On April 5, 2016, the United States Department of Justice's (DOJ) Criminal Division launched a new, one-year Foreign Corrupt Practices Act (FCPA) pilot program that the DOJ hopes will encourage corporations to voluntarily disclose FCPA violations and work together with the DOJ to improve FCPA compliance. The DOJ's press release is available here, and its internal memorandum providing guidance to DOJ staff related to the new pilot program is available here.
The primary feature of the pilot program is a promise of reduced criminal sanctions against corporations that voluntarily disclose FCPA violations, fully cooperate with the DOJ on FCPA matters or violations, and promptly and sufficiently remediate FCPA matters or violations. The DOJ will determine on a case-by-case basis the extent to which a corporation has satisfied these three conditions and attribute "cooperation credit" to a corporation that satisfies any of the above criteria. The DOJ, however, will only provide limited cooperation credit to those corporations that fail to voluntarily disclose FCPA violations but nevertheless cooperate with the DOJ and promptly remediate FCPA violations (at most a 25% reduction off the bottom of the United States Sentencing Guidelines fine range). Additionally, to qualify for any mitigation of criminal sanctions under the pilot program, a corporation must disgorge all profits obtained from the FCPA misconduct at issue.
The DOJ, however, significantly limits what it considers a "voluntary disclosure" of FCPA violations that qualifies for credit under the pilot program. A disclosure of an FCPA violation the corporation is required to make by law or agreement does not qualify as a "voluntary disclosure." In determining whether to provide credit for a "voluntary disclosure," the DOJ will also consider whether the disclosure occurred prior to an "imminent threat of disclosure or a government investigation," was provided to the DOJ within a "reasonably prompt time after the corporation became aware of the FCPA violation," and the corporation disclosed to the DOJ all relevant facts, including facts about individuals involved in the FCPA violation.
Where a corporation has received full cooperation credit by satisfying all three conditions above, the corporation may qualify for the DOJ's full range of mitigation credit applied to any criminal sanction, which includes:
- a 50% reduction off the bottom end of the Sentencing Guidelines fine range, if the DOJ seeks a fine against the corporation
- the DOJ declining to appoint a monitor to evaluate the corporation's FCPA compliance (this benefit is subject to the corporation instituting an effective FCPA compliance program)
Where all of the three conditions described above are satisfied, the DOJ may also consider to decline prosecuting the corporation. The DOJ, however, has broad discretion to forgo this route if, among other things, the FCPA violation is particularly serious, the corporation is a repeat offender, the FCPA violations resulted in significant profits, and/or the corporation's executive management was involved in the FCPA violation.
In addition to this pilot program, the DOJ also announced that it will substantially increases resources to investigate and enforce FCPA violations, which include the following:
- an increase of its FCPA prosecution team by more than 50%
- the creation of three new Federal Bureau of Investigation (FBI) squads devoted specifically to FCPA investigations and prosecutions
- a strengthening of the DOJ's collaboration with foreign governments to uncover FCPA violations and prosecute individuals outside of the United States
In sum, the DOJ offers substantial benefits to a corporation that satisfies the stringent requirements under its pilot program. However, because of the strict conditions outlined in the pilot program, the caveats to any mitigation of sanctions, and the fact that the program is simply a "guideline" that the DOJ may interpret to its liking, a corporation should discuss with legal counsel any potential FCPA matters before making any disclosure to the DOJ and/or providing the DOJ unfettered access to corporate records. Corporations are free to forgo the opportunity to receive credit under the DOJ's pilot program