On March 7 and 8, 2019, Deputy Attorney General Rod Rosenstein and Assistant Attorney General Brian Benczkowski delivered separate speeches on developments in FCPA enforcement, highlighting that DOJ aims to make “corporate criminal enforcement more effective and efficient.” These statements effectively double-down on DOJ’s FCPA Corporate Enforcement Policy of trying to get companies to self report and cooperate by dangling the carrot of declinations, even in cases of serious wrongdoing.
One way DOJ plans to achieve this goal is by continuing its focus on the “individuals responsible for misconduct.” In particular, Rosenstein directed that, “[a]bsent extraordinary circumstances, a corporate resolution should not protect individuals from criminal liability.” Both Rosenstein and Benczkowski defended DOJ’s focus on individuals, claiming that prosecuting individuals is the “most effective deterrent to corporate crime,” and rejecting critiques that DOJ is “going soft on corporate crime.” Rather, according to Rosenstein, the “individual accountability policy” is aimed at the “people who play significant roles,” or “devised and authorized criminal schemes,” and is meant to drive change internally within companies, and encourage robust and proactive compliance programs.
Another way DOJ plans to drive such change is to “incentivize exemplary corporate conduct” in FCPA cases. To do so, Benczkowski explained, DOJ has “made it a priority to foster transparency” in its corporate enforcement practices to better position companies to “engage in rational decision-making” about what factors DOJ will evaluate in deciding whether to offer cooperation credit or send a declination letter. In particular, Benczkowski announced that “aggravating factors like high-level executive involvement in the misconduct will not necessarily preclude a declination when the company’s actions are otherwise exemplary.”
To illustrate this point, Benczkowski cited two recent declinations. As detailed here, Cognizant Technology Solutions Corporation recently received a declination letter despite finding that “the misconduct reached the highest levels of the company.” DOJ stated that the key factors that led to the declination included: (1) the company’s voluntary self-disclosure within two weeks of the company’s board learning of the conduct; (2) the thoroughness of the company’s investigation; (3) the proactive and continued cooperation with the government; (4) the effectiveness of its preexisting compliance program; and (5) the company’s willingness to remediate and disgorge its entire cost savings from the alleged bribery. Similarly, DOJ declined prosecution of Insurance Corporation of Barbados Limited where high-level executives were allegedly involved in a bribery scheme. DOJ based its decision on similar factors including terminating all the employees involved. In both of these cases, the companies’ cooperation reportedly aided DOJ’s ability to identify and charge key individuals responsible for the misconduct.
In addition to transparency, the speeches indicate that DOJ will continue to pursue its anti-“piling on” policy to ensure that “punishment is proportional to the violation.” To do so, Rosenstein noted that DOJ attorneys have “discretion to offer credit” where a company “meaningfully assists the government’s investigation and candidly provides details about culpable officials and other employees most responsible for the misconduct.” Also, DOJ plans to continue its efforts to increase coordination with other enforcement agencies and regulators during parallel investigations. This will allow agencies to avoid duplicative penalties for the same conduct, and improve the ability to conclusively resolve matters sooner. This latter point is an important one because, with so many jurisdictions now pursuing penalties for the same conduct, companies face a serious risk of paying multiple fines, not to mention the litigation costs associated with dealing with numerous agencies.
These announcements on DOJ’s policies represent largely the same priorities and strategies we’ve been hearing about, although they make clear that we should not interpret their goals and priorities as taking a lighter approach and they remind us that the number of actions brought against individuals last year remain high, with 30 individuals charged and 19 convicted. Additionally, it continues to make sense for companies to strive to identify and detect potential problems early. It is almost always preferable for a company to identify the problem rather than finding out through a subpoena or search warrant after a whistleblower has gone to the government.