NOVEMBER 30, 2017
U.S. Department of Justice Announces Changes to its Foreign Corrupt Practices Act Corporate Enforcement Policy
On November 29, 2017, Deputy Attorney General (Deputy AG) Rod Rosenstein announced that the U.S. Department of Justice (DOJ) has concluded that the Foreign Corrupt Practices Act (FCPA) Pilot Program adopted last year "proved to be a step forward in fighting corporate crime," but that "there were opportunities for improvement." The enhancements are intended to provide "greater certainty for companies" deciding whether to voluntarily disclose potential wrongdoing and enable DOJ to "efficiently identify and punish criminal conduct." This revised policy will be set forth in the United States Attorneys' Manual as the FCPA Corporate Enforcement Policy (the Policy).
The DOJ announcement emphasized that the Policy would provide "greater clarity" about the government's decision-making. The Policy offers increased incentives to companies who voluntarily self-disclose potential violations, fully cooperate and timely and appropriately remediate the issues. It also provides details about how DOJ will evaluate a company's compliance program, acknowledging that programs vary depending on the size and resources of the company. DOJ's announcement also emphasized a continued shift toward increased individual criminal enforcement.
Noting that only two of the 17 FCPA-related criminal resolutions since 2016 were voluntary disclosures under the FCPA Pilot Program, DOJ offered further incentive to companies to self-disclose: if a company satisfies the standards of voluntary self-disclosure, full cooperation and timely and appropriate remediation, DOJ will apply a strong presumption in favor of resolving the case through a declination. That presumption may be overcome in cases involving aggravated circumstances related to the nature or seriousness of the offense, or if the offender is a recidivist. Even where aggravated circumstances are involved, DOJ will recommend a 50% reduction off the low end of the Sentencing Guidelines fine range where a company voluntarily self-discloses and otherwise satisfies the requirements of the Pilot Program. Criminal recidivists, however, may not be eligible for that credit.
Deputy AG Rosenstein emphasized the favorable outcomes in recent cases involving self-disclosure, highlighting that of the 17 corporate criminal resolutions since 2016, the two involving self-disclosure were both resolved through a non-prosecution agreement, without the requirement for a compliance monitor, versus 10 of the other resolutions requiring corporate compliance monitors. He emphasized that DOJ was not offering immunity, noting that DOJ had declined to prosecute the seven additional matters that were voluntarily disclosed during that time period, seeking only disgorgement of ill-gotten gains.
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Evaluating Compliance Programs
The Policy also offers further guidance on the DOJ's evaluation of appropriate compliance programs, which will differ by company size and resources. The Policy notes several important hallmarks of a robust program, including "fostering a culture of compliance, dedicating sufficient resources to compliance activities, and ensuring that experienced compliance personnel have appropriate access to management and to the board." Only companies that comply with the FCPA Policy will benefit from its revised guidelines.
Finally, in his opening remarks, Deputy AG Rosenstein emphasized the continued evolution of DOJ's focus on individual prosecutions, stating:
Effective deterrence of corporate corruption requires prosecution of culpable individuals. We should not just announce large corporate fines and celebrate penalizing shareholders. Most American companies are serious about engaging in lawful business practices. Those companies want to do the right thing. They need our support to protect them from criminals who seek unfair advantages.
Later, in announcing the specific policy changes, he remarked that "[i]t makes sense to treat corporations differently than individuals, because corporate liability is vicarious; it is only derivative of individual liability."
DOJ's revised Policy offers additional concessions to companies that implement robust compliance programs and choose to self-disclose, cooperate and remediate. Although DOJ has always emphasized the benefits of self-disclosure, it hopes the strong presumption of a declination will provide additional incentive for companies to self-disclose violations.
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Our lawyers assist clients around the globe with the particular challenges of navigating the current climate of intensified regulation and enforcement. We are experienced in handling the most complicated matters involving the Foreign Corrupt Practices Act (FCPA) and other international anti-corruption laws. With more than 90 lawyers in 14 offices worldwide, we draw on the firm's global capabilities and highly skilled practitioners to defend clients involved in Department of Justice (DOJ) and Securities and Exchange Commission (SEC) investigations. We create and implement compliance programs, and conduct internal investigations, assessments and due diligence on potential merger and acquisition targets, joint venture partners and third parties. We also counsel clients on compliance issues that arise from international licensing, sales and marketing and are well-versed in laws that relate to dealing with government officials and authorities around the world.
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