Last Fall, we highlighted the Department of Justice’s (DOJ) September 2015 Yates Memo regarding corporate cooperation in criminal investigations, including its requirement that corporations self-disclose facts relevant to any individuals responsible for purported misconduct. Click here to view that First Alert.
On Tuesday, April 5, 2016, DOJ announced a follow-on measure it calls the FCPA Pilot Program. Limited to investigations of violations of the Foreign Corrupt Practices Act (FCPA), the program is “designed to motivate” corporations to cooperate by linking specific acts of cooperation to specific reductions in fines and other punishments, all the way down to declination of prosecution.
To receive Pilot Program credit, a corporation must:
- prior to any imminent threat of disclosure or government involvement,
- reasonably promptly after becoming aware of the conduct, and
- must disclose all facts, including as to responsible individuals
- be proactive, rather than reactive,
- attempt “de-confliction” of internal investigation with government investigation,
- share full results of any internal investigation, including attribution of sources,
- preserve, collect and disclose all relevant documents and information,
- provide regular investigative updates,
- identify culpable third parties and facilitate production of overseas witnesses and documents, and
- make overseas employees and documents available for interviews or reviews and provide translations.
- implement an effective compliance and ethics program,
- discipline responsible employees, and
- take any other steps that demonstrate recognition of the seriousness of the conduct, acceptance of responsibility and efforts to reduce future risk.
In return, if the corporation does all of the above, DOJ may, where criminal prosecution is warranted:
- reduce fines 50% off the bottom end of the Sentencing Guidelines,
- not require the appointment of a monitor, or
- consider a declination of prosecution.
The Pilot Program will only last for one year, from April 5, 2016 through April 5, 2017, and only applies to FCPA investigations by the DOJ Fraud Section’s FCPA Unit. It does not apply to other divisions of DOJ, or to other agencies, including most importantly the Securities and Exchange Commission, which enforces the civil provisions of the FCPA. The SEC announced its own FCPA self-disclosure/cooperation measures last November, noting that going forward it would only grant deferred or non-prosecution agreements to corporations taking actions like those above, though it was less specific both as to the required conduct and the offered credit, reserving more discretion for itself than DOJ has here.
Perhaps DOJ has recognized that corporations view its prior pronouncements as all stick and no carrot. Or perhaps they hope that by making the credits explicit and defined, they can lessen the dilemmas inherent in cooperation decisions. It remains to be seen how the Pilot program will be implemented and whether corporations choosing to cooperate will see any real rewards. It also remains to be seen what impact this might have on other investigating agencies such as the SEC.
Either way, the Pilot Program demonstrates the lengths that companies will need to go to in order to avoid a criminal conviction and the costs of an independent monitor. For individuals, it underscores the incredible pressure that companies are under to serve up their employees to prosecutors for the good of the order.