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BarJournal CRIMINAL LAW

JULY/AUGUST 2015
fEATUrE fCPA Enforcement Trends

To Disclose or Not to Disclose, That Is the Question.

DOJ Has Created Several Incentives for Companies

to Answer in the Affirmative.

BY ADAM HOLLINGSWORTH & VANESSA HEALY

he U.S. Department of Justice In 2016, DOJ created an FCPA Enforcement • Involvement by management in the
(DOJ) has taken repeated steps Pilot Program (Pilot Program) to encourage misconduct;
to encourage companies to voluntary self-disclosure, cooperation, and • Significant profit from the misconduct;
suffer the slings and arrows of remediation by companies that suspected • Pervasive misconduct within the company; and
T its enforcement of the Foreign FCPA violations. The Pilot Program applied to • Criminal recidivism.
Corrupt Practices Act (FCPA) by making all FCPA actions that occurred during its one- If the presumption of declination
the suffering of those who self-disclose their year trial period. The benefits of self-disclosure is rebutted, but the company has fully
transgressions less severe. DOJ has provided under the Pilot Program included the possibility cooperated and remediated, DOJ will still
a measure of transparency, predictability, DOJ would decline criminal charges, up to a recommend the full 50% reduction in
and leniency not generally associated with 50% reduction in criminal fines, and a chance fines, and will generally not require the
government enforcement. In exchange, the to avoid the imposition of a corporate monitor, appointment of a corporate monitor. The
government has saved valuable resources and a costly and burdensome remedy. In order to Enforcement Policy even has something for
learned about foreign bribery that may well qualify, DOJ required a company to voluntarily companies that fail to voluntarily disclose,
have remained hidden from the disinfecting self-disclose its FCPA-related misconduct, but later fully cooperate and remediate,
effects of sunlight. fully cooperate with DOJ, remediate flaws in providing up to a 25% reduction in fines to
By way of background, the FCPA prohibits its compliance programs, and disgorge all ill- reward their belated cooperation.
offering or providing anything of value to a gotten profits. The carrots offered by DOJ, Although DOJ has promulgated memos
foreign official to obtain or retain business therefore, were subject to a considerable amount and guidance on this topic over the years,
or an improper advantage. Congress of prosecutorial discretion, while its stick was the Enforcement Policy is the most concrete
intended to punish and deter foreign bribery still certain to strike a firm blow after disclosure, direction provided to companies about
to level the playing field for American reducing the actual incentive to self-disclose. FCPA self-disclosure and cooperation.
companies operating in foreign countries. Rather than letting the Pilot Program expire The Enforcement Policy is now officially
The FCPA also requires covered businesses after a year, DOJ made its core principles part of the Justice Manual, the playbook
to keep accurate books and records. The permanent while removing some of the for federal prosecutors previously known
requirement for financial transparency uncertainty about the benefits of disclosure. as the U.S. Attorney’s Manual. In May
ensures that a company cannot hide corrupt In November 2017, Deputy Attorney General 2018, DOJ issued its first corporate
payments with impunity. Rod Rosenstein announced the DOJ’s FCPA declination under the Enforcement
The DOJ and SEC continue to devote Corporate Enforcement Policy (Enforcement Policy in declining to prosecute Dunn &
significant resources to FCPA investigations Policy). The Enforcement Policy built upon the Bradstreet for failing to accurately record
and prosecutions. In Fiscal Year 2018, the Pilot Program by providing greater certainty improper payments made in China on its
DOJ FCPA Unit announced eight corporate and predictability to the process to further books and records because the company
resolutions totaling more than $900 incentivize companies to self-disclose FCPA satisfied the “rigorous requirements” of
million in fines, penalties, and forfeitures. violations. Most significantly, the Enforcement the Enforcement Policy. DOJ has since
Additionally, FCPA prosecutors brought Policy created a presumption that DOJ issued 10 declinations based on similar
charges against more than 30 individuals. The will decline to take enforcement action factors, including:
U.S. has enjoyed closer collaboration between against a company that (i) voluntarily self- • Identifying misconduct and promptly and
its enforcement authorities and their foreign discloses suspected FCPA violations; (ii) fully voluntarily self-disclosing to DOJ;
counterparts, which has led to increased anti- cooperates with the DOJ investigation; (iii) • Undertaking a thorough internal
corruption enforcement activity around the performs timely and appropriate remediation; investigation;
world, particularly in Brazil. This vigorous and (iv) pays all disgorgement, forfeiture, and/ • Cooperating fully with DOJ, including
enforcement environment has been enhanced or restitution resulting from the misconduct. providing all facts relating to the
by deliberate policy choices at DOJ to The presumption of declination, misconduct, making current and former
increase the number and quality of company however, can be rebutted by “aggravating employees available for interviews, and
FCPA self-disclosures. circumstances,” including: translating documents;
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