51:3 The Catch-22 of Corporate Cooperation in Foreign Corrupt Practices Act Investigations

Abstract

For many years after the enactment of the Foreign Corrupt Practices Act in 1977, the Department of Justice (DOJ) infrequently enforced the statute, but today enforcement efforts are higher than ever and the DOJ collects record-breaking criminal fines totaling millions and billions of dollars. Companies can reduce their criminal fines by self-reporting violations to the DOJ or cooperating in ongoing investigations. Using deferred prosecution agreements as a carrot to incentivize corporations to cooperate has allowed the DOJ to save resources, open more investigations, collect greater fines, and prosecute more individuals.

The DOJ holds all the discretion in whether to offer the company a deferred prosecution agreement and conditions “cooperation” on the company’s willingness to name culpable individuals. In Writt v. Shell Oil Co., the person named as part of the company’s cooperation with the DOJ, Writt, sued the company for defamation. In this issue of first impression, the First Court of Appeals of Texas held that Writt could maintain his claim of defamation against Shell Oil Co. because Shell’s statements to the DOJ were only conditionally privileged.

Corporations currently find themselves in a Catch-22 in which their involvement in implicating individuals who violate the FCPA exposes them to liability for civil defamation claims. The DOJ has a significant interest in keeping cooperation an attractive option for companies under investigation. This Comment proposes that the DOJ’s pre-indictment investigation into crimes, specifically FCPA violations,should be defined as a quasi-judicial proceeding and afforded an absolute privilege against defamation.