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DOJ Fraud Section announces FCPA enforcement plan and guidance, encouraging self-disclosure and cooperation

The US Department of Justice (DOJ) launched a new pilot program on April 5, 2016 to encourage companies to self-disclose possible violations of the Foreign Corrupt Practices Act (FCPA) and to fully cooperate with DOJ investigations. The pilot program, which runs for one year and applies only to FCPA matters, sets out the extent of cooperation credit available to companies under investigation, and, for the first time articulates, a framework for penalty reductions below the low end of the US Sentencing Guidelines fine range.1  
In brief, a company that voluntarily discloses misconduct to the DOJ Fraud Section’s FCPA Unit, cooperates fully with the investigation, and engages in timely and appropriate remediation will qualify for the full range of mitigation credit: where a criminal resolution is warranted, the company may receive a penalty reduction of up to 50 percent below the low end of the Sentencing Guidelines fine range and generally will not require a monitor if the company has an effective compliance program in place. Moreover, the FCPA Unit will consider whether a declination of prosecution is appropriate, taking into account the seriousness of the offense based on factors such as executive management involvement, the significance of the profit to the company from the misconduct, any history of non-compliance, and any prior resolution with the DOJ in the past five years.
A company that does not voluntarily disclose, but that appropriately cooperates and remediates, may receive up to a 25 percent reduction below the low end of the fine range. A company that remediates the misconduct but does not self-disclose or otherwise cooperate would not be eligible for additional cooperation credit under the pilot program.
The FCPA pilot program’s guidance also gives color to the terms self-disclosure, cooperation, and remediation, outlining what is necessary for credit under the program:
  • Additional credit for voluntary self-disclosure will be limited to companies that report all relevant facts known to it (including facts about individuals involved) within a reasonably prompt time after becoming aware of these facts and before disclosure or a government investigation becomes imminent.
  • Full cooperation with the investigation requires proactive (rather than reactive) cooperation and, among other things, full and timely disclosure of (and updates on) all relevant facts, including facts relevant to individual misconduct or misconduct by third parties; preservation and production of relevant documents and, if requested, their translation; and facilitation of DOJ interviews of relevant witnesses, even if located overseas. The guidance noted that a company would not necessarily be barred from cooperation credit if it could not meet one of these requirements due to conflicting foreign law, but that the onus would be on the company to establish the conflict. And, while a company’s investigation should be tailored to the misconduct involved, the guidance included in a footnote that “evidence that the corporate team engaged in criminal misconduct in overseeing one country also oversaw other countries would normally trigger the need for a broader investigation,” which may have important implications for companies with diffuse reporting structures or misconduct at high levels.
  • To obtain credit for timely and appropriate remediation, a company must implement an effective compliance and ethics program that includes an independent compliance function with sufficient resources, risk assessments, periodic auditing, and a “culture of compliance” within the organization. A company must also provide for appropriate disciplinary measures for employees involved in misconduct, and must take additional steps to show its acceptance of responsibility and to reduce the risk of recidivism.
In the DOJ’s announcement, Assistant Attorney General (AAG) Leslie R. Caldwell framed the pilot program as part of a larger move to enhance FCPA enforcement activity more generally, also highlighting increases in prosecutorial and law enforcement resources (with 10 additional prosecutors in the Fraud Unit and three new FBI squads devoted to FCPA enforcement) and in international enforcement coordination and cooperation.
The FCPA pilot program highlights DOJ’s efforts “to promote both transparency and accountability.”2 By specifying the benefits of full and frank disclosure, and the risks of keeping quiet, the pilot program will allow “companies to make more rational decisions when they learn of foreign corrupt activity by their agents and employees.”3  
It is also the latest example of US regulators delineating the availability of penalty-reducing mechanisms for companies under investigation4: AAG Caldwell noted that the pilot program builds upon the September 9, 2015 Yates Memorandum on Individual Accountability for Corporate Wrongdoing,5 which limited cooperation credit to companies that share information about culpable individuals. In addition, the US Securities and Exchange Commission announced in late 2015 that deferred- and non-prosecution agreements will be limited to companies that voluntarily self-report to the Commission.6
The pilot program applies only to FCPA matters brought by the Fraud Section of DOJ’s Criminal Division, and may be extended or modified after the end of the one-year trial.
  1. The Sentencing Guidelines have long provided for reduced fines for corporate cooperation, but until the pilot program, there was no publicly available guidance outlining when and to what extent reductions should be below the low end of the fine range.
  2. See
  3. Id.
  4. Parallels can also be drawn between the FCPA pilot program and DOJ’s Swiss Bank Program, which was launched in August 2013 to provide “a path for Swiss banks to resolve potential criminal liabilities in the United States.” See Swiss banks that were eligible to enter the program were required, among other conditions, to disclose all information about their cross-border activities to DOJ in order to be eligible for a non-prosecution agreement. Our Dispute Resolution Team represented a number of Swiss Banks as they navigated the Swiss Bank Program between 2013 and January 2016, when DOJ reached its final non-prosecution agreement under this phase of the program.
  5. See
  6. See