On April 5, 2016, Assistant Attorney General Leslie Caldwell, head of the Criminal Division of the US Department of Justice (DOJ), announced a one-year FCPA enforcement “pilot program” designed to encourage companies to voluntarily self-disclose violations and identify the individual corporate executives who engaged in wrongdoing. The pilot program is outlined in a memorandum published by Fraud Section Chief Andrew Weissmann entitled “The Fraud Section’s Foreign Corrupt Practices Act Enforcement Plan and Guidance” (the Guidance).¹ The Guidance provides greater transparency on the extent of mitigation credit available to companies in FCPA enforcement matters pursued by the Fraud Section. Companies that voluntarily self-disclose violations, fully cooperate consistent with the Yates Memo² and Principles of Federal Prosecution of Business Organizations,³ and timely and appropriately remediate in FCPA matters “may” obtain up to a 50% reduction off the bottom end of the Sentencing Guidelines fine range, “generally” should not require appointment of a monitor, and will be “considered” for a declination of prosecution. Companies that do not voluntarily self-disclose will receive “at most” a 25% reduction off the bottom end of the Sentencing Guidelines fine range, even if they later fully cooperate, timely and appropriately remediate, and meet all other requirements of the Guidance.

Coupled with statements from SEC Director of Enforcement Andrew Ceresney last fall, the Guidance underscores the FCPA enforcement agencies’ desire to incentivize corporate self-reporting by conditioning the most favorable outcomes on such reporting. At the same time, in an effort to preserve prosecutorial discretion, it stops short of a leniency program. Whether this effort to have it both ways will prove fruitful may be difficult to assess in the pilot’s one year term.


The Guidance first explains the “requirements” for a company to qualify for credit in exchange for (1) voluntary self-disclosure, (2) cooperation, and (3) timely and appropriate remediation. It then specifies the extent of the mitigation credit available if a company meets the criteria.

Voluntary Self-Disclosure

To receive credit for voluntary self-disclosure:

  • the self-disclosure must occur “prior to an imminent threat of disclosure or government investigation” within the meaning of U.S.S.G. § 8C2.5(g)(1);
  • the company must disclose “within a reasonably prompt time after becoming aware of the offense,” with the burden on the company to prove timeliness, and
  • the company must disclose “all relevant facts known to it,” including, as required by the Yates Memo, “all relevant facts about the individuals involved in any FCPA violation.”

A disclosure “already required to be made”—by law, agreement, or contract—does not qualify.

Full Cooperation

To receive credit for full cooperation, in addition to satisfying the Principles of Federal Prosecution of Business Organizations, a company must:

  • timely disclose all relevant facts, including all facts implicating individuals (as required by the Yates Memo);
  • proactively cooperate;
  • preserve, collect, and disclose relevant documents, including overseas documents unless prohibited by foreign law (with the burden on the company to establish the prohibition);
  • provide timely and rolling updates on the internal investigation;
  • where requested, de-conflict an internal investigation with the government investigation—i.e., stand down on any witness interviews or investigative topics that DOJ believes may interfere with its investigation;
  • provide all facts relevant to criminal conduct by individual or corporate third parties;
  • make available for interviews current and former company officers and employees, including individuals located overseas; and
  • disclose all facts obtained during a company’s independent investigation, “including attribution of facts to specific sources where such attribution does not violate the attorney-client privilege”;
  • facilitate third-party production of documents and witnesses from foreign jurisdictions unless legally prohibited; and
  • translate relevant documents in foreign languages.

Cooperation is not “one-size-fits-all,” and DOJ will consider the circumstances of each case and the size and resources of a company when assessing cooperation. However, this consideration happens only after a company has met the “threshold requirements” of the Yates Memo.

Timely and Appropriate Remediation

Before a company can obtain any credit for remediation, it must first be “eligible for cooperation credit.” In addition, a company “generally” must meet three conditions to receive credit for timely and appropriate remediation: (1) implementation of an effective compliance program, (2) appropriate discipline of employees involved in the misconduct and their supervisors, including compensation impact, and (3) any additional steps recognizing the seriousness of the misconduct, demonstrating acceptance of responsibility, and reducing the risk of recidivism.

The Guidance sets out the following criteria for an effective compliance program:

  • whether the company has established a culture of compliance;
  • whether the company dedicates sufficient resources to compliance;
  • the quality and experience of compliance personnel;
  • the independence of the compliance function;
  • whether the company has performed an effective risk assessment and tailored its compliance program to that assessment;
  • how a company’s compliance personnel are compensated and promoted compared to other employees;
  • the auditing of the compliance program to ensure its effectiveness; and
  • the reporting structure of compliance personnel within the company.

The Guidance states that the Fraud Section’s new Compliance Counsel is assisting prosecutors in refining “benchmarks” for assessing compliance programs and evaluating remediation efforts.

Mitigation Credit

Once a company meets the Guidance’s requirements for voluntary self-disclosure, full cooperation, and timely and appropriately remediation, the company “qualifies for the full range of potential mitigation credit.” In such a case, the Fraud Section’s FCPA Unit (1) “may” allow a 50% reduction off the bottom of the Sentencing Guidelines fine range, (2) “generally” should not require a monitor, and (3) will “consider” a declination of prosecution.

By contrast, if a company has not voluntarily self-disclosed, it may receive “limited credit” under the pilot program for full cooperation and remediation. But such credit will be “markedly less” and will “at most” lead to a 25% reduction off the bottom of the Sentencing Guidelines range.


Transparency of Discount Ceilings: DOJ should be commended for increasing the transparency of the quantification of discounts off the bottom of the Sentencing Guidelines fine range available in corporate FCPA matters. For too long, identifying the range of available sentencing discounts has required companies and their counsel to glean guideposts from non-precedential plea agreements and other settlement agreements. We welcome the greater certainty of at least the maximum discounts available for the scenarios described in the Guidance.

Too Many Caveats: Unfortunately, the Guidance does not go far enough in providing certainty to companies facing FCPA issues. The Guidance is riddled with caveats that provide plenty of room for FCPA prosecutors to award something less than full mitigation credit to a cooperating company. Indeed, even a company that has cleared all the hurdles of voluntary self-disclosure, full cooperation, and timely and appropriate remediation is not guaranteed a certain outcome. Where such conditions are met, the FCPA Unit “may accord” up to a 50% discount, “generally” should not require a monitor, and “will consider” declining prosecution. Those heavily caveated provisions still do not give companies the certainty they need when evaluating the important self-disclosure question.

Doubling-Down on the Yates Memo: The Guidance makes clear that the “pilot program is intended to encourage companies to disclose FCPA misconduct to permit the prosecution of individuals whose criminal wrongdoing might otherwise never be uncovered by or disclosed to law enforcement.” By incentivizing voluntary self-disclosures, and requiring those disclosures to meet the Yates Memo requirements of including all relevant facts about the corporate employees involved in the alleged FCPA violation, DOJ is forcefully reiterating its demand that companies “name names” and make judgments about which corporate employees are culpable. We have previously expressed our view that corporations should not be pressured to throw employees under the bus in order to get credit for cooperation.4 The Guidance is another unfortunate step down the path of pressuring a company to turn against its employees.

Disclosures Prompted By Whistleblowers: The Guidance nowhere expressly mentions disclosures prompted by whistleblowers. To qualify as a voluntary self-disclosure, however, a disclosure must occur “prior to an imminent threat of disclosure”—the same standard set forth in the Sentencing Guidelines’ culpability score provision of U.S.S.G. § 8C2.5(g)(1). The Guidance could be interpreted as preventing a company from achieving voluntary self-disclosure status if its disclosure was prompted by a whistleblower. Indeed, in a speech last year, when defining voluntary self-disclosure, Fraud Section Chief Andrew Weissmann stated “if you disclose because you believe a whistleblower has already reported the information or is about to, that . . . won’t get you credit.”5 In our view, if a company learns of a potential FCPA violation from a whistleblower, and acts promptly thereafter to investigate, self-disclose, cooperate, and remediate, the company should be entitled to the full mitigation credit available under the pilot program even if the receipt of whistleblower allegations could be deemed to have represented an imminent threat of disclosure.

Attribution of Facts and the Attorney-Client Privilege: There is a serious tension in the Guidance between the attorney-client privilege and the requirement that companies disclose all facts gathered during the internal investigation with attribution of facts to specific sources. The Guidance states that such attribution is required only where it does not violate the attorney-client privilege. Certainly, a company could source facts to pre-existing, non-privileged documents without any privilege waiver. But it is difficult to imagine how a company could attribute facts learned during an internal investigation witness interview to that witness without waiving the attorney-client privilege.

Compliance Programs: The Guidance is significant for what it says about anti-corruption compliance programs in at least two respects. First, it reaffirms recent changes to the US Attorney’s Manual that make voluntary disclosure not only a gating condition to its benefits, but also make it a factor in assessing cooperation and the effectiveness of a corporate compliance program.6 Second, the criteria described above for implementation of an effective program represent a distilled-down list of elements previously cited in the FCPA Resource Guide7 and in individual resolutions, as well as some new elements, particularly how compliance personnel are compensated and promoted compared to other employees. As such, these criteria merit careful study.

By ratcheting up the pressure to self-disclose, and the accompanying pressure on companies to implicate individuals, the Guidance has significant implications for companies facing FCPA investigations, and their directors, officers, and employees. Much like the Yates Memo itself, time will tell whether the one-year pilot program has real teeth and brings about any meaningful change in criminal enforcement and the prosecution of individuals.