On November 20, 2019, the US Department of Justice (DOJ) announced the latest revisions to the Foreign Corrupt Practices Act Corporate Enforcement Policy (the Corporate Enforcement Policy). The revised language provides clarity around the type of information companies need to disclose to qualify for voluntary self-disclosure and cooperation credit.
The Corporate Enforcement Policy offers a “presumption” of declination for companies that: (1) voluntarily self-disclose; (2) fully cooperate; and (3) remediate in a “timely and appropriate” manner, in the absence of aggravating circumstances. If there are aggravating circumstances, such as executive involvement or criminal recidivism, and a criminal resolution is warranted, companies may still be eligible for fine reductions and may avoid the appointment of a monitor.
The November 2019 changes to the Corporate Enforcement Policy are the latest example of the DOJ’s efforts to provide transparency to companies that are considering making a voluntary self-disclosure or seeking cooperation credit. The changes cover two key areas:
- The Corporate Enforcement Policy previously required that, to satisfy the threshold for cooperation credit, a company had to alert the DOJ when it “is or should be aware” of opportunities for the DOJ to obtain evidence outside of its possession. Now, a company must alert the DOJ only when it is aware of opportunities to obtain evidence outside of its possession. The prior requirement that a company also alert the DOJ when it “should be aware” of evidence outside of its possession placed an additional burden on companies and added a potentially subjective element to the DOJ’s calculation of whether to give cooperation credit. Requiring a company to disclose only when it is aware of additional evidence is a more straightforward determination.
- The second change affects the Corporate Enforcement Policy’s previous requirement that the company disclose “all relevant facts” about “all individuals” substantially involved in or responsible for a “violation of law” to obtain self-disclosure credit. The revised version instead requires a company to disclose information about “any individuals” substantially involved in or responsible for the “misconduct” at issue. A new footnote acknowledges that a company “may not be in a position to know all relevant facts at the time of a voluntary self-disclosure, especially where only preliminary investigative efforts have begun.” The new language encourages companies to self-disclose even if the investigation is not complete and the company has not determined the full extent of the misconduct. There is inherent tension within the requirements for self-disclosure credit: while companies must disclose “all relevant facts,” they also have the burden of showing that they disclosed “within a reasonably prompt time” of learning about the misconduct and before the government’s investigation. In the early stages of an investigation, identifying potential misconduct is typically easier than concluding that there has been a violation of law. Furthermore, a company may be more likely to self-disclose unfavorable facts if doing so does not lead to the perception that it has uncovered a violation of law.
The November 2019 revisions are the latest example of the DOJ’s efforts to clarify requirements for voluntary self-disclosure, cooperation, and remediation credit. Companies should continue to monitor these changes, to understand how the DOJ has defined and continues to define full cooperation, and to maximize the chances of obtaining a declination following a voluntary self-disclosure.