The Foreign Corrupt Practices Act of 1977 (FCPA) makes it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. On November 29, 2017, Deputy Attorney General Rod Rosenstein announced the addition of an FCPA Corporate Enforcement Policy to the U.S. Attorneys’ Manual, providing guidance to companies seeking cooperation credit for voluntarily self-disclosing FCPA-related misconduct, fully cooperating with the government’s investigation, and remediating. Notably, the policy creates a presumption that a self-disclosing company that is not a repeat offender will receive a declination from the Department of Justice (DOJ) “absent aggravating circumstances.” Although, as an internal operating policy, it creates no private rights and is not enforceable in court, the policy promotes consistency and predictability in DOJ’s treatment of corporate FCPA offenders.
This new policy largely mirrors the Pilot Program announced by DOJ on April 5, 2016. By making the Pilot Program permanent and incorporating it into the U.S. Attorney’s Manual, and by modifying it to give even greater certainty to companies self-disclosing misconduct, DOJ has demonstrated its belief that incentivizing voluntary disclosure works. Indeed, Deputy Attorney General Rosenstein noted that during the period the Pilot Program was in effect, DOJ received 30 voluntary disclosures, compared to 18 during the previous 18-month period. Also, of the 17 criminal FCPA resolutions entered by DOJ during the Pilot Program, only two involved defendants who had voluntarily disclosed. Both of those were resolved through non-prosecution agreements that did not impose a compliance monitor. Over that same time period, seven additional matters came to the Department’s attention through voluntary disclosures and were resolved under the Pilot Program through declinations with payment of disgorgement. The new policy broadens and cements the incentives for companies to come forward of their own accord to report findings or suspicions of misconduct.
Most notably, while the Pilot Program provided for the possibility of a declination when a company voluntarily self-discloses misconduct, fully cooperates, and timely and appropriately remediates, the new policy creates a presumption that the company will receive a declination, unless there are aggravating circumstances related to the seriousness of the offense or if the disclosing company is a repeat offender. Even if aggravating circumstances exist, where the company is not a recidivist, DOJ will recommend a 50 percent reduction off the low end of the Sentencing Guidelines range. These modifications to the Pilot Program provide much greater certainty for a company considering making a voluntary disclosure.
Voluntary self-disclosure is evaluated by “assessment of the circumstances of the disclosure.” First, a company must make the disclosure prior to an imminent threat of disclosure or government investigation. Second, the company must demonstrate timeliness of the disclosure and show that it was made “within a reasonably prompt time after becoming aware of the offense.” And, third, the company must disclose all relevant facts known to it, including all relevant facts about all individuals involved in the violation of law.
The DOJ determines whether a company has fully cooperated based upon its Principles of Federal Prosecution of Business Organizations, as well as five other independent factors. These factors are timely disclosure of all relevant facts; proactive rather than reactive disclosure; preservation and collection of relevant documents; de-confliction of investigative steps; and making officers and employees available for interview by the department.
Finally, remediation credit is available when a company has performed a root cause analysis; implemented a compliance and ethics program; disciplined responsible employees; implemented an appropriate document retention policy; and taken any other steps to reduce future risks, accept responsibility, and demonstrate recognition of the seriousness of the misconduct. Although the 2016 Pilot Program indicated that remediation was “difficult to ascertain and highly case specific,” the new policy articulates additional factors to consider when evaluating remediation, such as the requirement of conducting a root cause analysis of the conduct.
It is worth noting that this policy applies only to FCPA matters and has no direct application to voluntary disclosures of wrongdoing in other contexts.