On April 5, the Department of Justice launched a one-year pilot program in the Fraud Section’s FCPA Unit in hopes to promote both greater transparency and accountability that will motivate companies to self-report FCPA-related misconduct. The DOJ’s Fraud Section released a policy document called The Fraud Section’s Foreign Corrupt Practices Act Enforcement Plan and Guidance (click here to view) that outlines the steps the DOJ is calling “enhanced enforcement strategy.”
The new program “draws a clear distinction between credit that you can be eligible for voluntary self-disclosure as opposed to companies that may decide to wait to see if they get caught, and then cooperate,” said Andrew Weissmann, chief of the DOJ fraud section and author of the policy.
The Guidance lays out the enhanced enforcement in three steps. The first and according to the Guidance, the most important step in combatting FCPA violations, is the addition of investigative and prosecutorial resources. The FCPA unit is increasing by more than 50% with the addition of 10 more prosecutors and the FBI has established three new squads of agents devoted to FCPA investigations and prosecutions. Additionally, the Guidance incorporates the new standards for individual liability and prosecution as set out in the Yates Memo published last September by the DOJ.
The second step outlines the international approach being taken to combat corruption. The DOJ has increased its coordination with foreign counterparts around the globe to step up enforcement to hold corrupt individuals and companies accountable. Cooperation globally has been increasing since 2007 so this step is nothing more than a restatement of already existing collaborative programs.
The third step is the launch of the FCPA enforcement pilot program. The DOJ anticipates this will have the greatest impact on motivating companies to voluntarily self-report FCPA violations. The Guidance outlines how the pilot program will work and how the Fraud Section might award credit over what is currently provided for by the U.S. Sentencing Guidelines and the Principles of Federal Prosecution of Business Organizations found in the United States Attorneys’ Manual. To qualify for enhanced credit, a company must do the following:
- Voluntarily self-report potential FCPA violations. A company who does not self-report, may still receive some credit under the program for cooperation however, at most it will be a 25% reduction off the sentencing guidelines;
- Fully cooperate with the investigation and do so in a timely fashion. This includes providing information on individual accountability in accordance with the Yates Memo. Not cooperating in what the DOJ determines as “timely fashion” may result in markedly less consideration than for full cooperation;
- Appropriate and timely remediation of the violation. This includes improvements to the corporate compliance and ethics program, discipline of culpable employees, and any additional steps that demonstrate the measures the company has taken to prevent future misconduct.
If the company has fully cooperated and met the standards outlined in the Guidance, the DOJ:
- May accord up to a 50% reduction off the bottom end of the Sentencing Guidelines;
- Generally will not require the appointment of an independent monitor if the company has demonstrated the implementation of an effective compliance program;
- Will consider declining prosecution.
It is important to note that the DOJ has given themselves great leeway to apply this new guidance in determining how they will award the full credit benefits. They “may accord up to a 50% reduction” and “Generally will not require…” and “Will consider…” All written to give the DOJ the ability to avoid giving companies the full benefits outlined in the pilot program if they deem it appropriate.
The pilot program is effective as of April 5, 2016. At the end of the one-year period, the Fraud Section will determine whether to extend or modify the program. The program applies only to FCPA matters brought by the Criminal Division’s Fraud Section. It does not apply to any other section or any other part of the Department of Justice, or any other agency.