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66–921 PDF 2011

S. HRG. 111–1005 

EXAMINING ENFORCEMENT OF THE FOREIGN 

CORRUPT PRACTICES ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CRIME AND DRUGS 

OF THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

NOVEMBER 30, 2010 

Serial No. J–111–115 

Printed for the use of the Committee on the Judiciary 

( 

(II) 

PATRICK J. LEAHY, Vermont, Chairman 

HERB KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

BENJAMIN L. CARDIN, Maryland 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

EDWARD E. KAUFMAN, Delaware 

ARLEN SPECTER, Pennsylvania 

AL FRANKEN, Minnesota 

JEFF SESSIONS, Alabama 

ORRIN G. HATCH, Utah 

CHARLES E. GRASSLEY, Iowa 

JON KYL, Arizona 

LINDSEY GRAHAM, South Carolina 

JOHN CORNYN, Texas 

TOM COBURN, Oklahoma 

BRUCE A. COHEN, Chief Counsel and Staff Director 

WILLIAM D. SMITH, Republican Chief Counsel 

SUBCOMMITTEE ON CRIME AND DRUGS

ARLEN SPECTER, Pennsylvania, Chairman 

HERB KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

BENJAMIN L. CARDIN, Maryland 

AMY KLOBUCHAR, Minnesota 

CHRISTOPHER COONS, Delaware 

LINDSEY GRAHAM, South Carolina 

ORRIN G. HATCH, Utah 

CHARLES E. GRASSLEY, Iowa 

JEFF SESSIONS, Alabama 

TOM COBURN, Oklahoma 

HANNIBAL KEMERER, Democratic Chief Counsel 

WALT KUHN, Republican Chief Counsel 

(III) 

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page 

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 2 

prepared statement .......................................................................................... 74 

Specter, Hon. Arlen, a U.S. Senator from the State of Pennsylvania ................. 1 

WITNESSES 

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

Department of Justice, Washington, DC ............................................................ 3 

Koehler, Mike, Assistant Professor of Business Law, Butler University, Indianapolis, Indiana .................................................................................................. 12 

Volkov, Michael, Partner, Mayer Brown, LLP, Washington, DC ........................ 16 

Weissmann, Andrew, Partner, Jenner & Block, LLP, New York, New York ..... 14 

QUESTIONS AND ANSWERS 

Responses of Greg Andres to questions submitted by Senators Coons and 

Klobuchar .............................................................................................................. 25 

Responses of Mike Koehler to questions submitted by Senator Specter ............. 32 

SUBMISSIONS FOR THE RECORD 

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

Department of Justice, Washington, DC, statement ......................................... 45 

Koehler, Mike, Assistant Professor of Business Law, Butler University, Indianapolis, Indiana, statement ............................................................................... 54 

Volkov, Michael, Partner, Mayer Brown, LLP, Washington, DC, statement ..... 75 

Weissmann, Andrew, Partner, Jenner & Block, LLP, New York, New York, 

statement .............................................................................................................. 86 

(1) 

EXAMINING ENFORCEMENT OF THE FOREIGN 

CORRUPT PRACTICES ACT 

TUESDAY, NOVEMBER 30, 2010 

U.S. SENATE, SUBCOMMITTEE ON CRIME AND DRUGS, COMMITTEE ON THE JUDICIARY, Washington, DC 

The Subcommittee met, pursuant to notice, at 10:21 a.m., Room 

226, Dirksen Senate Office Building, Hon. Arlen Specter, Chairman 

of the Subcommittee, presiding. 

Present: Senators Leahy, Klobuchar, and Coons. 

OPENING STATEMENT OF HON. ARLEN SPECTER, A U.S. 

SENATOR FROM THE STATE OF PENNSYLVANIA 

Senator SPECTER. Good morning, ladies and gentlemen. The 

Criminal Law Subcommittee will now proceed with this hearing focusing on sentencing under the Foreign Corrupt Practices Act. 

I regret the delay, but we just started the third vote this morning, and I voted at the outset so I could come and begin this hearing. We hate to keep people waiting, but voting is our priority activity. That comes ahead of all other items. 

Less than a month ago, I noted the media reports about the resolution of a case under the Foreign Corrupt Practices Act. It involved six oil and gas companies and a prominent freight-forwarding company, which agreed to pay some $236 million in criminal and civil penalties in what was reputed to be one of the largest 

corporate bribery cases ever to focus on a single industry. 

My eye was caught by that for a number of factors. One was the 

concern, which I had expressed some time ago, on the handling of 

a case involving Siemens AG, which was prosecuted under the Foreign Corrupt Practices Act, with the criminal information specifying, quote, ‘‘Siemens’ employees sometimes carried cash in suitcases across international borders to pay bribes.’’ 

Siemens received billions of dollars’ worth of government contracts because of these payments. Siemens’ conduct was egregious, 

staggering, brazen, and systematic, and there exists a corporate 

culture in which bribery was tolerated and even rewarded at the 

highest levels of the company. 

The total criminal fine was $450 million. Siemens also reached 

a settlement of a related civil complaint by the SEC and agreed to 

pay $350 million in disgorgement of profits. When added to fines 

paid in connection with related cases brought by German officials, 

Siemens will pay a combined total of more than $1.6 billion in 

fines, penalties and disgorgements. 

2 

Siemens enjoyed revenues that year of $105 billion and income of approximately $8 billion. Now, while $1.6 billion is a lot of 

money, it is not when you take a look at the other figures involving 

Siemens. 

I have been concerned about law enforcement for a long time and 

have had some experience in the field and am convinced that the 

only impact on matters of this sort is a jail sentence. Fines added 

to the cost of doing business end up being paid by the shareholders. 

Criminal conduct is individual. 

Nobody likes to pay fines, but it does not amount to a whole lot 

in the context of what is going on here. So I thought it would be 

useful to ask the Department of Justice to come in to see how 

many answers they could give. 

Oversight is a major function of Congress. Oversight of the criminal law is a major function of the Judiciary Committee; and, with 

all we have to do, we do not do very much of it, do not do very 

much of it at all. 

Some of us have some substantial experience in this line of work. 

The experience has been slightly more than doubled in the last 10 

seconds, with the arrival of Chairman Senator Leahy. 

Patrick, I was making a comment about money fines, talking about Siemens’ $1.6 billion income over $100 billion profits over $8 

billion, and this hearing was motivated by an article which appeared less than a month ago about six oil and gas companies 

agreed to pay $236 million criminal and civil penalties. 

I made the point that fines come out of the corporation, come out 

of the shareholders. It does not deal with the individual conduct of 

violating the law, and expressed my own view that the only effective way to deal as the deterrent is with jail sentences. 

So I was just saying, as you walked in, we brought the Department of Justice in. Oversight is a very big function. You are the 

Chairman. I was the Chairman. You were the Chairman before 

that. 

Senator LEAHY. We have gone back and forth. 

Senator SPECTER. Well, we do not do a whole lot of oversight, because we have so much else to do. But I was just on that point. 

It is fairly well publicized that District Attorney Leahy or Prosecutor Leahy in Burlington was tougher then than he is now, 

which is hard to believe, but he was, and I was DA of Philadelphia. 

We had been at the national DA’s convention in Philadelphia, I 

was the host, in 1870–1970. 

[Laughter.] 

Senator SPECTER. Patrick, I yield to you. 

STATEMENT OF HON. PATRICK LEAHY, A U.S. SENATOR FROM 

THE STATE OF VERMONT 

Senator LEAHY. Well, thank you, and I will be very brief. I was 

here just to compliment Senator Specter. As he said, we have 

served together almost 30 years in the Senate. We did first meet 

on that national DA’s meeting in Philadelphia, where he hosted it 

and did, as usual, a superb job. We became friends and have stayed 

friends. 

There are only a handful of Senators who have served on this 

committee for 30 years, five full terms, and Senator Specter is one 

3 

of them. He has been Committee Chairman. He has been Chairman of the Juvenile Justice Subcommittee, the Chairman of the 

Terrorism Technology and Government Information Subcommittee, 

Chairman of the Crime and Drug Subcommittee. 

You have all these titles, but they do not really talk about everything he has done. He passed the Career Criminal Act. He saved 

the juvenile justice program from elimination, something that 

today, it is hard for anybody to think that such a valuable piece 

of legislation might have disappeared. If it had not been for his 

herculean efforts, it would have. 

We worked closely on a bipartisan investigation on what went 

wrong at Ruby Ridge. We worked together to protect constitutional 

rights, those guaranteed by the First, the Second, the Fourth, 

Fifth, Sixth, Eighth, Ninth Amendments, including work on press 

shield legislation here. 

So my point being here is just to compliment him, and I will step 

out of the way, because he has chaired so many hearings. 

I found this in the archives, and this may have been the hearing, 

the first hearing you ever conducted. It is a hearing before the Subcommittee on Juvenile Justice, 97th Congress, first session, April 

1, 1981. Strom Thurmond was the Chairman. Mac Mathias, Paul 

Laxalt, Bob Dole, Alan Simpson, John East, Jeremiah Denton—I 

am just naming people who have left us since—Joe Biden, Ted 

Kennedy, Bob Byrd, Howard Metzenbaum, Dennis DeConcini, Max 

Baucus, Howell Heflin, and you and I somewhere down near the 

bottom on both sides. So I just wanted to give you that. 

I want to speak more on the floor about Senator Specter, but I 

just wanted to come here and compliment him. 

Senator SPECTER. Well, thank you very much, Mr. Chairman. 

Those are high words of praise and I appreciate them very much. 

Senator Klobuchar, would you care to make an opening statement? 

Senator KLOBUCHAR. No. Just that I agree with everything that 

Senator Leahy said about you, Mr. Chairman. 

Senator SPECTER. Well, thank you. 

We will proceed now to the acting Deputy Assistant Attorney 

General, the Criminal Division, the honorable Greg Andres. Mr. 

Andres comes to this position with a very extensive background in 

law enforcement. He was an assistant United States attorney in 

the eastern district of New York for more than a decade; served as 

chief of the criminal division there for 3 years; previously was deputy chief of the criminal division and deputy chief of the organized 

crime and racketeering section; graduate of Notre Dame and University of Chicago Law School; Law Review member; clerk to a 

Federal judge. 

We welcome you here—good morning, Senator Coons—and look 

forward to your testimony. 

STATEMENT OF HON. GREG ANDRES, ACTING DEPUTY ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, DEPARTMENT OF JUSTICE, WASHINGTON, DC 

Mr. ANDRES. Thank you, Chairman Specter and distinguished 

members of the Subcommittee. Thank you for the opportunity to 

4 

appear before you today to discuss the Department of Justice’s enforcement of the Foreign Corrupt Practices Act. 

The investigation and prosecution of transnational bribery is an 

important priority for the Department of Justice, and we have been 

hard at work. In particular, over approximately the last 2 years, 

we have substantially increased the number of our prosecutions 

against corporations and individual executives. We have collected 

more in criminal fines than in any other period in the history of 

our FCPA enforcement. We are proud of our accomplishments, and 

others have taken note, as well. 

On October 20, 2010, following a rigorous official review, the Organization for Economic Cooperation and Development, known as 

the OECD, applauded the Departments of Justice, Commerce and 

State, and the SEC for our collective efforts in the fight against foreign bribery. 

In its official report, the OECD’s working group on bribery in 

international business transactions noted that the United States 

has investigated and prosecuted the most foreign bribery cases 

among the partners to the anti-bribery convention. 

The OECD’s report makes clear that the United States’ success 

in enforcing the FCPA has far outpaced any other country’s enforcement of its foreign bribery laws. We remain committed to this 

effort. We are grateful for the Subcommittee’s interest and to the 

Chairman for inviting the criminal division to discuss the department’s progress. 

FCPA enforcement is as strong today as it has ever been, and we 

believe it is getting stronger. In the past year alone, we have prosecuted and entered into corporate resolutions with some of the 

world’s largest corporations. But that is only part of the story. 

We are also vigorously pursuing individual defendants who violate the FCPA, and we do not hesitate to seek jail terms for these 

offenders, when appropriate. The department has made the prosecution of individuals a critical part of its FCPA enforcement strategy. We understand well that it is an important and effective deterrent. 

Paying large criminal penalties cannot be viewed as and is not 

simply the cost of doing business. Corporate prosecutions and resolutions do not and cannot provide a safe haven for corporate officials. And every agreement resolving a corporate FCPA investigation explicitly states that it provides no protection against prosecution for individuals. 

The department has charged over 50 individuals with FCPA violations since January of 2009. Today, there are approximately 35 

defendants awaiting trial on FCPA charges in the United States; 

specifically, in Houston, Miami, Los Angeles, Santa Ana, and 

Washington, DC. By contrast, in 2004, the department charged 

only two individuals with FCPA violations. 

FCPA enforcement has always been important and it is particularly critical today. The World Bank estimates that more than $1 

trillion in bribes is paid each year, $1 trillion. This amounts to approximately 3 percent of the world’s economy. 

As Attorney General Holder explained to an audience earlier this 

year, bribery in international business transactions weakens ecoVerDate Nov 24 2008 13:56 Jul 19, 2011 Jkt 066921 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\66921.TXT SJUD1 PsN: CMORC
5 

nomic development; it undermines confidence in the marketplace; 

and it distorts competition. 

Thus, FCPA enforcement is vital to ensuring the integrity of the 

world’s markets and to ensuring sustainable development globally. 

At the Department of Justice, together with our partners at other 

Federal agencies and around the world, we have made combating 

transnational bribery a priority. 

We look forward to working with Congress as we continue our 

important mission to prevent, deter, and prosecute foreign corruption. Thank you for listening. And I will be pleased to take any 

questions you may have. 

[The prepared statement of Mr. Andres appears as a submission 

for the record.] 

Senator SPECTER. Mr. Andres, you talk about collecting more in 

criminal fines than anyone else, prosecuted more cases than other 

countries who are parties to the convention, and you say you do not 

hesitate to go after individuals. 

But whom have you sent to jail? 

Mr. ANDRES. Senator, thank you for the opportunity to address 

this issue. I know it is important to you and that you have spoken 

forcefully about it, and it is important to the department. 

As I mentioned, since January of 2009, we have charged more 

than 50 individuals. Approximately 35 of those have been—— 

Senator SPECTER. I have heard that and I have heard about 

charges and I know what charges are, but come to question, who 

is going to jail? 

Mr. ANDRES. Sir, to give you specific examples, Jack Stanley, as 

part of the KBR prosecution, was an officer and director, was sentenced to 84 months imprisonment for his involvement in the bribery of Nigerian officials to obtain engineering, procurement and 

construction contracts. 

John Warwick and Charles Jumet, executives in a Virginia engineering firm, were both charged with conspiring to violate the 

FCPA’s anti-bribery provisions. Warwick pled guilty and was sentenced in June of 2010 to 37 months imprisonment. Co-defendant 

Charles Jumet was charged with conspiring to violate the FCPA 

and making false statements to Federal agents. He was sentenced 

to 87 months imprisonment. 

In September 2010, three former employees and a partner of 

Nexus Technologies were sentenced for their involvement in a conspiracy to bribe officials of the Vietnamese government. One defendant was sentenced to 16 months imprisonment, another to 9 

months imprisonment. 

Christian Sapsizian, from February of 2000 through September 

of 2004, Sapsizian, a French national and vice president for Latin 

America for Alcatel, conspired with others to pay more than $2.5 

million in bribes to senior Costa Rican officials. On September 23, 

2008, he was sentenced to 30 months imprisonment. 

There are, of course, others, as well, Senator. I am happy to provide other examples. 

I would say this, though, with respect—— 

Senator SPECTER. I wish you would. I counted up your recitation, 

I get six jail sentences. Staff has prepared a long list of prosecuVerDate Nov 24 2008 13:56 Jul 19, 2011 Jkt 066921 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\66921.TXT SJUD1 PsN: CMORC
6 

tions and fines, without any jail sentences at all, from November 

4, 2010. 

The Noble Corporation, fines of more than $2.5 million; Panalpina, Inc., fines of more $70 million; Pride Forasol, more than 

$32 million; Shell Nigeria, $30 million; Tidewater, $7.35 million; 

Transocean, $13.44 million. But nobody went to jail in those cases. 

Mr. ANDRES. Senator, Gerald Green and Patricia Green were two 

defendants that went to trial. They were each sentenced to 6 

months imprisonment, 6 months of home confinement. 

Senator SPECTER. Are you saying that those jail sentences were 

handed down from cases I just enumerated? 

Mr. ANDRES. No. Senator, the cases that you referred to are, obviously, corporate dispositions and in some of those, the investigation, particularly in the Panalpina-related cases, are ongoing. In 

fact, there is ongoing litigation with respect to those employees of 

those corporations. 

With respect to the prosecution of corporations and individuals, 

it is not an either/or proposition for the department. We seek to 

prosecute both corporations and individuals who have violated the 

FCPA. 

With respect to those cases, there are a number of challenges for 

charging individuals in this particular area. 

Senator SPECTER. My time is almost up. Did anybody go to jail 

in the Siemens case? 

Mr. ANDRES. Senator, as we have said before, in the Siemens 

case, that investigation is ongoing. There are a number of prosecutions ongoing in Germany. 

Senator SPECTER. Are there individuals who are being prosecuted? 

Mr. ANDRES. That investigation is ongoing, Senator. 

Senator SPECTER. Are there any individuals being prosecuted? 

Mr. ANDRES. No individuals in the United States have been 

charged yet with respect to the Siemens matter. But as has been 

made clear in the court documents filed, the government has attempted to obtain information about individual defendants. 

In our sentencing memoranda—— 

Senator SPECTER. Well, I am going to conclude, because I do not 

want to go past the red light. I will return to this on the second 

round. 

Senator Klobuchar. 

Mr. ANDRES. Thank you, Senator. 

Senator KLOBUCHAR. Thank you very much, Mr. Chairman, and 

thank you for convening this important hearing and for your skillful chairmanship of this Subcommittee over the last several 

months. 

Thank you, as well, Mr. Andres, for your work and your enforcement efforts, and especially the criminal penalties in the most egregious cases that you mentioned. 

I am taking a little different tact here, because I do appreciate 

that you have ramped things up with some of these most egregious 

cases. And as a former prosecutor, I certainly realize that enforcement of the law can make a difference and it changes practices. 

But, also, one of the basic principles of due process is that people 

in companies have to be able to know what the law is in order to 

7 

comply with it. And I will tell you that I have heard from many 

very good standing companies in my State that they do not always 

know what behavior will trigger an enforcement action. 

As we know, the goal is not just to punish bad actors after a violation is committed, but rather to prohibit actions from happening 

in the first place. So a lot of my questions are focused on how we 

can incentivize corporations to make sure they have appropriate 

compliance procedures in place and that they voluntarily disclose 

violations when a rogue employee violates the law. 

I head up the Subcommittee on Exports and Commerce, a big believer in the President’s focus of trying to double exports. I believe 

this is the way that we are going to get ourselves out of this economic downturn. And I have a State where we truly believe in exporting all over the world and it is what I think has given our 

State a leg up when you look at our unemployment rate compared 

to other States. 

At the same time, I have heard a lot of concerns about any little 

conduct is going to trigger some kind of investigation. So my first 

question is—and in your testimony, you detailed several of the 

large cases that DOJ has prosecuted over the last few years. 

While many of these cases, clearly, these egregious cases may be 

clear-cut, I have heard from some businesses that additional guidelines laying out best practices would help them operate with more 

certainty. 

Have you given any thought to increasing the guidance you give 

businesses, especially in situations covered by the FCPA that are 

not so clear or fall into gray areas? 

Mr. ANDRES. Yes, Senator. As you may know, there is a unique 

procedure under the current law that allows companies to seek an 

advisory opinion under the FCPA. So that allows companies to provide facts and information to the department and we are able to 

give them an advisory opinion as to specific conduct and whether 

that conduct violates the FCPA. 

I believe that procedure is unique among the criminal laws. 

Those opinions are published and available to companies to analyze 

them, to understand where the government is focusing its enforcement, and what specifically violates the law. 

One other area where the government is particularly transparent 

in this area is with the publication and filing of our non-prosecution agreements, deferred prosecution agreements, information, 

and indictments. We have a Website at the Department of Justice—— 

Senator KLOBUCHAR. And do you think there is more that you 

can do, though? Because this is what I keep hearing of their concerns, of relatively minor things, and they are just not sure if it is 

a gray area or not. That what you are doing is not enough? 

Mr. ANDRES. Again, the best procedure is the advisory opinions, 

but officials from the department speak routinely about the Foreign 

Corrupt Practices Act, and our filings are rather detailed in specifically what we are looking for by way of compliance. 

The OECD’s good practice guidance also provides information 

about the appropriate compliance procedures, and the sentencing 

guidelines also reference compliance procedures. 

8 

Senator KLOBUCHAR. Has the department established or considered establishing a self-disclosure program, such as is offered by 

the department with the antitrust amnesty program, to encourage 

those companies that discover FCPA violations through their compliance efforts to disclose them to the department? 

It seems to me like that would be a way of advancing anti-corruption efforts. 

Mr. ANDRES. Many of our cases rely on the self-disclosure and cooperation of corporations, and we encourage that. Self-disclosure 

and cooperation are two of the nine factors that the government 

considers as part of the principles of Federal prosecution of business entities when we are making our charging decisions and we 

are deciding how to resolve cases. 

We do not believe that immunity is appropriate, just as we do 

not believe that a bank robber should get immunity for disclosing 

that he robbed a bank. The fact alone that a company discloses 

their involvement in criminal activity or that of an employee in 

criminal activity does not amount necessarily to getting a pass for 

those crimes. 

We think the antitrust provisions are different, because in that 

field, obviously, it takes two or more competitors to collude to fix 

prices. There is not the same incentives or the same criminal conspiracies necessarily at work with respect to the FCPA. 

But I will say this. In many of the cases that we resolve, some 

of which we decline to prosecute, self-disclosure is a very important 

factor and we believe that the current factors that the department 

follows under the principles of business organizations give sufficient motivation to self-disclose and cooperate. 

Senator KLOBUCHAR. Companies are obligated to disclosure, is 

that right, when they hear about things? 

Mr. ANDRES. They are not obligated to disclosure. 

Senator KLOBUCHAR. They are not. 

Mr. ANDRES. They make a decision to disclose and in return for 

their disclosing and their investigating, in large part, their own 

criminal conduct, they get meaningful credit with the department 

and that credit goes into the decision whether to file an information or charge the company, whether to enter a deferred prosecution or a non-prosecution agreement. 

Senator KLOBUCHAR. How many disclosures has the DOJ received since 2007? 

Mr. ANDRES. I would not know the specific number. I can get 

that for you, Senator. But it is significant. We are getting a significant number of disclosures from corporations about their own 

criminal conduct. I think that, in part, relates to the passage of the 

Sarbanes-Oxley legislation, which encourages corporations to review their own books and records. 

Senator KLOBUCHAR. Well, I will look forward to getting that, as 

well as working with you going forward. And I will have some more 

questions for the second round. 

Thank you. 

Mr. ANDRES. Thank you, Senator. 

Senator SPECTER. Senator Coons. 

9 

Senator COONS. Thank you, Senator Specter, and thank you for 

bringing forward this important hearing today and this focus on 

this important area of transnational illegal activity. 

Mr. Andres, I would be interested in hearing more about the impact on the other signatories to the anti-bribery convention of your 

ramped-up enforcement efforts by the department. 

I will commend you for being more aggressive in pursuing this 

area, but I will also share some of the questions of Senator Klobuchar about standards and process. 

But, first, I just wanted to ask—a number of these very large 

transnational cases have involved cooperation with allies, Germany, Venezuela, Switzerland, others. What success have we had 

in urging other signatories to step up their activities comparable to 

ours? What strains has it produced on some of our alliances? And 

then what impact does it have on the activity of elected officials or 

government officials in other countries? 

Mr. ANDRES. Thank you, Senator Coons. We have made significant efforts abroad through our participation in international organizations, through our cooperation with other law enforcement 

agencies abroad, and through our own prosecution of foreign corporations. 

First, the United States is a leader in the OECD and particularly 

in the working group on bribery. The United States has just undergone what they call the phase three review, in which we have a 

peer review of our own enforcement practices. 

The last stage of the review related to—or one of the prior 

stages—what laws are on the books, and now the concentration is 

on who is prosecuting companies. 

Other countries and other signatories to that convention will also 

now undergo the peer review. And through our own efforts and the 

efforts of others at the OECD, pressure has been brought upon 

other countries to also prosecute foreign bribery. 

I would cite to the BAE resolution and the Department of Justice’s longstanding relationship with the serious fraud office in the 

United Kingdom. Also, on the Siemens matter, we cooperated and 

we worked and continue to work with the German authorities. In 

the Innospec matter, we also worked with the serious fraud office. 

In some cases, we are not only prosecuting foreign companies, we 

are also extraditing foreign individuals to bring them back to the 

United States. 

So I would say that our work abroad has been important. I would 

also note that the attorney general himself visited the OECD to 

stress the importance of its work, as did the assistant attorney general for the criminal division, Lanny Breuer. 

We are working with our partners and, particularly through organizations like the OECD, we think we are having an effect. 

Lastly, I would just point to the recent passage of the U.K.’s law 

on bribery, which is viewed as aggressive, and that, I think, is the 

outgrowth, not just, obviously, of the United States, but our work 

at the foreign organizations like the OECD. 

Senator COONS. Has there been any reported appreciable change 

in the conduct or behavior of public officials overseas in response 

to our more aggressive enforcement or, as some companies have 

suggested, is this simply putting U.S.-headquartered companies at 

10 

a disadvantage in not actually having some positive or desirable 

impact on the conduct of foreign officials? 

Mr. ANDRES. It is hard to quantify specifically what the effect 

would be on foreign officials. I will say that we are clearly prosecuting foreign companies. Approximately half the cases that we 

have brought over the last 2 years have been against foreign companies. 

I will say that there is clearly an increased awareness in places 

like China and Russia. We have been invited to speak and have 

spoke to officials from the Department of Justice, in China about 

these issues. We have also worked with the Chinese delegation 

that came to the United States and, in coordination with the 

Chamber of Commerce, addressed some of these issues. 

So I think there clearly is a heightened awareness around the 

world and people are taking notice, and, hopefully, that will have 

an effect on foreign officials. 

Senator COONS. And are there other remedies the department is 

seeking, debarment, exclusion from government contracting or 

other remedies, that are also potentially part of the solution to the 

ongoing challenges you face? 

Mr. ANDRES. Sure. With respect to debarment, I think it is important to remember that the Department of Justice is not the 

agency that is in charge of debarment; that is, it is not within our 

jurisdiction. 

Our role is to investigate and to prosecute violations of the Foreign Corrupt Practices Act. Debarment decisions are made by the 

officials at the various contracting government agencies. 

Secondly, debarment is not or was not intended to be punitive or 

punishment, but, rather, a means for government agencies to protect themselves against unscrupulous and poorly performing contractors. The debarment authorities make the decision whether the 

company is a presently responsible contractor. 

So the debarment decision is clearly not one within the Department of Justice. Our job is to make sure that the facts of our investigation are transparent and that we communicate that information to the debarring authority so that they will have all the available information to make their own decisions. 

Again, we publish and file all of our agreements. They are rather 

explicit as to the criminal conduct at issue, and, hopefully, those 

allow the debarring officials to make the appropriate decisions. 

Senator SPECTER. Thank you, Senator Coons. 

Mr. Andres, I am not going to take a second round, because we 

got started late and have another panel and we are going to be 

running into the later activities. 

I will pursue a couple of questions with you informally, and I am 

not looking for answers now. But you commented—if there are individual prosecutions as to Siemens, I would like to pursue that, 

to the extent you can tell us. Those are 2008 matters, and I would 

like to pursue the question as to where you are going on this case. 

It was reported less than a month ago with the fines, and I ask 

you for your comments later about the deterrent effect when you 

have publicity—you cannot control the publicity, but you can control when you announce a disposition of cases. 

11 

But it certainly gives the appearance on Siemens, with fines 

only, in the most recent case, with fines only, that it is not a matter for jail sentences, and you have to find some way to publicize 

your other good works on jail sentences. 

Senator Klobuchar, would you care to question further? 

Senator KLOBUCHAR. I just wanted to follow-up on a few things 

that—and I will try to be quick here—that Senator Coons raised 

about the other countries. And I know in your testimony, you noted 

that the United States’ success in enforcing the FCPA has far outpaced any other country’s enforcement of its foreign bribery laws 

and that you have been working with our trading partners, as you 

discuss with them, to encourage them to enhance their effort. 

Again, I have heard from a number of businesses in my State— 

and this was not an organized discussion, this is over a year of people bringing up what is making it difficult for them to export, when 

all we want to do is create jobs in this country. I have heard from 

businesses who remain concerned that they just want an even playing field and that not enough is being done to ensure that some of 

the other countries who are trading are also enforcing similar laws. 

Can you discuss in further detail what our government is doing 

to ensure a level playing field for our companies competing overseas? 

Mr. ANDRES. Again, it is primarily through our work in international organizations like the OECD and our peer review process 

of other countries. When our prosecutors go to the OECD, they talk 

to other prosecutors from around the world about the prosecutions 

in their own countries and there are questions posed to each of 

those prosecutors about why they are not prosecuting bad actors 

and corporations in their own countries. 

Again, we also are pursuing many foreign companies with prosecutions here in the United States. To some extent, underlying 

these criticisms about the level playing field, I think, is the notion 

or the claim that our FCPA enforcement has been bad for business 

in the United States. 

We at the Department of Justice disagree with that. Foreign 

bribery cannot be good for business, and good compliance is a good 

way for companies to make sure that there is not waste, fraud and 

abuse. So we think that good compliance is good for corporations 

and that our enforcement is not bad for business and that we are 

leveling the playing field by attacking foreign bribery both here in 

the United States and abroad. 

Senator KLOBUCHAR. Well, I would never want to say that foreign bribery and letting it go is a good thing. I do not think that 

at all. And certainly, the examples of the cases you mentioned are 

good examples of good work you are doing. 

I just believe that there is a problem with companies not being 

so afraid of what is going to happen if they disclose for minor 

things. And so what I hope you are open to doing going forward 

is to at least have some discussion about this. I know you believe 

there is enough guidance for them. I do not think that they think 

that there is. 

If we could just have a discussion of that going forward with I 

do not know who, but if you would be open to that, I think that 

would be helpful with a number of companies and others. Again, 

12 

these are companies that they have told me that they cannot sleep 

at night because they are worrying about this and they are just 

trying to follow the law, but it is very difficult for them to figure 

out what is following the law. 

So if we could have some discussion going forward on this, I 

think it would be helpful, because, again, I know we share this mutual belief that we want our country to be strong. We do not want 

bad bribery, but at the same time, we want clear rules. 

So I might have some additional questions—I know that the 

Chairman wants to move on here—about Mr. Weissmann’s testimony and your response to some of his points. But I would just 

hope you would be open to discussing this going forward. 

Mr. ANDRES. We are certainly open to that, Senator. Thank you. 

Senator KLOBUCHAR. Thank you. 

Senator SPECTER. Thank you, Senator Klobuchar. 

Senator Coons, do you have any further questions? 

Mr. COONS. I will simply, if I might, add I have some personal 

experience from private practice in exactly this issue. Working for 

an excellent company, trying to deliver good compliance was, at 

times, a challenge, because of the moving target of knowing exactly 

what the compliance standards were. 

This was a number of years ago. Your advisory opinions, I think, 

have helped significantly. But I think we will listen attentively to 

the other panels for some clarity about what the current challenges 

are and would welcome an opportunity to continue to work with 

you and the department on helping clarify exactly what constitutes 

good compliance so that in-house counsel can sleep at night and 

compliant companies can more actively and effectively export. 

Mr. ANDRES. Thank you, Senator. 

Senator COONS. Thank you. 

Senator SPECTER. Thank you very much, Mr. Andres. 

We call the second panel now, Professor Koehler, Mr. 

Weissmann, Mr. Volkov. 

Our first witness is Michael Koehler, Assistant Professor of Business Law at Butler University in Indianapolis; expertise in the Foreign Corrupt Practices Act evidenced by his publications in the 

Georgetown Journal of International Law and the Indiana Law Review. 

He practiced law in this area; graduate of the University of Wisconsin Law School and the University of South Dakota. 

Thank you for appearing as a witness today, Professor Koehler, 

and the floor is yours. 

STATEMENT OF MIKE KOEHLER, ASSISTANT PROFESSOR OF 

BUSINESS LAW, BUTLER UNIVERSITY, INDIANAPOLIS, INDIANA 

Mr. KOEHLER. Thank you, Senator Specter, other members of the 

subcommittee. Thank you for that introduction. 

I also run a Website called fcpaprofessor, and part of my mission 

with that Website is to ask the ‘‘why’’ questions that are increasingly present in this era of aggressive enforcement. So given that 

mission, I, obviously, commend Chairman Specter for calling this 

hearing and I am grateful to have this opportunity to participate. 

13 

The FCPA is a fundamentally sound statute that was passed by 

Congress in 1977 for a very specific and valid reason, and my prepared statement provides a brief overview of the legislative history 

on that issue. 

That the FCPA is a fundamentally sound statute does not mean 

that FCPA enforcement is fundamentally sound. And the recent article I wrote in the Georgetown Journal of International Law, ‘‘The 

Facade of FCPA Enforcement,’’ details several pillars which constitute this current facade environment that exists. 

One pillar that I would like to talk about today is the pillar 

which is very frequent, that is where seemingly clear-cut cases of 

corporate bribery, per the Department of Justice’s own allegations, 

are not resolved with FCPA anti-bribery charges, and it is this facade pillar that I would like to talk about today, because I really 

think it undermines the rhetoric that DOJ uses when it describes 

its FCPA enforcement program and it undermines the deterrence 

that proper FCPA enforcement can achieve. 

So despite numerous public statements during this era of the 

FCPA’s resurgence that the DOJ will vigorously pursue violators 

and that paying bribes to get foreign contracts will not be tolerated, 

the undeniable fact is that in the most egregious cases of corporate 

bribery, the DOJ does not charge FCPA anti-bribery violations. 

And the Siemens and the BAE enforcement actions that have already been alluded to here today are perfect examples of those. 

Not only is it that these companies were not charged with FCPA 

anti-bribery violations, but the deterrence message is also undermined when one analyzes the extent of U.S. Government business 

these companies have done in the immediate aftermath of the bribery scandals. 

Using recovery.gov, one will find that Siemens alone has been 

awarded numerous Federal Government contracts with U.S. stimulus dollars in the immediate 12 months after the bribery scandal. 

And one will also find that BAE, this month alone—not only was 

BAE not charged with FCPA anti-bribery violations, but this 

month alone, BAE, according to its Website, has secured $50 million in U.S. Government contracts, including, in September 2010, 

securing a $40 million contract from the FBI, the same exact government agency that investigated BAE for its improper conduct. 

So deterrence is not achieved when a company that bribes is not 

charged with FCPA anti-bribery violations. Deterrence is not 

achieved when a company settles a matter for an amount less than 

the business gained through bribery, nor is deterrence achieved 

when the U.S. Government continues to award multimillion dollar 

contracts to the same companies that are engaged in these bribery 

schemes. 

There has been a bit of discussion today about a potential debarment penalty. I believe that a debarment penalty in egregious 

cases of corporate bribery that legitimately satisfy the FCPA’s antibribery elements should be considered, and I would note that H.R. 

5366 recently passed the House. That is now in the Senate. 

However, because of the facade of FCPA enforcement, this bill, 

as currently drafted, will, in my opinion, be an impotent bill. 

I would next like to discuss the prosecution of individuals rather 

quickly. The key to achieving deterrence in the FCPA context is 

14 

prosecuting individuals, again, to the extent the individuals’ conduct legitimately satisfies the elements of an FCPA anti-bribery 

violation. 

For corporate employees with job duties providing an opportunity 

to violate the FCPA, it is easy to dismiss corporate money being 

spent on fines and penalties. It is not easy to dismiss hearing of 

an employee with your same job background being sent to Federal 

prison for violating the FCPA. 

So during this era of the FCPA’s resurgence, clearly, the DOJ 

has prosecuted more individuals, but, again, a ‘‘why’’ question 

needs to be asked, and Chairman Specter has asked many of these 

‘‘why’’ questions already when it comes to the lack of individual 

prosecutions in Siemens, BAE, Daimler and some other cases. 

I would also like to note that just because prosecuting individuals adequately deters and could, thus, be a cornerstone of the 

DOJ’s FCPA enforcement program, when one looks at the numbers 

that the DOJ has cited, i.e., 50 individual prosecutions over the 

last couple of years, one will find the following: 24 individuals are 

in one case, the so-called Africa Sting case, where FBI agents posing as a president of Gabon, had largely owners of small companies 

engaged in fictitious business transactions; and, another 22 individuals are in a group of cases where the foreign officials are employees of state-owned or—— 

Senator SPECTER. Professor Koehler, how much more time will 

you need? 

Mr. KOEHLER. Just about 30 seconds, Chairman. Another 22 individuals are in cases where the so-called foreign officials are employees of state-owned or controlled companies, and interpretation, 

I believe, is contrary to the intent of Congress in enacting the 

FCPA. 

The issue is not whether FCPA enforcement is good or bad for 

any one constituency, but whether the DOJ, in many cases, is enforcing the FCPA consistent with its provisions. 

So these are some of the issues I think that need to be examined, 

and the time to examine them is now. So thank you for the opportunity to participate in these hearings, and I would be happy to 

take any questions. 

[The prepared statement of Mr. Koehler appears as a submission 

for the record.] 

Senator SPECTER. Thank you, Professor Koehler. Our next witness is Mr. Andrew Weissmann, co-chair of the white collar defense 

investigation practice at Jenner & Block. Mr. Weissmann had been 

director of the Enron task force and the chief of the criminal law 

division of the United States Attorney’s office for the eastern district of New York, has been chief of the criminal division there; has 

overseen a wide array of white collar crime investigations. 

We thank you for joining us, Mr. Weissmann, and the floor is 

yours. 

STATEMENT OF ANDREW WEISSMANN, PARTNER, JENNER & 

BLOCK, LLP, NEW YORK, NY 

Mr. WEISSMANN. Good morning, Chairman Specter, members of 

the committee, and staff. I testify today on behalf of the United 

15 

States Chamber of Commerce and the Chamber’s Institute for 

Legal Reform. 

I do not take issue with the basic premise of the FCPA. The 

original goals of the FCPA, that is, to deter and punish corrupt 

transactions overseas that undermine public confidence in business 

and government alike remain important. 

Rather, I suggest improvements to that statute that will provide 

greater notice of what is prohibited, greater incentives to organizations to have robust compliance programs, and be fairer in implementation. 

I briefly discuss here two possible reforms. The first is to add an 

affirmative compliance defense that would be available to companies that maintain rigorous FCPA-compliant systems. Such a defense is already included in the new anti-bribery law in the United 

Kingdom. 

Second, it would be important to clarify the definition of a, quote, 

‘‘foreign official,’’ unquote, within the meaning of the FCPA. As the 

law does not make clear who qualifies as a foreign official, it is, 

thus, not clear to which transactions the statute will apply. 

One of the reasons it is important to have a clearer statute, particularly in the FCPA arena, is that corporations cannot typically 

take the risk of going to trial and, thus, there is a dearth of legal 

rulings on the provisions of the FCPA as it applies to organizations. 

Thus, the government’s interpretation can be the first and the 

last word on the scope of the statute as it applies to a company. 

The lack of judicial oversight, expansive government interpretation 

of the FCPA, and the increased enforcement that you heard about 

from Mr. Andres have led to considerable concern and uncertainty 

about how and when the FCPA applies to overseas business activities. And the solution is not to do away with the FCPA. 

Rather, it is to think about whether there are ways to modify it 

to make it clear what is and is not prohibited and to enact legislation that encourages businesses to be vigilant and compliant. 

So to address the first idea, which is a compliance defense, the 

problem with the existing FCPA statute is that it does not provide 

for a defense if individual employees circumvent compliance measures that are reasonably calculated to identify and prevent FCPA 

violations. 

Currently, companies may receive credit from the Department of 

Justice for a compliance program, but that would be only at the 

discretion of the government and unclear up front how that discretion will be exercised; or, at sentencing, it can be a factor to be 

given a reduced sentence under the United States sentencing 

guidelines. 

That is not sufficient. The statute should be modified, as it is in 

the United Kingdom, to mandate consideration of compliance programs during the liability discussion of an FCPA prosecution. For 

instance, a company that has done due diligence before it acquires 

another company and discovers an historic FCPA issue at that acquired company should not bear criminal responsibility for that 

other company’s actions. 

Similarly, as another hypothetical, which I think is quite real in 

practice, an organization that has an ideal compliance program has 

16 

done nothing wrong as a company, when an employee nevertheless 

flouts that program a bride. The company, as opposed to an individual, has committed no wrong that we, as a society, want to deter 

or punish. But that is the current state of the law. 

Remember that it will only take—for the Department of Justice 

to bring an FCPA case—one employee at any level of the organization to bring a case regardless of the diligence of that company. 

Such a defense will bring the FCPA in line with a series of Supreme Court cases in the civil context, where the Court has placed 

limitations on the application of respondent superior and determined that it should not apply where the company can show that 

it took specific steps to prevent the offending employee’s actions. 

Having such a defense would incentivize companies to deter 

FCPA violations, identify FCPA violations, and self-report such violations. It will also serve to make companies not victims of rogue 

employees. And to be clear, such a defense distinguishes responsible companies from irresponsible companies. 

It would do nothing, for instance, in the next Enron. The next 

bad company that comes along is not going to be helped one iota 

by having such a defense. 

Then just briefly, since I see I am over time, the statute as currently written provides no meaningful way of identifying who an 

instrumentality of a foreign government is. In my written testimony, I provide examples of how that particular provision could be 

rectified to provide clear guidance to make the statute fairer; so 

that companies that are bent on applying the law and staying on 

the right side of the law can do so in advance, without having to 

worry about being prosecuted. 

Thank you. 

[The prepared statement of Mr. Weissmann appears as a submission for the record.] 

Senator SPECTER. Thank you, Mr. Weissmann. 

Our final witness is Mr. Michael Volkov, litigation partner at 

Mayer Brown; has an extensive background in law enforcement; 

was an assistant U.S. attorney for 17 years here in DC and, before 

that, worked on this Committee with Senator Hatch and chief 

counsel of the Crime, Terrorism and Homeland Security Committee. 

Thank you very much for joining us, Mr. Volkov, and we look forward to your testimony. 

STATEMENT OF MICHAEL VOLKOV, PARTNER, MAYER BROWN, 

LLP, WASHINGTON, DC 

Mr. VOLKOV. Thank you, and good morning, Chairman Specter 

and members of the committee. Thank you for this opportunity to 

discuss with you the enforcement of the Foreign Corrupt Practices 

Act. 

At the outset, I want to say that it is an honor to appear before 

the Subcommittee for the first time since I left the Judiciary Committee staff in 2005. I have many, many fond professional and personal memories of the work I was able to do here as part of the 

Committee staff, and it is nice to return. 

In the last 5 years, FCPA enforcement has risen to unprecedented levels. The Justice Department has sent a very strong mesVerDate Nov 24 2008 13:56 Jul 19, 2011 Jkt 066921 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\66921.TXT SJUD1 PsN: CMORC
17 

sage and the business community is well aware of the need for 

compliance. 

But to increase compliance, the Justice Department needs to review and modify its voluntary disclosure process. For most corporations, the decision to make a voluntary disclosure is complicated by 

the uncertainty of the ultimate punishment or the benefit of making such a disclosure. 

The Justice Department provides no clarity as to that point. 

There simply is no guarantee for what benefits a corporation will 

earn for voluntary disclosure. Now, you do not need an economist 

or you do not need any smart person to know that in the absence 

of clarity and transparency, companies may not accurately weigh 

the pros and cons of voluntary disclosure; hence, the sleepless 

nights of company officials. 

What I am proposing is a more balanced enforcement approach. 

One is to increase the incentive to comply with the law and to distinguish between corporations that engage in flagrant violations, 

like Siemens, like Daimler, of the FCPA and those that seek to 

comply in good faith, but, nonetheless, as Mr. Weissmann was outlining, can be held liable for the actions of a few employees. 

In my view, these two goals can be accomplished by adopting a 

corporate self-compliance limited amnesty program. Now, I want to 

acknowledge here that former Federal Judge Stanley Sporkin is a 

mentor and the so-called father of the FCPA, who comes from 

Pennsylvania, has articulated a very similar proposal for many 

years. 

He is no shrinking violet when it comes to enforcement matters. 

Judge Sporkin’s proposal consists of the following elements: a participating company agrees to conduct a full and complete review of 

the company’s compliance with the FCPA for the 5 previous years; 

the internal review is then conducted jointly by a major accounting 

firm, law firm, or with a specialized accounting firm; the company 

further agrees to disclose the results, to come into the Justice Department and the SEC and say what it found, disclose it to the investors, and disclose it to the public. 

If the company discovers any violations in the audit, the company agrees to take all steps necessary to eliminate the problems 

and implement the appropriate controls to prevent future violations. The company would then subject itself to an annual review 

for 5 years to ensure that compliance was being maintained. 

The company would then also be required to retain an FCPA 

compliance monitor, who would annually certify—certify, under 

oath, under penalty of perjury, to the SEC and the DOJ that the 

company was in compliance. 

Now, in exchange for these actions, the SEC and DOJ would 

agree not to initiate an enforcement action against the company 

during this period, except—and this is a big exception—for those 

flagrant or egregious violations, meaning where a company’s culture, like Siemens, where a company’s business depends upon and 

was built upon a bribery scheme; not in a situation where companies are trying in good faith to comply and are not—and make a 

mistake, make a mistake as to what their interpretation of the law 

is. 

18 

Now, I wanted to turn to one other issue, which two of the Senators or two of the members had referred to, and that is the international efforts against bribery and corruption. One glaring omission in this overall enforcement scheme is that the bribe-takers 

themselves, the people taking the money in the government are not 

prosecuted. 

Could you imagine here in the United States if we had that situation, where people taking the bribes would not be prosecuted? At 

its inception, the FCPA was the only statute of its kind anywhere 

in the world, but we live in a different place now. 

The United Kingdom recently enacted the Anti-Bribery Act, 

which will become effective in April 2011. I was surprised to learn 

that Italy, in 2001, had enacted an anti-bribery act very similar in 

terms of being strict in terms of enforcement. 

Now, look, the United Kingdom’s act is even more stringent than 

the FCPA. But international efforts against bribery and corruption 

need to increase. There is just no question about it. 

You cannot be the only enforcer in the world and expect to clean 

up the world. That is not our role. We need to put more emphasis 

on helping other countries improve their enforcement programs. 

Next week, I am participating in a conference here at the World 

Bank, titled ‘‘The International Corruption Hunters Alliance,’’ at 

which all the countries, many, many countries are sending representatives, prosecutors, investigators, and public officials to try 

and put together some meaningful enforcement programs. This is 

a good thing and we should support it as much as we can. 

It is important to note that if all the signatories, 39 signatories, 

to the anti-bribery convention—— 

Senator SPECTER. Mr. Volkov, how much more time will you 

need? 

Mr. VOLKOV. This is my last point. If all the signatories to the 

anti-bribery convention enforced the law, that is 75 percent of the 

world’s exports would be under that type of enforcement regime. 

Thank you, and look forward to answering your questions. 

[The prepared statement of Mr. Volkov appears as a submission 

for the record.] 

Senator SPECTER. Thank you, Mr. Volkov. 

Professor Koehler and Mr. Volkov, you have both zeroed in on 

Siemens. Mr. Volkov, do you think that there ought to be individual jail sentences in Siemens? 

Mr. VOLKOV. Well, Mr. Chairman, I think you have raised a really important point with the department, which is—and this may be 

against my client’s interests, but I will tell you, quite honestly, that 

if I were a prosecutor and I have the corporation’s cooperation, the 

first thing I am going to do is find the five worst actors in that corporation. 

The corporation is what had handed me all the evidence that I 

need, and I am going to have them indicted. I do not understand 

why that did not happen. I cannot give you an explanation for that. 

But you have certainly made a very important point. 

Why, in the most significant cases, is nobody going to jail? And 

I cannot say that I disagree with your concern. 

Senator SPECTER. When you see all the publicity on Siemens, a 

big fine and $100 billion in revenues, $8 billion in profits, and no 

19 

jail sentence, what effect does that have? Is this not really a signal 

that you can violate the act and pay a fine? 

Mr. VOLKOV. Well, I would hope that that is not the result. I will 

tell you, in terms of counseling clients, I get the sleepless calls that 

Senator Klobuchar referred to, which was I have people who call 

me very, very in good faith, who want to comply, but yet have difficulty because of the uncertainties surrounding the law or the absence of clear statements. 

I would say that there has been a shockwave sent through the 

world community by the Siemens case. On the other hand, I know 

from my experience as a prosecutor, when somebody goes to jail 

and you are a high level executive—when Bernie Ebbers went to 

jail or when any of those officials went to jail, that was a big deal 

when he went to jail for life. 

When Bernie Madoff goes to jail for 50 years, that is a big deal. 

That sends a message. You are right. I cannot say what the marginal difference would be, but I will tell you this. The size of the 

fine in that case was no laughing matter in terms of many companies. 

Senator SPECTER. Professor Koehler, you talked at some length 

about Siemens. Have you become conversant with the facts and 

what individuals did in that case? 

Mr. KOEHLER. Yes, very much so. One of the things I do as an 

academic is I analyze every single FCPA enforcement action there 

is. So I am very familiar with the facts of that case. 

The DOJ’s—— 

Senator SPECTER. What do you think about a 2008 case—— 

Mr. KOEHLER. Well, it is ironic that in the case—— 

Senator SPECTER. I am not finished with my question. 

Mr. KOEHLER. Sorry. 

Senator SPECTER. With a 2008 case and the giant fines and those 

characterizations which I read earlier out of the indictment and no 

jail? 

Mr. KOEHLER. It is highly ironic in the case that the Department 

of Justice terms the most egregious case of corporate bribery the 

FCPA has ever seen, that there is no individual prosecutions. 

I guess it would be one thing if these prosecutions were just commenced, as in the Panalpina cases last month, but as you know, 

we have been going on nearly 2 years now. 

The DOJ’s sentencing memorandum says that compliance, legal, 

internal audit, and corporate finance departments all played a significant role in the conduct at issue. 

Now, for foreign nationals, there are some jurisdictional issues 

that must be met, but the Department of Justice has never shied 

away from pursuing incredibly broad—— 

Senator SPECTER. I will not ask you to be specific in the open 

hearing, although you are not subject to liability for what you testify at a hearing, but we will proceed with you privately as to the 

inquiries you have made and what you know. 

What I intend to do is to confront the department with that and 

see if we can get answers. We do not have their files and the inquiries you made look to be promising and we would like to have 

the benefit of that, if you would be willing to give us a hand on 

that. Would you? 

20 

Mr. KOEHLER. I would be happy to assist, yes. 

Senator SPECTER. Mr. Weissmann, overall, I have listened with 

care to your recommendations for modifications and I think you 

make some good points when you talk about a compliance defense, 

talk about rogue employees. 

There, you have the totality of the conduct of the corporation exonerated. Before my red light goes on, I will ask you the question. 

That is, overall, do you think that the act is fairly well balanced 

and fairly well enforced or too tough? 

Mr. WEISSMANN. I think there is no question that many of the 

cases that were brought up today, such as Siemens, fall far, far, far 

into the—that it is amply warranted for the application of the statute. 

The problem is that every company in America and many companies overseas worry about the statute daily. And so regardless of 

what the Department of Justice is doing, people think about the 

statute and could their conduct fall on one side of it versus the 

other and will they be subject to an investigation. 

So it is a difficult question to answer, because I have seen many 

prosecutions where you say, of course, that seems like a just result 

and should have been warranted, but there are many companies 

that are hurt by the ambiguities in the statute and what I think 

is the over-breadth of some of its provisions on a daily basis. 

Senator SPECTER. Thank you, Mr. Weissmann. 

Senator Klobuchar. 

Senator KLOBUCHAR. Thank you very much, Mr. Chairman. It 

has been an interesting discussion. And since I brought up the 

sleepless nights, I want to point out this is not my major concern 

here. 

When I have sleepless nights about legislation, I do not think my 

constituents feel sorry for me. But I used it as an example that 

there are companies that are trying to comply. 

My major concern is if we have an uneven playing field that is 

hurting American business while we balance the obvious need to 

have this law on the books and to enforce it and to go after egregious bribery. 

So I guess my first question is of you, Mr. Volkov. You brought 

up how we get other countries to also enforce their statute. How 

do you think we do that? You said you were going to this conference, but what would be the best way, whether it is with agreements we have with those countries, conventions? How do you 

think we do that? 

Mr. VOLKOV. Well, already, some issues have been raised in 

terms of our mutual assistance treaties and the process being very 

difficult to secure evidence or share information back and forth. 

That is one issue. 

There also is just a lack of basic information on prosecution and 

expertise. What happens frequently is that our government ends 

up training people. It had to prosecute and investigate corruptiontype cases and those folks then go out, somewhat like here, into the 

private sector and they go out and they go and make more money 

and do not stay as government prosecutors in these other countries. 

21 

I think it requires the efforts that the Administration has already done, which is to work with the other countries, but I think 

there is also some basic groundwork that needs to be done. 

For example, they do not even know—countries do not even know 

how to share information across law enforcement agencies. They do 

not know who to contact. They do not know who are even the 

points of contact among various countries. And I think we have to 

continue to encourage those types of efforts. 

Senator KLOBUCHAR. And when Senator Specter was asking you 

about the compliance ideas and you mentioned the judge’s ideas, is 

it your argument that, in fact, if you made some changes to the 

statute to better encourage compliance, that it would be easier, in 

fact, to root out some of the bad actors who could then be prosecuted criminally in an easier fashion? 

Mr. VOLKOV. Absolutely. And I think that Mr. Weissmann’s 

points are all good, particularly with regard to the foreign officials. 

Senator KLOBUCHAR. And that was my next question, is if you 

agreed with some of his proposals, as well. 

Mr. VOLKOV. Absolutely. Here is one of the ironies, to Mr. 

Weissmann’s point. One of the hardest countries to go into and to 

conduct business is China, because, basically, all of my clients assume that everybody they deal with there is a foreign official, because they are a state-owned enterprise under this broad definition. 

I do not think that was the intent when the FCPA was passed, 

to prevent—to put businesses—— 

Senator KLOBUCHAR. What year was it passed? 

Mr. VOLKOV. That was 1977 was the original. 

Senator KLOBUCHAR. That was before we were doing a lot of 

business—— 

Mr. VOLKOV. With China. 

Senator KLOBUCHAR.—in these countries. 

Mr. VOLKOV. Right. 

Senator KLOBUCHAR. Mr. Weissmann, if we could just follow-up 

on that point. I was looking at your testimony here and you talked 

about some of the issues that arise, like is a payment to a professor 

to speak at a conference for prospective clients an FCPA violation. 

What if the professor works at a university that receives public 

grants or is state-run? What if the professor works for a Chinese 

company that is owned, in part, by the state? 

For example, I heard about what if a nurse attends a conference 

and then gets some money for a cab ride home because the metro 

has stopped, is she a state official for those purposes. Could you 

elaborate on some of the issues and how we could try to fix that 

to make it clearer? 

Mr. WEISSMANN. Sure. It is important to note that the FCPA has 

no materiality requirement and no de minimis exception. So $10 

can be enough. And there is no balancing as there is in SEC rules 

to determine whether the violation was material to the company. 

So it is really a broad statute. 

One of the things, to address your prior question, that could be 

done to help put people on an even playing field is to look at the 

U.K. bill and realize that there are two provisions that it has that 

we do not have. One, there is the compliance defense, which I will 

22 

not bore you with; and, the other is that the U.K. bill actually punishes the foreign officials and imposes liability for soliciting abroad. 

That does not exist in the United States. And if you are trying 

to figure out ways to put America on an even playing field, one is 

to have similar laws. And since often what you see in these cases 

is not that companies are actively trying to solicit, but they are, in 

many ways, the victim of the company saying—the country saying 

this is what you need to do. If there was greater enforcement, including in the United States, on those people, that would help, as 

well. 

In terms of who a foreign official is, the statute provides some 

guidance, but gives no guidance on the ambiguous word, which is 

an instrumentality of a foreign government. So one example that 

I think is useful is to think about if that were applied here, potentially, anybody who works for Bloomberg Media or, potentially, 

General Motors could be considered a public official for the purposes of the FCPA. 

Senator KLOBUCHAR. Why is that? 

Mr. WEISSMANN. Because in Bloomberg Media, since my hometown is New York, the mayor of New York has a substantial stake 

in that company, and so it could be considered a public company, 

in which case, all employees of that instrumentality would be covered by the FCPA. 

Similarly, General Motors, if you take it a month ago, would 

have been majority owned by the public. And even now, with a 

non-majority stake, the Department of Justice has taken the view 

that even in cases where it is a non-majority ownership, that that 

is sufficient to trigger being a foreign official for the purposes of the 

FCPA. 

So what could help is having actual rules. And one example of 

how this could be solved is in the accounting literature, there are 

strict rules about when you are a third party for purposes of accounting, whether you are actually controlled by the company, 

what percentage ownership you have for determining whether you 

are dealing with a third party or whether you are going to be determined to be dealing with yourself, essentially. And those kinds of 

analogies could be used to provide clear guidance, particularly in 

an area where there is criminal liability at stake. 

So, ironically, you have very clear rules for SEC and accounting 

literature, but not in the case of the criminal statute, such as the 

FCPA. 

Senator KLOBUCHAR. Thank you. 

Senator SPECTER. Thank you, Senator Klobuchar. 

Senator Coons. 

Senator COONS. Thank you, Senator. I just simply wanted to 

commend you, Senator Specter, for pursuing aggressively, in egregious cases such as Siemens, where there is a failure to charge individually or pursue individually, to thank the members of the 

Committee who have—the members of the testifying panel today 

for your input. 

I would welcome an opportunity to work with the Committee on 

potential amendments to the act that would allow clarification on 

the definition of foreign official, the creation of a compliance defense. 

23 

There are egregious offenders and we do need to continue to pursue aggressively foreign corruption. I am interested in what might 

someday happen as our allies begin to join us, the Italians, the 

U.K. government, others, and then how we would begin to harmonize the actual enforcement. 

Today, we are the only nation that is extending an 

extraterritorial reach and going after the citizens of other countries, we may someday find ourselves on the receiving end of such 

transnational actions. 

If I might, just one last question, Mr. Volkov. Any suggestions 

about what we might be doing to strengthen our regime in terms 

of its effectiveness for transnational jurisdiction and how we might 

harmonize it with what we see the U.K. doing, and, yes, I was surprised to learn, as well, Italy? 

Mr. VOLKOV. Yes. Well, I think there is a lot going on already. 

I think that the 36 other signatories need to be cajoled, be whatever needs to be done to try to persuade them to adopt some kind 

of law. 

The extraterritorial reach that you mention with regard to the 

United States law is very significant, but wait until you see what 

happens in England. In England, all you have to do is be doing 

business, in quotes, meaning—and what that means, you do not 

have to have a principal place of business, you do not have to be 

doing anything. 

If you sell your product in England, you are subject to their anticorruption and anti-bribery restrictions, which are much stricter 

with regard to—are about to be—with regard to hospitality and 

just providing, let us say, food at an event or whatever. It makes 

it much more difficult. 

The one point I wanted to go back to, which I did not have a 

chance to clarify, is that Judge Sporkin’s proposal is—and I have 

nothing against Mr. Weissmann. He is a colleague and I love him, 

but I do not favor creating a defense, because the defense requires 

the corporation to go to trial. The defense requires the corporation 

to get indicted. 

We have already seen what happened with Arthur Andersen and 

the demise of a company, the demise of hundreds of thousands of 

jobs in the Houston community. What we are saying with Judge 

Sporkin’s proposal is let us do it up front, do the compliance, certify 

to it, and we will give you this—you have to report to us on a yearly basis, and I bet you almost—many of my clients would choose 

that option, because they would rather be safe than sorry. And so 

they want to have a compliance program that does not require 

them to get indicted and then raise it as a defense. 

That is the difference that we have, because we are trying to distinguish between good faith actors and those that are the egregious, flagrant cases. 

Senator COONS. What would be the mechanism for actually acting on Judge Sporkin’s proposal? 

Mr. VOLKOV. Well, it could be done—in other words, how could 

it get implemented? 

Senator COONS. Right. 

Mr. VOLKOV. Well, the Department of Justice—and you will notice this in reaction to a lot of the criticism coming from Chairman 

24 

Specter and others—has said, ‘‘Oh, well, now we are going to take 

a look and see if there should be some kind of leniency program 

like the antitrust division’s leniency program.’’ 

They can implement this on their own. They could do it tomorrow. This is an exercise of prosecutorial discretion. They could do 

it tomorrow. 

Now, to the extent they need statutory changes, obviously, they 

would have to come to Congress. But they could do it right now 

and there is no reason for them to not do it right now, because like 

I said, I mean, it is good for business, for me, but it is not good 

for the country in terms of American business and making it competitive, because we are spending more and more time with clients, 

dedicating hours and hours to just these types of questions. 

I have a nurse. Can I give her a sandwich to eat at a conference? 

Can I do that? And they have to call up the law firm and ask them. 

Senator COONS. Well, I appreciate the Chamber’s advocacy on 

this and the testimony of every member of the panel, and thank 

you for that clarification. 

Thank you very much, Mr. Chairman, for the chance to ask questions. 

Senator SPECTER. Thank you, Senator Coons. 

Anything further? 

[No response.] 

Senator SPECTER. Thank you very much, Professor Koehler, Mr. 

Weissmann, and Mr. Volkov. 

That concludes the hearing. 

[Whereupon, at 11:42 a.m, the hearing was adjourned.] 

[Questions and answers and submissions for the record follow.] 

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