Since announcing the policy in November 2017, the DOJ has consistently moved towards greater incentives for companies to self-report misconduct.
On November 20, 2019, the Department of Justice (DOJ) announced several significant changes to its Foreign Corrupt Practices Act (FCPA) Corporate Enforcement Policy that clarify the information that companies must provide to the DOJ, and when they must provide it, in order to qualify for cooperation credit in FCPA cases.
FCPA Corporate Enforcement Policy
The FCPA Corporate Enforcement Policy allows companies that come forward and disclose foreign bribery to obtain credit for their cooperation with the DOJ. Under the policy, when a company has voluntarily self-disclosed such misconduct, fully cooperated, and timely and appropriately remediated the problem, there is a presumption that the company will receive a “declination”—i.e., no criminal charges—absent aggravating circumstances. If a company that has voluntarily self-disclosed, fully cooperated, and timely and appropriately remediated the problem does not receive a declination and is prosecuted, the DOJ: (1) will recommend to the sentencing court a 50 percent reduction from the low end of the sentencing guidelines fine range, except in the case of a criminal recidivist; and (2) generally will not require appointment of a compliance monitor, if the company has, at the time of resolution, implemented an effective compliance program.
Since announcing the policy in November 2017, the DOJ has consistently moved towards greater incentives for companies to self-report misconduct. The most recent changes reflect a continuation of this trend.
The Clarifying Changes to the Policy
Timing and Content of Disclosure
The policy previously stated that to receive self-disclosure credit, a company must disclose “all relevant facts known to it, including all relevant facts about all individuals substantially involved in or responsible for the violation of law.” This language seems to require companies to do a complete investigation and determine that a violation of law has occurred before coming forward to report the misconduct. The new language eases this requirement, both in terms of the timing of the disclosure and its content.
Now, companies are required only to disclose relevant facts known “at the time of the disclosure.” In addition, companies must disclose all relevant facts “as to any individuals substantially involved in or responsible for the misconduct at issue.” (Emphasis added.)
As for the timing of the disclosure, the DOJ explains in a footnote that it recognizes that a company “may not be in a position to know all relevant facts at the time of a voluntary self-disclosure, especially where only preliminary investigative efforts have been possible.” However, the footnote instructs a company to “make clear that it is making its disclosure based upon a preliminary investigation or assessment of information, but it should nonetheless provide a fulsome disclosure of the relevant facts known to it at that time.”
As for the content of the disclosure, companies need only provide information about “any,” not “all,” individuals. In addition, companies need not determine that a “violation of law” has occurred before making the disclosure, just that “misconduct” has occurred.
Under the previous language, companies faced a dilemma. The policy requires companies to report suspected violations “within a reasonably prompt time after becoming aware of the offense.” If the company came forward before fully investigating the facts, it would be credited with early disclosure, but risked the DOJ determining that the company had not done a sufficient investigation to conclude that a violation of law had occurred or to disclose “all relevant facts about all individuals” involved. On the other hand, if the company waited to report until after it had completed a full investigation, the company risked the DOJ determining it had not made a timely report of the misconduct. The changes eliminate this dilemma by allowing the company to come forward earlier in the process, even if the company has only done a preliminary investigation of the facts, and still receive cooperation credit.
Evidence Outside a Company’s Possession
The policy previously required companies to identify opportunities for the DOJ to “obtain relevant evidence not in the company’s possession” when the company “is or should be aware of” such opportunities, in order to obtain full cooperation credit. The DOJ has also eased this requirement. The policy now states that “where the company is aware of relevant evidence not in the company’s possession, it must identify that evidence to the Department.” This change eliminates the requirement of identifying opportunities that companies “should be aware of”—an inherently subjective determination that only the DOJ could make—and simply requires companies to identify relevant evidence they are aware of that is not in their possession.
Early Disclosure Will Be Rewarded
These recent changes to the policy are significant because they show that the DOJ is looking for early self-disclosure of foreign bribery misconduct. The DOJ has now made clear that companies that self-disclose misconduct based upon a preliminary investigation will be eligible for cooperation credit and a declination of prosecution if all the criteria are met. Thus, early self-disclosure can be the first step in resolving an FCPA investigation without criminal charges.
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Duane Morris’ white-collar criminal defense attorneys design corporate compliance programs that provide clients with protection against corporate misconduct, and, if misconduct occurs, mitigate the adverse consequences to the company of a corporate criminal prosecution.
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