United States: U.S. Department Of Justice Establishes Pilot Program To Encourage Companies To Self-Report Foreign

The United States Department of Justice (the "DoJ") issued a memorandum on April 5, 2016 (the "Memorandum") announcing a one-year pilot program [2] created to encourage companies to voluntarily self-report FCPA-related misconduct and to cooperate with the Fraud Section of the Criminal Division of the DoJ.[3]. The DoJ also announced plans to increase FCPA enforcement resources at the Federal Bureau of Investigation as well as at the DoJ and to strengthen its coordination with foreign counterparts in an effort to improve its ability to combat FCPA violations.

The DoJ's increased focus on the FCPA provides clear evidence of its view that bribery of foreign government officials to secure business is a "serious systemic criminal problem across the globe."  Memorandum at 1.  Its creation of the Pilot Program signals to companies operating abroad that implementing and improving measures to ensure FCPA compliance, conducting internal investigations to identify violations thereof, and adequately considering whether or not to self-report such violations are of the utmost importance in conducting business internationally.

In announcing the Pilot Program, the DoJ has set forth in detail – for the first time – the credit that companies can receive for voluntarily disclosing FCPA-related misconduct, fully cooperating with a DoJ investigation, and implementing remediation measures.  To qualify for such credit, the DoJ has identified three separate requirements described briefly below.   

  1. Voluntary Self-Disclosure:  A company seeking cooperation credit must voluntarily disclose FCPA-related misconduct "prior to an imminent threat of disclosure or government investigation" within a reasonable time of learning of the misconduct.  A company must disclose all facts known that are relevant thereto.  See Memorandum at 4.
  2. Full Cooperation:  A company must fully cooperate with any investigation of the FCPA-related misconduct reported.  Such cooperation includes disclosure of all relevant facts even if not requested by the DoJ, preservation of all relevant data and information, identification of all sources of potential information, and provision of timely updates on as well as of facts gather during any internal investigation.  See Memorandum at 5.
  3. Remediation:  A company must undertake "appropriate and timely remediation" aimed at "reducing corporate recidivism and detecting and deterring individual wrongdoing."  This includes the implementation of a robust compliance and ethics program designed to account for the size and resources of the organization.  See Memorandum at 7.

If a company meets the three requirements set forth above, it may be afforded cooperation credit by the DoJ.  In such cases, the Fraud Section may recommend: (1) up to a 50% reduction of the bottom end of any applicable range of fines, (2) no monitor if the company has implemented an effective compliance program, or (3) a declination to  prosecute the FCPA-related misconduct.  See Memorandum at 8-9.  It is important to note, however, that these measures only apply to the Fraud Section's FCPA Unit and only apply during the term of the Pilot Program.  See Memorandum at 9.

Despite the guidance provided by the Memorandum, a company's decision to self-report or not remains extraordinarily difficult.  The DoJ has set forth significant incentives for voluntary self-disclosure but self-reporting may not always be the most advisable approach, especially where the seriousness of the offense or the scope of the individuals involved is unclear. 


1. The Foreign Corrupt Practices Act of 1977 is a federal law that makes it unlawful for certain individuals and entities to make payments to foreign government officials for the purpose of influencing the foreign officials to assist the individual or entity making payment in obtaining or retaining business.  It also requires companies whose securities are listed in the United States to comply with certain accounting provisions.  See 15 U.S.C. §§ 78dd-1, et seq.

2. The FCPA enforcement pilot program (the "Pilot Program") will remain in effect until April 5, 2017.  It will apply to all companies that self-report FCPA violations or cooperate in FCPA-related investigations during this period.  At the end of the period, the Fraud Section will determine whether the program is to be extended and/or modified.  See Memorandum at 3.

3. The Memorandum titled "The Fraud Section's Foreign Corrupt Practices Act Enforcement Plan and Guidance" dated April 5, 2016 is linked here.

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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