.000 HJUD PsN: 66886
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tion of Iraq. Just got back from Iraq last night, and when I was 

there I learned that, of course, the Chinese are going to rebuild 

their oil drilling system. I suspect—my opinion—maybe some 

money changed hands for the Chinese to be doing that instead of 

American oil companies. I don’t know. 

And compliance seems to be part of the issue here. We want our 

American companies to operate within the law. We set the law, and 

we need to make sure that it is effective. It disturbs me that we 

give the Justice Department too much discretion on who they want 

to go after and who they don’t want to go after. There doesn’t seem 

to be a rule of thumb except they use their discretion whenever 

they want to. I think that is a universal problem. I was a prosecutor for 8 years, and I see that that is a problem with the prosecution side. 

Ms. Regon, I am going to let you finish your answer that ran out 

of time. Tell me why compliance is a better idea than what we have 

under the current system, from your point of view. 

Ms. REGON. Thank you, sir, for the opportunity to answer that 

question. And I think it is because what the criminal law really 

seeks to do is try to prevent misconduct from occurring in the first 

place, and to deter those individuals and corporations who would 

engage in crimes otherwise not to do so. And so I think a robust 

compliance program protects companies and individuals from engaging in misconduct because it educates them about what that 

misconduct would be. It trains them to avoid it. It trains them to 

identify it. And it also provides a reporting mechanism when misconduct does occur, even if it is perhaps on the other side of the 

ocean, not from the American employees. 

And it also—usually a good compliance program will provide an 

opportunity for a whistleblower to say safely, without retaliation, 

there is some misconduct happening. And then it provides the company with a nice structure about what to do if that kind of thing 

happens. 

That seems to me a commonsense way of both preventing these 

kinds of misconduct from happening and also for providing remedial measures when it does happen. You end up deterring the conduct from happening to begin with. You—individuals don’t end up 

being sort of surprised in a gotcha game about what was prohibited 

and what wasn’t if there is a good, robust compliance program. 

Mr. POE. Follow-up question. The global economy where we have 

U.S. companies trying to compete worldwide, especially with companies or countries that don’t follow any rules except to win, do you 

think that that would help international competition? Would it 

hurt as far as United States companies go, Ms. Regon? 

Ms. REGON. Well, I think that the Department of Justice should 

be congratulated on being the world’s enforcer on foreign corruption. I think other countries look at our international corruption 

laws and think that we are doing the best job. And so I congratulate them on that. 

I think the discussion here today has been not to sort of make 

it easier for anyone, including American businesses or anyone 

internationally, to bribe in order to get business done. I think the 

discussion here today is how to give individuals and companies 

clarity about what the law means and what it doesn’t so that we 

62 

can all go out and conduct business, stimulate our economy, stimulate economic growth throughout the globe without engaging in corruption or without being fearful that a cab ride or other legitimate 

business activities could be criminalized, and that clarification is 

needed today. 

Mr. POE. I agree with you on that. I am certainly not advocating 

that we loosen the standards for American companies. They just 

need to have some absolute certainty as to what is a violation, 

what is not, and when they will be prosecuted, and if they do something this will happen, as opposed to too much discretion on the 

part of what something means and what a bribe happens to be. 

Maybe Congress has a responsibility to define what bribery is, although we all know what it is. It needs to be somewhat definite. 

Thank you, Mr. Chairman. I yield back the remainder of my 

time. 

Mr. SENSENBRENNER. Thank you. 

The gentlewoman from California, Ms. Chu? 

Ms. CHU. Thank you, Mr. Chair. 

Mr. Andres, you clearly articulated the reason that the Department of Justice doesn’t agree with passing statutory language authorizing a compliance defense. However, is it my understanding 

that you consider a compliance program a factor in determining a 

company sentence for bribery offenses? 

Mr. ANDRES. Both at the sentencing phase and at the charging 

phase, that is, a decision whether or not to enter into—charge a 

company, to enter in some resolution, or to decline prosecution in 

the first place. We certainly take into consideration a company’s 

compliance program. 

And just to amplify that a little, there are, of course, cases where 

we decide not to prosecute or not to require a company to enter into 

a resolution, because they have strong compliance programs. You 

don’t read about those because we don’t issue a press release when 

we decide not to prosecute. So there is certainly—that certainly is 

an important factor that we take into consideration. 

Ms. CHU. Are there currently any guidances that are available 

to companies that articulate or describe what you believe to be a 

strong compliance program? 

Mr. ANDRES. Sure. There are a variety of different reference materials, including the United States Sentencing Guidelines, and 

OECD good practice guides that dictate or describe things that are 

important for a valid and robust compliance program. They talk 

about things such as having an articulated policy against foreign 

bribery, having standards and procedures designed to reduce violations of their policies, to have senior officials charged with implementation and oversight, and a variety of other factors that are detailed in those various resources. 

Ms. CHU. If—well, are those guidelines readily available? 

Mr. ANDRES. They are readily available. I think another point 

with respect to guidance, every time the Department has entered 

into a resolution with a company dating back to, I believe, 1988, 

we published those detailed plea agreements, resolutions and other 

documents on our website. So you could go back and look on our 

website and see, for example, in the Daimler case, what the specific 

resolution was, what issues there were with compliance, what 

63 

modifications we may have asked from that company or any of the 

other companies that we prosecuted. All those documents are available on the Department’s website. 

Ms. CHU. How could we incentivize corporations to have these 

kinds of compliance programs, then? 

Mr. ANDRES. I think we incentivize companies by giving them 

credit for their compliance programs, which, as I said, we do. As 

I mentioned, there are instances where we decide not to prosecute 

a company because of compliance. There are other factors that go 

into the mix as well, such as cooperation, self-disclosure, and remediation. But clearly, by making decisions based on compliance factors, which we do, and to the extent that we can publicize that and 

make the business community aware of the fact that we take that 

into consideration, I think we provide the right incentives. 

Ms. CHU. Let me ask about something else, which is that in 2004 

DOJ initiated two FCPA investigations, and SEC initiated three. 

However, last year DOJ brought 48 investigations, and the SEC 

brought 26 investigations. I am trying to get the reason for this, 

get an understanding of what is the problem. Is the problem bigger, or is the enforcement greater? 

Mr. ANDRES. I think the problem is as big as it has ever been, 

if not bigger. I think we have become aware of more cases for a variety of different reasons. 

One, the world is smaller. We can communicate with our foreign 

law enforcement partners through emails and otherwise much 

more easily than previously. 

Secondly, at least one reason why there are more cases—I don’t 

think it is the sole reason—is that CEOs of corporations are complying with other laws such as the Sarbanes-Oxley law, which requires them to verify their financial statements. In doing that and 

getting confidence as to the credibility of those financial statements, they are detecting problems with foreign bribery, and in 

many instances they are disclosing that to the Department of Justice. 

So I think, again, the problem is a substantial one. That certainly has led to more enforcement. But there is a variety of factors 

which has led to the increase. 

Ms. CHU. And how would these new proposals address this 

trend? 

Mr. ANDRES. The proposals? 

Ms. CHU. Yeah. 

Mr. ANDRES. Well, again, the Department is concerned about the 

proposals with respect to a compliance defense or another definition of a foreign official, because they provide some possibility for 

loopholes, that some bribery becomes acceptable. And I think just 

as in domestic bribery, the Unites States needs to send a clear 

message that bribery is unacceptable. 

Ms. CHU. Thank you. I yield back. 

Mr. SENSENBRENNER. The gentleman from South Carolina, Mr. 

Gowdy, is recognized for 5 minutes. 

Mr. GOWDY. Thank you, Mr. Chairman. 

Mr. Andres, you are not suggesting that current DOJ has placed 

more of an emphasis or is more concerned about these prosecutions 

than predecessor DOJs, are you? 

64 

Mr. ANDRES. Far from it. Many of the investigations that are 

now coming to resolution have been ongoing for some time. So I 

think it is not necessarily an appropriate barometer to say that if 

we have had X number of resolutions in this year, it is because 

there is more enforcement now. Those investigations take time. 

Mr. GOWDY. Right. Just like when other witnesses have come before Judiciary and we have noticed a downturn in investigations 

and prosecutions, it would also be unfair for us to suggest that the 

current DOJ isn’t concerned about those lines of cases, right? 

Mr. ANDRES. Again, it is hard to comment on these things generally. But suffice to say, at least with respect to the FCPA prosecutions, those investigations are often longstanding. They take 

some time. So it may be that prosecutions resulting in resolutions 

now have gone on for years. 

Mr. GOWDY. All right. In response to an earlier question, you 

said DOJ isn’t prosecuting cup of coffee cases, or that is at least 

a pretty good paraphrase of what you said. And my concern isn’t 

whether or not you are or are not prosecuting cup of coffee cases. 

The question is whether or not you can, because one is a declination issue and the other is a jurisdictional issue, and I think those 

are very, very different and require a different analysis. 

So can you prosecute cup of coffee cases? 

Mr. ANDRES. Just so I am clear, with respect to whether or not 

we can, there are within the statute exceptions for reasonable and 

bona fide promotional expenses. There are also other exceptions 

that cover legitimate business expenses. So if a cup of coffee is 

given to a foreign official without an intent to bribe that individual, 

we would not be able to bring that case because there is not the 

requisite intent to bribe. 

Mr. GOWDY. What do you do with a different standard, the different mens rea standard for corporations and individuals? Do you 

support having a willful requirement for corporations, or not? 

Mr. ANDRES. Well, with respect to that distinction, I would say 

that in our enforcement, I am not aware of any cases where companies have complained that they have been held accountable for any 

conduct that is other than willful conduct. But I think it is also important to recognize that in the FCPA, in the legislation, the statute, the standard with respect to corporations talks about corruptly. So the word ‘‘willfully’’ is replaced by the word ‘‘corruptly,’’ 

and I think those two words are very similar. In large part they 

encompass the same type of conduct. 

Mr. GOWDY. Professor Terwilliger, do you see any issues with not 

having a willful requirement for corporations in conjunction with 

not also affording them a compliance defense? 

Mr. TERWILLIGER. Certainly, sir. And I have been accused of a 

lot of things, but being an academic is not one of them. It is a 

pleasure to be here with you today. 

The problem with a willfulness requirement for corporations is 

just what General Mukasey mentioned. Corporations can’t think; 

only individuals can think. And therefore any ascribing of an intent 

to a corporation is really artificial because the corporation itself is 

artificial. 

It seems to me that all of that kind of debate surrounds much 

more the question of definitions of the statute than it does the exVerDate Aug 31 2005 18:35 Sep 05, 2011 Jkt 000000 PO 00000 Frm 00068 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\061411\66886.000 HJUD PsN: 66886
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ercise of prosecutorial discretion. I think the Justice Department 

generally does a fairly good job of exercising its discretion. 

What the Congress’ job is, if I may, is to define the parameters 

in which that discretion is exercised, and that is where there is uncertainty. And when and under what circumstances a corporation 

itself and its shareholders should be penalized because employees 

go off on some bribery scheme that, in spite of having a good compliance program, in spite of having complete buy-in by a CEO and 

so forth, that to me is an enforcement policy question that rests 

right here, not in the Justice Department. 

Mr. GOWDY. Ms. Regon, there are other crimes that are strict liability crimes, but you don’t think this should be added to the list? 

There are contraband cases, child pornography, under-age sex 

cases that are strict liability crimes. Why is this different? 

Ms. REGON. Well, I think it is up to the Congress to determine 

which crimes are or are not strict liability crimes, and I do believe 

that 30 years ago the Congress who created the FCPA did not intend it to be so. It is certainly within your province to decide when 

that is appropriate and when that isn’t. 

I think the problem here is you have a statute where that was 

not the intent. It does contain a willfulness requirement, at least 

for individuals, in the anti-bribery provisions. I think that when 

the Congress included that word, I think that they meant it, and 

I think that, unfortunately, because the statute is otherwise written fairly expansively, it does allow DOJ and SEC to treat the statute as if it is a little bit—to sort of prosecute to the fullest extent 

that the law allows. 

You know, they do a good job, they do their jobs, and they will 

take as much as the Congress gives them. And I think that that 

doesn’t mean to suggest bad faith on the part of prosecutors. It just 

means that any one of us, given our job, will do it to the expansive 

limitations that are given to them. And unfortunately, there aren’t 

as many limitations in the statute as there should be. 

Mr. GOWDY. Thank you, Mr. Chairman. 

Mr. SENSENBRENNER. The gentleman’s time has expired. 

The gentleman from Georgia, Mr. Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Mr. Terwilliger, you just said something that is very profound. 

You said corporations can’t think, and I wish that you had been the 

attorney who could have argued that to the U.S. Supreme Court in 

the Citizens United case. [Laughter.] 

Mr. JOHNSON. But I would like to turn now to Ms. Regon and ask 

you, have you ever been a prosecutor before? 

Ms. REGON. I have not, sir. 

Mr. JOHNSON. But would it be fair to say that the looser the law, 

then the more prosecution discretion comes into play? 

Ms. REGON. Certainly. 

Mr. JOHNSON. And then to narrowly draw the law means less 

prosecutorial discretion. 

Ms. REGON. It means less discretion. It doesn’t necessarily mean 

less prosecutions. 

Mr. JOHNSON. Well, it could result in less prosecution victories. 

Ms. REGON. I think if DOJ means what it says here today, which 

is that it is really focused on explicit commercial bribery, and I 

66 

think Mr. Andres promised that the DOJ would never prosecute a 

company for the rogue acts of an employee overseas, I think if they 

meant that, then they wouldn’t mind that the statute was so narrowed because they would still be allowed to prosecute explicit commercial bribery. I think that they enjoy a certain broader amount 

of discretion so they can in the future bring the kinds of cases they 

want to bring. 

Mr. JOHNSON. Yes, but my problem is that, okay, while we want 

to narrowly draw statutes to limit prosecutorial discretion in cases 

of legalized crime, because there are two. There is legalized crime, 

there is legal crime and illegal crime. 

Ms. REGON. Well, I am not—— 

Mr. JOHNSON. The illegal crime is the blue collar type of crime, 

the burglaries, robberies, rapes, murders, those kinds of things, 

theft, shoplifting, drug dealing. That is illegal crime. Some would 

argue that things like white-collar crime are legal crime, and they 

argue that it is legal crime because the prosecutions for that kind 

of misconduct are not as vigorous as they should be. 

So in the case of legalized crime or legal crime, I am bothered 

by the notion that we need clarification, and I am bothered by the 

fact that there has not been a whole lot of prosecutorial activity in 

this arena, FCPA, in the past. And so it just seems kind of fishy. 

We are trying to let some folks off the hook for legal crime. 

Ms. REGON. Congressman Johnson, if I may respond to that, I 

think that there are a number of people who have been prosecuted 

for white-collar crimes and that are, in fact, serving what in effect 

are life sentences, and they would—— 

Mr. JOHNSON. There have been some examples made. 

Ms. REGON. Yes. They would disagree that white-collar crime is 

not real crime. 

Mr. JOHNSON. There have been some examples made, some of 

which I disagree with, some of which I feel like people were treated 

too harshly by the criminal justice system for white-collar crime 

just to make them an example, and I can feel your pain in terms 

of representing clients who may fall on the wrong side of political 

correctness, and I hear what you are saying. But I do not think to 

amend the law in this case would prevent prosecution discretion 

from being misused from a political standpoint. 

Ms. REGON. Sir, I would like to respond to really what I feel is 

the heart of your question, which is I think that both blue collar 

criminals and white-collar criminals or those who are accused of 

those sorts of crimes, they both deserve constitutional fairness. 

They both deserve fair notice of what is against the law before they 

are prosecuted for potentially violating—— 

Mr. JOHNSON. But nobody—— 

Mr. SENSENBRENNER. The gentleman’s time is expired. 

Will the witness continue her answer? And then I will recognize 

the gentlewoman from Florida. 

Ms. REGON. Thank you, Chairman, very much. 

The Constitution requires fair notice to each of us about what 

the law prohibits and what the law does not. We do this because 

we think it deters conduct. We do this because it is fair, because 

it provides due process notification to all of us, and I think that is 

important to anyone accused of any type of crime. NACDL repVerDate Aug 31 2005 18:35 Sep 05, 2011 Jkt 000000 PO 00000 Frm 00070 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\061411\66886.000 HJUD PsN: 66886
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resents those accused of all types of crimes, including burglary and 

rape and child—— 

Mr. JOHNSON. I realize that. 

Ms. REGON. The full panoply of crimes, and I don’t think that 

there is a difference between—— 

Mr. JOHNSON. But legally—— 

Mr. SENSENBRENNER. The gentleman’s time has expired. 

Mr. JOHNSON. Legal crimes—— 

Mr. SENSENBRENNER. The gentleman’s time has expired. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Mr. SENSENBRENNER. The gentlewoman from Florida, Ms. 

Adams. 

Ms. ADAMS. Thank you, Mr. Chairman. 

Mr. Andres, does DOJ have definitions for foreign official instrumentality? Do you have that in your agency? 

Mr. ANDRES. So in addition to the statute, foreign official as defined in the statute, there are now several decisions by district 

courts, two in California, recently one in Miami, which have further amplified the definition of foreign official. And beyond that I 

would say that it is important when we think about that concept 

that the foreign official definition in the statute is consistent with 

our own treaty obligations. 

So, yes, there is a definition in the statute. 

Ms. ADAMS. What about DOJ? 

Mr. ANDRES. We follow the definition—— 

Ms. ADAMS. You don’t have any tweaks to it whatsoever when 

you are determining whether or not to file? 

Mr. ANDRES. We don’t support a change in the definition of foreign official, again because—— 

Ms. ADAMS. What about instrumentality? 

Mr. ANDRES. Same answer, because we are fearful that that 

will—there is a bright line rule with respect to who constitutes a 

foreign official. We think if companies are not paying bribes, that 

there is really no fear of prosecution from FCPA enforcement. 

Ms. ADAMS. Well, I have listened to the different conversations, 

different questions, and you said that you publish when you have 

your decisions on how you came about your decisions. What about 

when you decide not to file? Is there some area in which you have 

that information so that people can go to that area and find out 

if it is consistent, is there any irregularities based on decisions 

made whether or not to file? 

Mr. ANDRES. So that is a difficult area for the government. We 

don’t, in large part, because we don’t want to penalize a company 

or an individual that has been investigated and not prosecuted, 

that there may be some prejudice from that. But let me—— 

Ms. ADAMS. Can you tell me how many cases maybe in the last 

year that you have had come to your agency where you wanted to 

take a look but then you changed your mind or whatever and decided maybe it didn’t fall into the parameters or didn’t quite make 

that bright line test, about how many cases that would be this year 

alone? 

Mr. ANDRES. I don’t have those numbers, and I can try and provide them. I will say one other thing about guidance. In the FCPA 

there is a unique feature in the law called the procedure, or an 

68 

opinion procedure process. It is unique to the FCPA. If a company 

has a question about who constitutes a public official, or if some 

particular conduct, they have the ability to ask the Department of 

Justice for an advisory opinion as to whether or not that conduct 

will violate the statute. 

So if there is a question about a payment being made or whether 

somebody constitutes a—— 

Ms. ADAMS. Such as the taxi cab ride that cost $200,000 to investigate. 

Mr. ANDRES. If, in fact, that is true, then yes, you could ask the 

question, and the Department would be obligated under the statute 

to give you an opinion as to whether or not that conduct—— 

Ms. ADAMS. So just curious. Would it be fair to say, in the absence of court involvement in FCPA cases, judges will have the opportunity to define the limits in the FCPA, and therefore DOJ 

alone gets to define what the law means? 

Mr. ANDRES. I don’t think that is right. There is judicial oversight. We just finished—— 

Ms. ADAMS. I said in the absence of it. 

Mr. ANDRES. I’m sorry? 

Ms. ADAMS. In the absence of judicial oversight, in the absence 

of the court involvement, then you would be making all those definitions and defining. 

Mr. ANDRES. Yes, but every one of these cases is negotiated with 

experienced defense counsel. And so we take a great amount of 

time to speak to defense lawyers who are very experienced in this 

field in making decisions about how to come to resolutions. So 

there is ample opportunity for them to address these issues with 

the Department. 

Ms. ADAMS. Judge, I see maybe you wanted to add something? 

Mr. MUKASEY. I would simply point out that none of those cases 

are binding on any other case. So, yes, they provide an interesting 

case study for somebody who would like to make a future decision, 

but there is no guarantee that it is going to come out the same 

way. 

Ms. ADAMS. Interesting. So it all falls back to DOJ and the decisions that they decide to make based on what? 

Mr. ANDRES. We decide based on the definition of a foreign official in the statute. And while an opinion release may not be binding on a separate party, nothing precludes that party from asking 

the Department the particulars of his or her case so that they can 

have clarity about what the law is. We feel that that procedure has 

the ability to provide explicit guidance. 

Ms. ADAMS. Would it be possible, just say in the last year, for 

you to provide to the Committee the amount of cases that were 

brought to your attention and that were not filed upon, and the 

reasons and rationale why you did not file those cases? 

Mr. ANDRES. We certainly can try to figure out the number of 

cases we declined, the various factors that went into—— 

Mr. SENSENBRENNER. Will the Department submit this information in writing to the Committee? 

Mr. ANDRES. To the extent that we can—to the extent that we 

can gather that information, we will certainly try to. 

69 

Mr. SENSENBRENNER. Without objection, when the information is 

received, it will be made a part of the record. 

And the gentlewoman’s time has expired. 

The gentlewoman from Texas, Ms. Jackson Lee. 

Ms. JACKSON LEE. Mr. Chairman, thank you, and I thank you 

and the Ranking Member, Mr. Scott, for holding the hearing. It is 

extremely important for this Committee to be diligent in oversight. 

And if there is a Committee that has a broad reach, it is the Judiciary Committee in terms of the layers of laws that we have to address. 

So let me try to probe as quickly as I can to the Department of 

Justice. Tell me how many attorneys and staff, to your best knowledge, are assigned to the Foreign Corruptions Act. 

Mr. ANDRES. Well, I am going to—I can obviously get that number in particular, but I am going to say there are probably between 

15 and 20 lawyers in the Department of Justice in Washington that 

are assigned to those cases and do those cases primarily. When we, 

in fact, prosecute a case, we often partner up with the local U.S. 

Attorney’s Office. So—— 

Ms. JACKSON LEE. So you add resources when it happens to fall 

within a different jurisdiction. 

Mr. ANDRES. That is right. 

Ms. JACKSON LEE. So any given time, you could have 10—excuse 

me—you could have 15, 20, 25 if you are working on a case, or 

more. I mean, I would imagine there is some flexibility there. 

Mr. ANDRES. Fifteen or 20 in Washington who are dedicated solely to this mission, the prosecution of foreign bribery, and then lawyers, prosecutors in offices throughout the United States who will 

supplement our trial team if we go to trial, or in the investigative 

team. 

Ms. JACKSON LEE. Do you think that is an excessive amount? 

Mr. ANDRES. Certainly not in light of what the problem is, that 

is the size and magnitude of foreign bribery and the way that that 

negatively impacts on American business, which isn’t to say I am 

asking for more resources, but only to say the problem is significant. 

Ms. JACKSON LEE. So your prosecution, however, is of U.S. companies that engage in bribery. Is that correct? 

Mr. ANDRES. No. That I think is a common misconception. Our— 

the FCPA allows us to prosecute a range of different companies, 

both foreign and domestic. In fact, one of the ways that we are 

hopeful that we are helping American businesses is by the prosecution of foreign companies who are engaged in widespread—— 

Ms. JACKSON LEE. And give me the nexus. If I am in a foreign 

country and I am a foreign company from elsewhere, what is the 

nexus for suing that company for bribing? And I would add to it 

that there is an American company trying to do business, I am 

bribing, I get the business, but I am a foreign country—excuse 

me—foreign company in a foreign country, the same country that 

this United States business is in. 

Mr. ANDRES. So, for example, if you are a foreign company who 

is listed on an exchange in the United States, then we can—you 

fall within the jurisdiction. Eight of the 10 largest FCPA settleVerDate Aug 31 2005 18:35 Sep 05, 2011 Jkt 000000 PO 00000 Frm 00073 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\061411\66886.000 HJUD PsN: 66886
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ments in the history of the statute are against foreign companies, 

which isn’t to say that we target—— 

Ms. JACKSON LEE. And is the action based upon a bribery, does 

it have to impact a U.S. company, or because it is on an exchange 

you have the jurisdiction? 

Mr. ANDRES. No, it doesn’t have to impact an American company 

necessarily. 

Ms. JACKSON LEE. But the bribery, of course, is one that undermines the normal course of business. 

Mr. ANDRES. Clearly it affects the level playing field, and we believe—— 

Ms. JACKSON LEE. Give me some—and my time is running, so I 

am interrupting. Give me some, one or two cases and your assessment of whether you have been excessive. 

Mr. ANDRES. So, for example, the Siemens case involved im- proper payments of over $800 million in four countries, and that 

bribery scheme lasted over 6 years. That was a company that we 

prosecuted. 

Ms. JACKSON LEE. Right. What was the settlement? What was 

the result? 

Mr. ANDRES. The settlement was a payment, I believe, of ap- proximately over $800 million settlement with respect to the payments that were made—— 

Ms. JACKSON LEE. And what would be your answer to the question that it is antiquated and over-broad? 

Mr. ANDRES. I don’t believe that is true, and I don’t believe 

change is necessary to the statute. Again, given the magnitude of 

the problem and the possibility that some change to the statute 

could either send a message that we were sanctioning some type 

of bribery or producing loopholes which would further—— 

Ms. JACKSON LEE. Thank you. 

Mr. ANDRES [continuing]. Impact American business. 

Ms. JACKSON LEE. Thank you. 

May I get Ms. Shana-Tara Regon? What is your opposition, or 

what do you think we can do to improve? Frankly, let me tip my 

hand and say that I think it is a valuable purpose for this act. 

What are your arguments against its utilization? 

Ms. REGON. Congresswoman Lee, we would agree that the act 

itself started off with a laudable goal, and that is to prevent explicit commercial bribery abroad, and we are certainly not here to 

suggest that there shouldn’t be anti-corruption laws on the books. 

We are suggesting that those that do exist have understandable 

and rational limitations, that the people who are subject to those 

laws are able to understand by reading the law what is prohibited 

and what is not so that they can then conform their conduct to the 

law and not violate it. That is, unfortunately, not the case with this 

statute. 

Ms. JACKSON LEE. Mr. Chairman, may I just thank General 

Mukasey for being here? I wanted to pose a question, but he knows 

the great respect that I have for him and thank him for his service 

that he rendered as Attorney General and on the Federal bench, 

and I will look forward maybe to engaging with you on this question. 

Mr. MUKASEY. Thank you very much. Good to see you again. 

71 

Ms. JACKSON LEE. Thank you. Good to see you. 

Mr. SENSENBRENNER. The gentlewoman also knows that the 

gavel is bigger than normal. [Laughter.] 

Ms. JACKSON LEE. But I know you won’t throw it. Thank you, 

Mr. Chairman. [Laughter.] 

Mr. SENSENBRENNER. The gentleman from Arizona, Mr. Quayle. 

Mr. QUAYLE. Thank you, Mr. Chairman. 

Mr. Andres, in 2006 Macau became the number one gambling 

market in the world, surpassing Las Vegas, and it was recently reported that gambling revenue in Macau rose about 42 percent in 

May, and year over year, and it is expected to continue to grow in 

this manner. 

Has the DOJ looked into the gambling practices in Macau and 

if there is any illegal activity occurring in that arena? 

Mr. ANDRES. I am not sure that would be appropriate for me to 

comment on any ongoing investigation to the extent there was one. 

So I am not sure that is a question I am able to answer. 

Mr. QUAYLE. Okay. Let me go to another subject. Now, when you 

are trying to decide whether a company is an instrumentality of 

the state, what sort of ownership structure or ownership percentage do you have to be there to fall within that definition? Because 

one of the things I am wondering is if under that guidance, is GM 

considered an instrumentality of the state? 

Mr. ANDRES. So there are a variety of factors which we look at, 

and ownership is not the sole factor. In deciding whether or not an 

instrumentality constitutes, or a foreign official constitutes an entity bribing against which we could prosecute, we look at the characterization, the foreign state’s characterization of the entity and its 

employees, the foreign state’s degree or control over the entity, the 

purpose of the entity, the state law, the creation. So the fact alone 

that GM, that there is some government investment in GM would 

not, under the tests we use, qualify it as an instrumentality of the 

United States. 

Mr. QUAYLE. So just the ownership stake does not actually trigger that. You would actually say, well, if there was some communication with the board and various members of the government 

basically being able to control or influence, as you will, where a 

company goes, would that then fall under that category? 

Mr. ANDRES. Yes. So ownership is one of several factors that we 

consider, but it is not the sole factor. Just to give you an example, 

in the recent prosecution of Lindsay Manufacturing, they were 

bribing a state-owned electric company in Mexico, and in the constitution, the Mexican constitution dictated that people had a right 

to electricity. So that was one of the factors that we considered, the 

country’s own constitution and how it defined what the responsibilities of the entity were, the instrumentality. 

Mr. QUAYLE. Okay. Thank you. 

Mr. Terwilliger, the SEC recently implemented new rules pursuant to the Dodd-Frank bill which encourages whistleblowers to actually go directly to the SEC, which circumvents the internal corporate compliance requirements. Now, given your experience conducting these internal investigations, can you speak to the appropriateness of the whistleblower provision included in the DoddFrank bill? And also I would like to get specific in terms of how 

72 

they are allowing the monetary sanctions that the government receives, the whistleblower gets a percentage of that, and how that 

would influence and have, I think, maybe a possible perverse effect 

on whistleblowing going forward. 

Mr. TERWILLIGER. Thank you, Mr. Quayle. And I think it is—I 

commend you for attention to that issue, and the Committee’s attention to it, because what we are really talking about here and the 

fundamental need for reform is to address the impact on the American economy and American businesses which create the jobs that 

Americans so desperately need right now. And, yes, having a level 

playing field in the world for competition is good for American business, but wasting money on compliance efforts that get nothing at 

the end of the day is problematic. 

And the uncertainty that attaches to the parameters of the FCPA 

costs tremendous amounts of money not just to hire lawyers to try 

to figure out where they are and to discuss them in a reasonable 

basis with the Justice Department in the context of an enforcement 

action, but even to decide whether, for example, given your example, an instrumentality in a similar situation to General Motors is, 

in fact, an instrumentality of the government or not, and therefore 

enhanced compliance procedures would be needed if a U.S. company was engaged in business with it. Those uncertainties as to 

those questions create a lot of hidden cost and may have a U.S. 

company say, look, I am not going to spend $200,000 to find that 

out; I am going to leave. 

In terms of the whistleblower act, the fundamental problem with 

the whistleblower statute and its impact on compliance programs 

is this. Companies need to know if something wrong is being done 

in their operations, and they need to know it in a timely way so 

they can remediate it, take corrective action and, if appropriate, 

disclose it to the government and accept the consequences. 

The whistleblower statute encourages employees to go around 

the company and instead go to the SEC. Why should someone who 

stands to gain a percentage of a recovery act in a manner that is 

going to limit the bad acts which determine the size of what that 

recovery would be? It is something that I would humbly suggest is 

well worth Congress’ attention. 

Mr. QUAYLE. And going back to the creation of jobs—that is the 

final question? My time is—— 

Mr. SENSENBRENNER. Sure. 

Mr. QUAYLE. Thank you, Mr. Chairman. Without getting into any 

confidences, how—can you give us an example? Do you have any 

knowledge of companies that have been ceding markets to foreign 

companies because they are afraid of what happens under FCPA? 

Mr. TERWILLIGER. I would not—I think ceding markets would go 

too far, at least between, beyond data that is available to me. I 

would say that American companies have become much more circumspect in dealing with opportunities, particularly smaller opportunities that may grow into something larger in some of the developing markets of the world, including China, which was mentioned 

earlier, simply because the cost/benefit analysis of worrying about 

FCPA compliance issues in this world of uncertain parameters, 

which is no criticism of the Justice Department. I think they do unVerDate Aug 31 2005 18:35 Sep 05, 2011 Jkt 000000 PO 00000 Frm 00076 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\061411\66886.000 HJUD PsN: 66886
73 

dertake an effort to be fair in enforcement. But that is the end of 

the line. We are worried about the beginning of that line. 

Mr. QUAYLE. Thank you. Thank you, Mr. Chairman. 

Mr. SENSENBRENNER. Thank you very much, Mr. Quayle. 

I have changed the order of questioning deliberately today rather 

than asking my questions first, but I am going to do it last because 

I wanted to hear both the testimony as well as the answers to 

questions of Members of the Committee. 

There is no question in my mind that we have to bring this law 

up to date. Nobody here is in favor of bribery, but there has to be 

more uncertainty. And I must say I was a bit befuddled at the 

statement that the former Chairman of the Committee, Mr. Conyers, made, saying that corporations should know what is illegal. 

I think while a corporation is not a human being, but everybody 

has a right to know what is illegal, and there has to be much more 

certainty in the law. 

So I think that we are going to have to have a defined parameter 

which may be a little bit less than it has been, recognizing that 

there have been some changes with the result of China’s economy 

exploding and the collapse of the Soviet Union, so that people have 

a better idea of what is in bounds and what is out of bounds. 

I have several points that I have heard, and I am going to ask 

you, Mr. Andres, and you, Ms. Regon, what your idea of an appropriate response would be. 

First is a better clarification of the definition of a foreign official, 

particularly when you are dealing with a quasi-state-owned enterprise like are very common in China and the Middle East. 

The second is how we delineate between a legitimate business activity and bribery, because I think that there has to be a clarification on that. 

The third is talking about affirmative defenses such as the affirmative defense that has been provided in Title 7 of the Civil 

Rights Act, where if there is a remediation in the workplace, that 

can be pleaded as an affirmative defense; a clarification of the type 

of mens rea that the prosecution must prove in order to successfully convict someone who is indicted. 

And then I am really concerned about a de minimis defense and 

having at least some clarification that when an opinion is issued, 

the Justice Department would have to accept that as precedential 

value rather than saying, well, it was okay if X did it, but it is 

criminal if Y does exactly the same thing. 

And we talked quite a bit about the taxi ride. And if you are 

working until 3 o’clock in the morning and everything is shut 

down, I don’t know what good it does to wait for an advisory opinion that can take as long as 30 days from the Justice Department 

for the U.S. corporation official or somebody else to decide to get 

back to the hotel and snare some Z’s, rather than sitting and waiting until somebody from Washington tells them what is good and 

what is not and whether this is bribery or whether it is a legitimate business activity. 

So if you can kind of sum this up, both Ms. Regon and Mr. Andres, on how we deal with this issue, I think it would be very helpful to the Committee in drafting legislation. And I would like to ask 

74 

you to go first, Ms. Regon, because I would like to hear the answer 

to your observation from Mr. Andres. 

Ms. REGON. Thank you, Chairman, and I will attempt to answer 

succinctly the many questions that you have put to me. I would 

first like to say that NACDL has not taken an official policy position on the types of reforms my colleagues have mentioned today, 

but I would like to suggest that we are certainly supportive of anything that the Congress does to clarify, bring uniformity, and bring 

fairness to the enforcement of this statute. We are particularly supportive of ensuring that mens rea requirements in the statute, on 

behalf of both individuals and corporations, is as high and as protective as possible so that only persons who are purposely engaging 

in corrupt, explicit commercial bribery are punished by the act. 

I think that defining more narrowly who a foreign official is so 

that companies and individuals can look prospectively and say I am 

dealing with a foreign official in this business deal, therefore my 

compliance measures have to be up, my focus on what I am doing 

and what my employees are doing needs to be more sharp, sharply 

focused, I think that would help and go a long way in ensuring 

both compliance with the statute and preventing misconduct. 

Where you get misconduct is where you get these fuzzy lines 

where no one, companies or the individuals working for them, really understands what is prohibited or not, and I fail to see a rational explanation for not providing that kind of clarity to people so 

that they can conform their behavior to it. 

I think that we have many bribery statutes on the books that address other types of bribery in other contexts. Some of those are 

written very tightly and very well, and no one seems to have any 

difficulty figuring out what is bribery and what is not. So I suggest 

that we use those as models. 

I think an affirmative defense could be helpful to a company. The 

Department has testified that they do take into consideration compliance defenses when they are thinking about whether to charge 

a company or what an appropriate sentence should be. I guess I 

would suggest that from NACDL’s point of view, we would like to 

foster fairness in the criminal justice system, and having a prosecutor also sort of be judge and jury and being the sole person in 

that calculation making the determination of how valuable the 

compliance defense is isn’t quite fair. 

And so I believe the people that are supporting an affirmative defense in this way are probably coming from that point of view and 

hoping that it is taken into consideration slightly more than just 

the same person that is deciding whether a violation of the statute 

has actually occurred. 

Mr. SENSENBRENNER. Mr. Andres, which of Ms. Regon’s suggestions don’t you agree with? 

Mr. ANDRES. I am not sure I agree with any of them, sir. 

Mr. SENSENBRENNER. Okay. 

Mr. ANDRES. Just stepping back for a minute, with respect to the 

definition of a foreign official, Mr. Chairman, you talk about the 

different structures in China. I think one of the things that you 

have to take into consideration in defining what a foreign official 

is is that the statute covers the whole world. And so what constitutes a foreign official in China because of different structures 

75 

within the government and how they run their state-run industries 

may be very different from those joint ventures or structures that 

are government-controlled in Brazil, or in France. So—— 

Mr. SENSENBRENNER. But how do you know that when you are 

trying to negotiate a contract to sell American-made products? 

Mr. ANDRES. Well, two things. If there is a concern about who 

constitutes a foreign official, you ask the government for an opinion 

and you provide the relevant facts. 

Mr. SENSENBRENNER. Oh, come on now. China is a communist 

country. They are not going to tell you what the governmental involvement is or who gets paid which way. 

Mr. ANDRES. Well, we are going to—— 

Mr. SENSENBRENNER. They don’t have the type of disclosure that 

Western countries, including the United States, has on who owns 

what, with disclosures that the SEC requires of public corporations. 

Mr. ANDRES. I understand that, sir, but there is no prohibition 

with doing—the statute doesn’t make it illegal doing business with 

China. It makes illegal providing a bribe. And so with respect to 

whether or not a company could bribe a commercial entity versus 

bribing a foreign official, the Department’s position would be that 

if companies aren’t paying bribes, they have nothing to fear with 

respect to enforcement—— 

Mr. SENSENBRENNER. Okay. Then would the Department approve 

an amendment to the Foreign Corrupt Practices Act to use the 

statute on bribing somebody in a commercial contract to apply to 

any type of bribery and forget about this debate on who a foreign 

official is, because bribery is bribery? That is a lot clearer than 

what is in the Foreign Corrupt Practices Act. 

The thing is that we have heard from every one of the witnesses 

today that this statute is vague, it does not tell people what is 

criminal activity and what isn’t, and it is subjective, and what the 

Justice Department determines, which you don’t know until you 

find out there is an investigation or get hit with an indictment, and 

there is no precedential value to advisory opinions that have been 

issued in the past. 

Now, I have been pretty pro-prosecution, as my friend from Virginia can say, probably too much so. But I really think that it 

would behoove the Department to realize that this statute needs 

updating because China was a lot different in 1977 than it is today, 

and I think most of the Middle East is going to be changing pretty 

rapidly if the newspaper reports are correct. 

Mr. ANDRES. Mr. Chairman, obviously the Department is more 

than willing to work with Congress on any possible changes. 

Mr. SENSENBRENNER. Okay. 

Mr. ANDRES. Although I—— 

Mr. SENSENBRENNER. Okay. Well, the invitation is there, and we 

are going to be drafting a bill. So, see you later. [Laughter.] 

Mr. ANDRES. Understood, with the exception, Mr. Chairman, 

that—— 

Mr. SENSENBRENNER. Okay. 

Mr. ANDRES. I will say that while there have been criticisms by 

the other members of the panel, no one has raised a single example 

of a prosecution or enforcement action which was remotely close to 

the line. The cases that we are prosecuting—— 

76 

Mr. SENSENBRENNER. But that is not the point, Mr. Andres. You 

know, the thing is is that if you were the general counsel of a corporation that was involved in the globalized economy and you had 

to go advise your CEO and everybody else who is involved in this, 

you are going to be advising in the most narrow way and exercising 

the greatest amount of caution because of what is going on. And 

as a result, legitimate business activity which is not bribery in nature is going to be quashed, and we end up being put at a significant disadvantage to our foreign competitors. Get the message, sir, 

and tell that to the AG. 

Well, I made my point. I think all of the Members of the Committee, as well as the witnesses, have made their point. I would 

like to thank all of you for coming, even those of you who have had 

a tough time. 

Does the gentleman from Virginia want to put something into 

the record? 

Mr. SCOTT. Yes. Mr. Chairman. Letters from—statements from 

the Global Financial Integrity and Citizens for Responsibility and 

Ethics in Washington. 

Mr. SENSENBRENNER. Without objection, the material will be put 

in the record. 

The purpose of this Committee or this hearing having been concluded, without objection, the Committee stands adjourned. 

[Whereupon, at 12 p.m., the Subcommittee was adjourned.] 

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