On Friday, March 10, Kenneth Blanco, the acting assistant attorney general for the Department of Justice’s Criminal Division, announced that the FCPA Pilot Program would not expire on April 5, 2017, as originally scheduled. Instead, Blanco indicated that the program would stay in place indefinitely while the Department conducts an evaluation of the utility and effectiveness of the program.
The indefinite extension of the program signals that the Department will continue to encourage proactive disclosure and remediation of violation of potential FCPA violations for at least the near future. As discussed further below, the FCPA also emphasizes the identification of culpable individuals—including executives—by companies as part of full cooperation and disclosure, and thus Friday’s announcement may also signal the DOJ’s continued emphasis on individual culpability.
The announcement follows a record-breaking year for FCPA enforcement actions brought by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) and may signal the newly minted Attorney General Sessions’ commitment to keep FCPA enforcement at the top of the federal enforcement priorities. During his confirmation proceedings, then-Senator Sessions stated he would enforce the FCPA “as appropriate based on the facts and circumstances of each case,” notwithstanding President Trump’s earlier criticism of the law.1 Friday’s announcement appears to confirm this statement and indicates that the DOJ will not step back from FCPA enforcement.
The stated goal of the Pilot Program, announced last April by the Fraud Section of the DOJ, was “to promote greater accountability for individuals and companies . . . by motivating companies to voluntarily self-disclose FCPA-related misconduct, fully cooperate with the Fraud Section, and, where appropriate, remediate flaws in their controls and compliance programs.”2 The Pilot Program was announced concurrently with an announcement that the DOJ was increasing its FCPA unit by 50% and the FBI’s establishment of additional special agents devoted to FCPA investigations and prosecutions.3
The guidance accompanying the announcement of the FCPA Pilot Program outlined the requirements of the three key provisions: (1) voluntary self-disclosure; (2) full cooperation; and (3) remediation by business organizations. Key factors for these three provisions are as follows:
- Disclosure must be timely and occur “within a reasonably prompt time after becoming aware of the offense”;
- Disclosure must occur “prior to an imminent threat of disclosure or government investigation”;
- Disclosure must include “all relevant facts” known by an entity including “all relevant facts about the individuals involved.”
- Proactive cooperation, rather than reactive cooperation, whereby “the company must disclose facts that are relevant to the investigation, even when not specifically asked to do so”;
- Disclosure of relevant documents and information;
- Provision of updates on a company’s own internal investigation to the government;
- Disclosure of “all relevant facts gathered during a company’s independent investigation”;
- Disclosure of overseas documents and documents from third parties, with translations as appropriate.
Timely and Appropriate Remediation
- Implementation of effective compliance and ethics programs;
- Evidence of a culture of compliance;
- Evidence that the company dedicates sufficient resources to the compliance function;
- Evidence of “appropriate discipline of employees including those identified by the corporation as responsible for the misconduct, and a system that provides for the possibility of disciplining others with oversight of the responsible individuals.”
Under the Pilot Program, companies may earn credit if criminal resolution is warranted and the company has satisfied the above three provisions to the DOJ’s satisfaction. Specifically, the DOJ guidance states that the Fraud Section’s FCPA Unit may provide the following credit:
- Up to a 50% reduction off the bottom end of the Sentencing Guidelines fine range if a fine is sought;
- A company generally will not be required to appoint a monitor.
Additionally, a company that does not self-disclose but satisfies the other requirements may earn up to a 25% reduction from the bottom end of the Sentencing Guidelines fine range.
Another key component of the FCPA Pilot Program is the FCPA Unit’s ability to consider a declination of prosecution if the above provisions are satisfied by a company during an investigation. To date, the DOJ reports five declinations related to the Pilot Program.4
Thus far in 2017, the DOJ and the SEC have each announced five FCPA enforcement actions, though all ten of those actions were brought in January.