In the first major action of 2024, the Department of Justice (DOJ) announced it had entered into a three-year deferred prosecution agreement (DPA) with a publicly traded global software company for alleged violations of the Foreign Corrupt Practices Act (FCPA). The January 10, 2024 announcement described the company's agreement to pay more than $220 million in connection with the investigation, consisting of just under $120 million in criminal penalties. While significant, these fines were reduced based on the pilot program announced by the DOJ last spring, as described below.

The company in question had prior alleged violations. The current indictment involved two counts: conspiracy to violate the anti-bribery and books and records provisions of the FCPA relating to its scheme to pay bribes to South African officials, and conspiracy to violate the anti-bribery provision of the FCPA for its scheme to pay bribes to Indonesian officials.

Under the pilot program announced last spring, the DPA and reduced fines were based in part on the company's proactive remedial actions, including:

  • Strengthening its code of conduct and policies surrounding gift-giving, providing hospitality, and use of third-party sale representatives;
  • Overhauling its compliance and auditing programs and monitoring those functions;
  • Enhancing its compensation policies with compliance incentives;
  • Taking swift action to terminate the responsible employees; and
  • Aggressive litigating to enforce its compensation claw-back policies.

As we have previously discussed, in 2023 the DOJ issued its updated guidance on Evaluation of Corporate Compliance Programs, emphasizing that companies that link compensation plans to FCPA compliance – particularly by retaining the right to withhold or claw back payments to employees involved in violations such as bribery – will receive consideration for reduction of penalties equivalent to the amount of the claw-back. And importantly, even unsuccessful claw-back efforts can reduce the amount of penalties.

Multi-nationals are strongly advised to review whether their compensation policies are in line with the DOJ guidance, including claw-back provisions in their employment agreements. In doing so, they need to undertake a review of local laws in any jurisdiction where their employees reside, including privacy protections, blocking statutes, wage and hour law, and dismissal protections. Whether a possible violation is revealed by a whistleblower, internal financial controls, or otherwise, with proactive planning, companies can be prepared to take swift investigative and remedial actions, thus laying the groundwork for a favorable resolution in the unfortunate event a violation is discovered.

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.