United States: New DOJ FCPA Pilot Program Outlines Steps For Full Corporate Cooperation Credit For Companies

Last Updated: April 18 2016
Article by Sharie A. Brown

The U.S. Department of Justice (DOJ), Fraud Section's Foreign Corrupt Practices Act (FCPA) Enforcement Plan and Guidance, issued by Andrew Weissmann, Chief, Fraud Section, DOJ Criminal Division, on April 5, 2016, ("Weissmann Memo") continues DOJ's ongoing effort to provide practical, written guidance for companies that hope to receive full credit for cooperation and compliance-related actions undertaken when the companies suspect and uncover FCPA misconduct. Companies should pay attention to the Weissmann Memo because the DOJ is increasing its FCPA unit by 50% (adding 10 new prosecutors), and the FBI now has three new squads with special agents devoted to FCPA investigations and prosecutions. Further, the DOJ is increasing its ongoing collaboration and coordination with its international law enforcement counterparts to combat bribery schemes that cross national borders.

DOJ Pilot Program Corporate Qualifying Criteria for Credit In FCPA Matters

According to the Weissmann Memo, in order to promote greater accountability for individuals and companies that violate the FCPA, the Fraud Section has commenced a one-year pilot program (effective April 5, 2016) that is designed to motivate companies to voluntarily self-disclose FCPA-related misconduct, fully cooperate with DOJ prosecutors, and remediate flaws in corporate controls and compliance programs, as appropriate.

Voluntary Self-Disclosure Defined

DOJ will evaluate the circumstances of corporate self-disclosure during the pilot period and award credit to companies for voluntary self-disclosure of FCPA wrongdoing where:

  • The voluntary disclosure occurs "prior to an imminent threat of disclosure or government investigation";
  • The company discloses the conduct to the DOJ "within a reasonably prompt time after becoming aware of the offense", with the burden being on the company to demonstrate timeliness; and
  • The company discloses all relevant facts known to it, including all relevant facts about the individuals involved in any FCPA violation.

Full Cooperation in FCPA Matters Required

In addition to the Principles of Federal Prosecution of Business Organizations, DOJ requires a company to do the following in order to receive full cooperation (beyond credit already available under the U.S. Sentencing Guidelines):

  • Disclosure on a timely basis of all facts relevant to the wrongdoing at issue, including facts related to the criminal activity of the company's officers, employees or agents;
  • Proactive cooperation; this requires the company to disclose facts that are relevant to the investigation (even when not specifically asked to do so), and to identify opportunities for prosecutors to obtain relevant evidence not in the company's possession or otherwise known to the government;
  • Preservation, collection and disclosure of relevant documents and information relating to provenance;
  • Timely updates on a company's internal investigation;
  • De-confliction of an internal investigation with the government's investigation- when requested;
  • Provision of all facts relevant to potential criminal conduct by all third party entities and third-party-individuals;
  • Upon request, making company officers and employees available for DOJ interviews (including former employee/officers and overseas personnel);
  • Disclosure of all relevant facts from a company's independent investigation, including attribution of facts to specific sources, except those that create violations of the attorney-client privilege ;
  • Disclosure of overseas document location and details regarding who, how and where they were found;
  • Facilitation of third-party document production and witnesses from foreign jurisdiction, unless legally prohibited; and
  • Document translations, when appropriate and requested.

Timely and Appropriate Remediation in FCPA Matters

Before awarding credit for remediation efforts during the pilot period, DOJ will first determine if the company is eligible for cooperation credit. A key requirement for remediation credit is a determination on whether the company has implemented an effective compliance and ethics program featuring criteria that will be periodically updated to include:

  • Whether the company has a culture of compliance;
  • Whether the company dedicates sufficient resources to its compliance function;
  • Whether the compliance personnel have the quality and experience to understand and identify transactions with potential risk;
  • The independence of the compliance function;
  • Whether the compliance program has performed an effective risk assessment tailored to the compliance program based on the risk assessment;
  • How the compliance personnel are compensated and promoted compared to other employees;
  • Extent of auditing of the compliance program effectiveness, and the reporting structure of the compliance personnel within the company
  • Extent of discipline of employees responsible for misconduct, oversight of responsible individuals, and how compensation is affected for offending personnel and for those who fail to adequately supervise
  • Any additional steps that demonstrate the seriousness of the corporate misconduct, acceptance of responsibility, and implementation of measures to reduce the risk or reoccurrence of the misconduct.

Maximum Credit for Companies That Voluntarily Disclose During the Pilot Program

The Weissmann Memo makes clear that companies will only receive limited credit if the company has cooperated with DOJ and remediated; but, did not voluntarily disclose in accordance with the standards set out in DOJ's pilot program. At most, a company would receive a 25% reduction off the bottom of the Sentencing Guidelines range if the company did not voluntarily disclose.

Companies that voluntarily disclose, fully cooperate, and engage in timely and appropriate remediation of FCPA issues could receive up to 50% reduction off of the bottom end of the Sentencing Guidelines fine range, if a fine is sought. The DOJ may also not require the appointment of a compliance monitor, if at the time of resolution, the company has implemented an effective compliance program. In some instances, DOJ may also consider a declination of prosecution of a company, if the company has disclosed information that permits the prosecution of individuals, among other factors considered.

Thus, now more than ever is the time for companies to update their compliance programs, review and investigate any suspected FCPA misconduct, and make appropriate determinations about whether a voluntary self-disclosure is warranted in order for the company to qualify for the benefits and credits described in the new DOJ pilot program for enforcement of FCPA offenses.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Sharie A. Brown
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