On November 29, 2017, Deputy Attorney General Rod Rosenstein announced that the U.S. Department of Justice (DOJ) was issuing a new enforcement policy covering its enforcement of the Foreign Corrupt Practices Act (FCPA). The new “FCPA Corporate Enforcement Policy” formalizes prior internal guidance and makes permanent aspects of the DOJ’s 2016 “pilot program” for corporate cases involving potential violations of the foreign bribery and anti-corruption law. The new policy encourages companies to voluntarily self-disclose misconduct to enforcement authorities by creating certainty about the potential outcomes of FCPA investigations and enforcement actions.
Specifically, the new policy creates a rebuttable presumption that DOJ will decline to prosecute companies that voluntarily self-disclose potential violations of the FCPA, “fully” cooperate with the DOJ investigation, and “timely and appropriately” remediate. The new policy defines each of those elements, detailing the government’s expectations for cooperation and remediation. Previously, declinations had been among the potential outcomes for cooperating companies that self-disclosed misconduct, but the new policy’s inclusion in the U.S. Attorney’s Manual makes the prior guidance mandatory.
Prosecutors nevertheless retain discretion in how to evaluate a company’s cooperation and remediation, and other “aggravating factors” described in the policy could still take declinations off the table in certain cases. However, the new policy states that prosecutors will be required to agree to a 50-percent reduction to the minimum fines required in such cases. Previous DOJ guidance had left more discretion to prosecutors, stating that they “may” have agreed to such penalty reductions.
The new policy also formalizes the notion that full cooperation with the government’s investigation may include “deconfliction” – requests by the government that a company’s legal team step back during an investigation in order to allow the government to interview witnesses first. The earlier pilot program had introduced deconfliction, but the new policy explains that such requests from the government must be limited in duration and narrowly tailored to a legitimate investigative purpose.
Although it remains to be seen how DOJ will implement the new policy, the formalization of prior guidance and practice, along with the additional certainty of outcomes, means that companies that identify potential misconduct have additional considerations to take into account when deciding whether to disclose to enforcement authorities.
The text of the policy is as follows:
9-47.120 - FCPA Corporate Enforcement Policy
1. Credit for Voluntary Self-Disclosure, Full Cooperation, and Timely and Appropriate Remediation in FCPA Matters
Due to the unique issues presented in FCPA matters, including their inherently international character and other factors, the FCPA Corporate Enforcement Policy is aimed at providing additional benefits to companies based on their corporate behavior once they learn of misconduct. When a company has voluntarily self-disclosed misconduct in an FCPA matter, fully cooperated, and timely and appropriately remediated, all in accordance with the standards set forth below, there will be a presumption that the company will receive a declination absent aggravating circumstances involving the seriousness of the offense or the nature of the offender. Aggravating circumstances that may warrant a criminal resolution include, but are not limited to, involvement by executive management of the company in the misconduct; a significant profit to the company from the misconduct; pervasiveness of the misconduct within the company; and criminal recidivism.
If a criminal resolution is warranted for a company that has voluntarily self-disclosed, fully cooperated, and timely and appropriately remediated, the Fraud Section:
To qualify for the FCPA Corporate Enforcement Policy, the company is required to pay all disgorgement, forfeiture, and/or restitution resulting from the misconduct at issue.
2. Limited Credit for Full Cooperation and Timely and Appropriate Remediation in FCPA Matters Without Voluntary Self-Disclosure
If a company did not voluntarily disclose its misconduct to the Department of Justice (the Department) in accordance with the standards set forth above, but later fully cooperated and timely and appropriately remediated in accordance with the standards set forth above, the company will receive, or the Department will recommend to a sentencing court, up to a 25% reduction off of the low end of the U.S.S.G. fine range.
a. Voluntary Self-Disclosure in FCPA Matters
In evaluating self-disclosure, the Department will make a careful assessment of the circumstances of the disclosure. The Department will require the following items for a company to receive credit for voluntary self-disclosure of wrongdoing:
b. Full Cooperation in FCPA Matters
In addition to the provisions contained in the Principles of Federal Prosecution of Business Organizations, see USAM 9-28.000, the following items will be required for a company to receive credit for full cooperation for purposes of USAM 9-47-120(1) (beyond the credit available under the U.S.S.G.):
c. Timely and Appropriate Remediation in FCPA Matters
The following items will be required for a company to receive full credit for timely and appropriate remediation for purposes of USAM 9-47-120(1) (beyond the credit available under the U.S.S.G.):
Cooperation Credit: Cooperation comes in many forms. Once the threshold requirements set out at USAM § 9-28.700 have been met, the Department will assess the scope, quantity, quality, and timing of cooperation based on the circumstances of each case when assessing how to evaluate a company’s cooperation under the FCPA Corporate Enforcement Policy.
“De-confliction” is one factor that the Department may consider in determining the credit that a company will receive for cooperation. The Department’s requests to defer investigative steps, such as the interview of company employees or third parties, will be made for a limited period of time and will be narrowly tailored to a legitimate investigative purpose (e.g., to prevent the impeding of a specified aspect of the Department’s investigation). Once the justification dissipates, the Department will notify the company that the Department is lifting its request.
Where a company asserts that its financial condition impairs its ability to cooperate more fully, the company will bear the burden to provide factual support for such an assertion. The Department will closely evaluate the validity of any such claim and will take the impediment into consideration in assessing whether the company has fully cooperated.
As set forth in USAM 9-28.720, eligibility for full cooperation credit is not predicated upon waiver of the attorney-client privilege or work product protection, and none of the requirements above require such waiver. Nothing herein alters that policy, which remains in full force and effect. Furthermore, not all companies will satisfy all the components of full cooperation for purposes of USAM 9-47.120(2) and (3)(b), either because they decide to cooperate only later in an investigation or they timely decide to cooperate but fail to meet all of the criteria listed above. In general, such companies will be eligible for some cooperation credit if they meet the criteria of USAM § 9-28.700, but the credit generally will be markedly less than for full cooperation, depending on the extent to which the cooperation was lacking.
Remediation: In order for a company to receive full credit for remediation and avail itself of the benefits of the FCPA Corporate Enforcement Policy, the company must have effectively remediated at the time of the resolution.
The requirement that a company pay all disgorgement, forfeiture, and/or restitution resulting from the misconduct at issue may be satisfied by a parallel resolution with a relevant regulator (e.g., the United States Securities and Exchange Commission).
Public Release: A declination pursuant to the FCPA Corporate Enforcement Policy is a case that would have been prosecuted or criminally resolved except for the company’s voluntary disclosure, full cooperation, remediation, and payment of disgorgement, forfeiture, and/or restitution. If a case would have been declined in the absence of such circumstances, it is not a declination pursuant to this Policy. Declinations awarded under the FCPA Corporate Enforcement Policy will be made public.
[Added November 2017]https://www.justice.gov/usam/usam-9-47000-foreign-corrupt-practices-act-1977