On April 5, 2016, the DOJ announced that it is launching a one-year pilot program for FCPA enforcement as a step to continue its effort to target FCPA violations. The program aims to motivate companies to voluntarily disclose FCPA-related misconduct by making it transparent that a company has to voluntarily self-report its FCPA misconduct to receive full mitigation credit. It also provided further guidance on what constitutes "voluntary self-disclosure," "full cooperation" and "remediation."

The US Department of Justice ("DOJ") took a further step to enhance its enforcement effort against violations of the Foreign Corrupt Practices Act ("FCPA") by launching a one-year pilot program to encourage companies to voluntarily self-disclose FCPA-related misconduct and cooperate with the enforcement authorities. In particular, full cooperation credits in FCPA enforcement actions will only be available for companies that have self-reported. The benefits of full cooperation credits include a 50% reduction of the low end of the applicable US Sentencing Guidelines fine range or even a declination in prosecution. On the contrary, companies that fully cooperate and take proper remediation but have not self-reported will only be eligible for a 25% discount.

The relevant DOJ guidance also describes what constitutes "voluntary self-disclosure," "full cooperation," and "remediation," which are key actions a company can take to cooperate in an FCPA enforcement action and has already been described as mitigating factors under the US Sentencing Guidelines. The guidance intends to provide further transparency of the DOJ's enforcement considerations.

Voluntary self-disclosure

During the one year period of the pilot program, if a company has self-disclosed misconduct, and has fully cooperated and taken appropriate remediate action, the company qualifies for a 50% reduction of the bottom end of the Sentencing Guidelines fine range, if a fine is sought. The company might also avoid a monitorship requirement in its settlement with the DOJ if it has implemented an effective compliance program. Self-disclosure can also result in declination, although the DOJ will take other factors into consideration in making a declination decision.

To constitute "self-disclosure," the following conditions have to be met:

  • the disclosure cannot be made under a requirement by law or an agreement or contract;
  • the disclosure has to be made "prior to an imminent threat of disclosure or government investigation"
  • the disclosure has to be made "within a reasonably prompt time after becoming aware of the offense," with the burden being on the disclosing company to demonstrate timeless; and
  • the disclosure has to contain all relevant facts known to the disclosing company, including all relevant facts about the individuals involved in any FCPA violations.

The fourth condition regarding disclosure of facts about individuals follows directly from the Yates Memo.

Full cooperation

The guidance says that "proactive" cooperation is required for a company to qualify for mitigation credits. Proactive cooperation means that a company has to disclose relevant facts even if not specifically asked, and also to take the additional step to "identify opportunities for the government to obtain relevant evidence not in the company's possession and not otherwise known to the government."

In addition, cooperation requirements include, among other things:

  • disclosure of all facts relevant to involvement by individuals and third parties;
  • preservation, collection and disclosure of relevant documents;
  • timely updates on the investigation process;
  • making company officers and employees, including those located overseas, available for government interview;
  • disclosure of non-privileged information gathered through an internal investigation, and de-confliction of an internal investigation; and
  • disclosure of documents located overseas (subject to compliance with foreign laws) and facilitating the government's evidence collection in foreign jurisdiction.

The guidance made clear that as long as a company fulfils the requirements under the Yates Memo, the DOJ will consider a company's resources and circumstance in evaluating the level of its cooperation. For example, a small company is not expected to conduct an expansive investigation in as short a period of time as a Fortune 100 company.


The third mitigating factor the DOJ emphasizes is appropriate and timely remediation, which includes the following items:

  • implementation of an effective compliance and ethics program with proper components such as compliance culture, resources, independence, risk assessment, auditing and appropriate reporting structure;
  • disciplinary policies for employee misconduct; and
  • other steps that demonstrate true remediation.

Remediation alone, without full cooperation, will not be sufficient for a company to be eligible for receiving mitigation in fines.

Implications for FCPA enforcement

Following the Yates Memo, the pilot program is another step by the DOJ to increase FCPA enforcement transparency and to address concerns that its charging decisions are opaque. Over the years, practitioners have doubted the benefits of making a self-report in FCPA cases, when costly investigations initiated by government enforcement actions can drag along for years and there was great uncertainty that self-reporting will lead to leniency.

The pilot program provides a framework for the DOJ to promote self-reporting and test the responsiveness from the business community, and it simultaneously re-itinerated the requirements under the Yates Memo. However, it is important to note that the pilot program also sets a high bar for all mitigating factors to be recognized by the DOJ, and might have unintentionally introduced more uncertainties. For example, the requirement that a company make its disclosure within a "reasonably prompt time" is open to interpretation. A company that has discovered potential FCPA misconduct still has to carefully weigh the potential costs and benefits of self-disclosure before rushing to the DOJ. Among others, a company should consider the nature and severity of the misconduct, the estimated cost of cooperation as well as whether any defense might be available under the FCPA. Moreover, companies confronting FCPA challenges must understand that, even when there are written procedures, each case will be evaluated on its own facts and circumstances.