Articles by Levick Experts
When
a governmental regulatory agency targets a corporation, there are not
just legal, but critical communications challenges as well. The
strategic options for the company are often starkly contrasting,
ranging from careful and quiet watchfulness to a full-blown spirited
public defense.
One option is to keep a low profile and
try to placate the regulators or at least prove good faith. The other
option: fight back and exert political pressure on the powerful
adversary. The choice hinges on how one reads the situation and the
regulator’s real intent. If there seems to be a reasonable settlement
in sight, or if the risks of the investigation harming the company’s
reputation aren’t overly severe in any event, there is obviously no
good reason to stir the pot. Any public communications in this
situation should be coordinated or at least approved by the regulatory
agency itself.
Often, however, the intent of the regulator
is to make an example of the company, to use it as a global poster boy
and a lesson for others in the industry. The decision then is often to
fight back, particularly when the company can make a strong argument
based on publicly cherished values of equity and fair play. In some
notable cases, the regulators have actually left their targets no
choice but to go on the offense.
Once the company has made
the decision to fight, there are typically powerful strategic themes
with which to hoist the regulators on their proverbial petard:
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Have the regulators overstepped their bounds? If so, the government becomes no different from the very corporate transgressors whom the public loves to hate.
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Such abuse of power poses more of a threat to American businesses, who might be targeted next, than anything one company or even a number of colluding companies can possibly do.
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Have the regulators reneged on any agreements? If so, they have stomped on a fundamental American value – namely, keeping one’s word.
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From a practical standpoint, the government’s ill-advised zeal is muddying its relationships with other businesses with which they are negotiating, or from which they are seeking help. In so doing, they are making themselves less effective as regulators.
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Foreign companies are watching. If the regulators are, not just aggressive, but unreasonable, they are sending a negative message to global investors and thereby jeopardizing American jobs.
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For foreign businesses that are themselves facing the brunt of overzealous U.S. regulators, the sword cuts two ways. If American officials can break a covenant with a foreign company, why can’t foreign officials do the same to an American corporation?
If
the first order of business is the critical decision to fight back, the
next equally important challenge is to know just how aggressively to
fight, and what specific tools and messages to use. Those messages will
typically go well beyond the fact patterns of the investigation itself,
emphasizing both the ethical and legal problems in the government’s
behavior, as well as the purely practical disadvantages to the public
that are likely to come about as a result.