In April 2016, the DOJ’s release of its FCPA Enforcement Plan and Guidance (the “Pilot Program”) confirmed an evolution in the agency’s view of the elements of an effective FCPA compliance program. The Pilot Program included two new elements that never before had appeared in published DOJ memoranda or guidance: (1) “The quality and experience of the compliance personnel such that they can understand and identify the transactions identified as posing a potential risk”; and (2) “How a company’s compliance personnel are compensated and promoted compared to other employees.”
These new elements signaled that the DOJ’s analysis had moved beyond compliance program fundamentals like policies, procedures and training toward a more sophisticated understanding of the engine that actually powers an effective compliance function: the corporate resources dedicated to it. And, consistent with this evolution, the first two FCPA resolutions reached under the Pilot Program feature enhanced compliance resourcing as well as augmentation of traditional compliance fundamentals.
The Pilot Program. Under the DOJ’s pilot program, companies are eligible for reduced penalties if they: (1) voluntarily disclose FCPA violations; (2) fully cooperate with the DOJ’s investigation; and (3) implement “appropriate remediation” upon detecting wrongdoing.1 Voluntary disclosure, full cooperation and appropriate remediation each are defined within the Pilot Program guidance and are consistent with prior DOJ statements.
Appropriate Remediation. The “appropriate remediation” element was particularly interesting to compliance professionals because it required companies to implement an effective FCPA compliance program as defined within the Pilot Program guidance. Unlike past government advice featuring laundry lists of policies, procedures and training that buttress an effective FCPA compliance program, the Pilot Program guidance on “appropriate remediation” focused on five factors, including the two new components related to compliance resourcing.
The Nortek and Akami DOJ Declinations. On June 7, 2016, the DOJ resolved its first two cases under the Pilot Program, declining to charge building products company Nortek, Inc. (“Nortek”) and technology services provider Akamai Technologies, Inc. (“Akami”) with FCPA violations because they met the Pilot Program’s requirements “despite the bribery” by company employees.2 With respect to the “appropriate remediation” prong of the Pilot Program requirements, the DOJ’s declination letters state simply that the companies took steps to “enhance” their corporate compliance programs and internal accounting controls and terminated or otherwise disciplined employees involved in the misconduct. Given the traditional brevity of the DOJ’s declination letters, this lack of detail is not unusual, although a more fulsome explanation of the specific compliance program enhancements adopted would have been a welcome source of benchmarking data for FCPA compliance professionals.
The SEC Non-Prosecution Agreements. While the DOJ letters lack detail, parallel non-prosecution agreements (“NPAs”) among Nortek, Akami and the SEC provide more facts regarding the companies’ compliance program enhancements. Both companies appear to have undertaken significant efforts to augment their policies, procedures and training programs, including enhancing the resources dedicated to FCPA compliance (emphasis below):
- Strengthening anti-corruption policies and procedures (both);
- Providing extensive mandatory in-person and online trainings on the FCPA and anti-corruption policies around the globe in appropriate languages (both);
- Implementing enhanced compliance monitoring functions and structures, including naming a Chief Compliance Officer and staffing a global team of dedicated compliance professionals (Akami);
- Developing a Compliance Committee to supervise implementation of compliance policies and training (Nortek);
- Revising internal audit testing, protocols and schedules (Nortek);
- Implementing enhanced due diligence for certain partners (Akami); and
- Enhancing travel and expense controls in China (Akami).3
Although these two resourcing enhancements certainly fall within the Pilot Program’s requirements that compliance professionals have the “quality and experience” necessary to perform their duties, they are silent with respect to compensation and promotion. It would be beneficial if future resolutions under the Pilot Program (or parallel SEC settlements) provided more details regarding these types of resourcing enhancements—including with respect to compensation and promotion—to better assist companies in benchmarking their own programs and resourcing decisions. In the meantime, companies must recognize that the DOJ’s understanding of and expectations for FCPA compliance programs have evolved and that a deeper analysis of the company’s compliance function must be an important part of any compliance benchmarking.