Bosch Becomes First Company To Receive DOJ Declination Under New Corporate Enforcement Policy

Highlights

• On June 17, German technology company Robert Bosch GmbH (Bosch) became the first company to avoid criminal prosecution under the Department of Justice’s (DOJ) new department-wide criminal corporate enforcement policy.
• Bosch agreed to pay $36 million to settle allegations it improperly exported technology products to sanctioned Chinese company Huawei Technologies Co. Ltd. (Huawei).
• The declination underscores the significant benefits available to companies that voluntarily self-disclose potential violations, fully cooperate with government investigations, and implement timely remediation measures.

DOJ Investigation Into Bosch Export Control Violations Involving Huawei and BIS Entity List Restrictions

The DOJ’s declination ends its investigation into an alleged scheme in which Bosch reexported from abroad more than $70 million worth of foreign-produced sensor products and software to Huawei and its affiliates on the Bureau of Industry and Security’s (BIS) Entity List. Exporters are prohibited from exporting, re-exporting, or transferring in-country any items subject to U.S. jurisdiction to entities on BIS’s Entity List without first obtaining an export license. The exports were carried out by two Bosch subsidiaries based outside the U.S. over four years beginning in September 2020 and netted Bosch more than $11.4 million in profits. Bosch stated the sensor products at issue were for consumer applications and automotive software.

The DOJ found that Bosch’s trade compliance personnel were “ill-equipped” to provide accurate guidance on the Foreign Direct Product Rule, which applies export controls on items made with technology originating from the U.S., even if the products are manufactured elsewhere. Bosch missed several opportunities in which third-party companies identified potential applications of the rule to their products.

Why DOJ Granted Bosch a Declination: Voluntary Self-Disclosure, Cooperation, and Compliance Remediation

Upon discovering the potential U.S. export control violations, Bosch took several remedial steps that proved critical to obtaining the declination:

• Voluntary self-disclosure: Bosch voluntarily self-disclosed its misconduct to the DOJ’s National Security Division, as well as to the BIS.
• Full cooperation: The company preserved and proactively disclosed relevant facts, information, and documents about the conduct and promptly responded to the National Security Division’s and BIS’ subsequent requests.
• Timely remediation: Bosch immediately halted any related transactions, engaged external counsel to conduct a review, made organizational changes, imposed disciplinary action, added employees to its trade compliance organization, expanded its resources for U.S. trade compliance, and updated its internal policies and procedures.

DOJ and BIS Officials Highlight Benefits of Voluntary Self-Disclosure and Export Compliance Programs

The DOJ’s Assistant Attorney General for National Security John A. Eisenberg emphasized that the declination “reflects the clear benefits for companies that promptly disclose potential violations and fully assist in our investigations.” He further stated that “Bosch’s cooperation and timely remediation met the high standards set by the corporate enforcement policy, supporting a fair and efficient resolution,” and called this “first-of-its-kind decision” by the National Security Division a highlight of “the important role of transparency in safeguarding U.S. technology and national security.”

Assistant Secretary of Commerce for Export Enforcement David Peters noted that the settlement agreement “underscores BIS’s commitment to strong enforcement as well as incentivizing voluntary disclosures of past violations.” Peters cautioned that “Bosch had several opportunities to avoid these violations had they exercised the increased vigilance BIS has repeatedly said it expects of companies whose transactions are governed by the Export Administration Regulations,” and stated that this action “should serve as a warning to embrace compliance and as an example of the benefits of voluntary self-disclosure.”

What the Bosch DOJ Declination Means for Companies Facing Export Control Compliance Risks

This declination — the first issued by DOJ’s National Security Division — comes approximately three months after the DOJ released its first-ever department-wide criminal corporate enforcement policy. Under this policy, declinations may be available when companies:

• Voluntarily self-disclose misconduct
• Fully cooperate with DOJ investigations
• Remediate the misconduct in a timely and appropriate manner, and
• Avoid aggravating circumstances.

The Bosch resolution demonstrates that the DOJ is prepared to follow through on its stated commitment to incentivize corporate compliance and self-disclosure. Companies operating in areas subject to export controls — particularly those dealing with the Foreign Direct Product Rule — should ensure their compliance programs are robust, that personnel are adequately trained, and that mechanisms exist for prompt detection and disclosure of potential violations.

Key Compliance Lessons From DOJ’s First Corporate Enforcement Policy Declination

The Bosch declination serves as both a cautionary tale and a roadmap. While the company’s compliance failures resulted in significant civil monetary penalties totaling $36 million, Bosch’s proactive approach, including voluntary disclosures, full cooperation, and comprehensive remediation, enabled it to avoid criminal prosecution. Criminal penalties for the 109 violations otherwise could have cost Bosch well over $100 million. Companies facing potential export control violations should carefully consider the benefits of early engagement with enforcement authorities.