On April 5, 2016, the U.S. Department of Justice (DOJ), Fraud Section, announced a series of bold steps to encourage companies to come forward and disclose their wrongdoing in the anti-corruption arena. While this likely ensures that the wave of Foreign Corrupt Practices Act (FCPA) cases and investigations will not end anytime soon, is the pilot program meaningful to companies? On balance, it may offer measurable benefits for what most companies will do anyway. On the whole, that additional transparency is a good thing.
The Fraud Section is concentrating its augmented enforcement efforts in three key areas:
- Increasing the number of line prosecutors to the FCPA Unit by “more than 50% by adding 10 more prosecutors to its ranks.” In support of this new regime, the FBI “has established three new squads of special agents devoted to FCPA investigations and prosecutions.”
- Increasing international cooperation with foreign law enforcement. This goal includes greater sharing of leads, information, witnesses and documents.
- Creating and implementing a new pilot cooperation program that effectively can be referred to as “Cooperation Plus,” which will be discussed below.
The addition of prosecutors or agents, as well as increased international cooperation, is not big news. At various times over the years, for those of us focused on these issues, there has been a steady rise in resources and cooperation. Often, the increased resources are referenced in the DOJ or Securities and Exchange Commission budget. The boost in international cooperation can be observed in new international enforcement cases and in the U.S. Department of State’s referencing record improvements in mutual legal assistance treaties. What is likely to be viewed as interesting is the announced concept of “Cooperation Plus.”
The Fraud Section correctly points out that existing DOJ policies and the United States Sentencing Guidelines consider and award cooperation to companies that do the right thing—self-disclose wrongdoing to law enforcement. The DOJ’s announcement is striking because it plainly puts numbers behind the cooperation, thus potentially dampening criticism from the defense bar that how “cooperation” benefits corporate clients cannot be measured quantitatively. Now, this will be possible.
In order to qualify for the “Cooperation Plus” pilot program, the DOJ announced that companies must meet the following standards:
- Voluntarily disclose criminal conduct;
- Fully cooperate with law enforcement; and
The DOJ appears to be setting a high bar for companies to receive the benefits of “Cooperation Plus.” Regarding self-disclosure, the DOJ standards require companies to self-disclose prior to “an imminent threat of disclosure or government investigation.” The disclosure must be made “promptly” with the “burden on the company to demonstrate timeliness.” Finally, companies must disclose “all relevant facts about individuals involved in any FCPA violation.”
Full cooperation means, among other things, that companies must tell all about their officers, employees, directors and agents. Companies need to be “proactive” and find answers before the DOJ prosecutors ask. This may place significant pressure on companies to act swiftly and completely under challenging circumstances.
According to the Fraud Section, remediation relates to the “[i]mplementation of an effective compliance and ethics program.” The guidance sets forth criteria that companies should consider. The Fraud Section appropriately states that its expectations for companies will vary according to “size and resources of the organization.” Middle-market organizations are generally not expected to act as those in the Fortune 100.
The most significant factor that the DOJ announced was the specific quantitative benefit that “Cooperation Plus” companies can receive. The benefits are as follows:
- A company that does not voluntarily disclose to the DOJ, but “later fully cooperates and timely and appropriately remediates” can receive “25% reduction off the bottom of the Sentencing Guidelines fine range.”
- A company that complies in all respects to the “Cooperation Plus” standards may receive the following benefits from the Fraud Section’s FCPA Unit:
- “50% reduction off the bottom end of the Sentencing Guidelines fine range, if a fine is sought;” and “generally should not require appointment of a monitor if a company has, at the time of resolution, implemented an effective compliance program.”
- Compliance with all the standards can result in “a declination of prosecution.”
The “Cooperation Plus” pilot program is intriguing and one that practitioners, general counsels and companies should consider when anti-corruption issues arise. While the priority is generally to obtain a complete pass from DOJ, the new pilot program may be considered as a useful backup plan.