On October 18, 2018, at the Latin Lawyer/Global Investigations Review Anti-Corruption and Investigations Conference in São Paulo, Brazil, John P. Cronan, Principal Deputy Assistant Attorney General for the U.S. Department of Justice’s (“DOJ”) Criminal Division, explained and elaborated on recent efforts by the DOJ to clarify its prosecutorial principles in the corporate enforcement and government corruption contexts.
Cronan stated that that the DOJ recognizes “the need for better defined ‘rules of the road’ in corporate enforcement” and detailed the DOJ’s efforts “to articulate and clarify those rules.” He highlighted that he was “referring to the [DOJ’s] efforts to establish settled and predictable guideposts by which prosecutors exercise their discretion – guideposts that we hope provide greater clarity and clearer expectations to the private sector, and allow companies to conform their conduct accordingly.”
Cronan cited the DOJ’s Foreign Corrupt Practices Act (“FCPA”) Corporate Enforcement Policy, and spoke about the following factors the DOJ considers when evaluating a company’s violation of the FCPA:
- Whether the company voluntarily self-discloses the misconduct;
- Whether the company fully cooperates with the DOJ; and
- Timely and appropriate remediation, including paying all disgorgement, forfeiture, and restitution for misconduct.
Cronan advised that if the above conditions are satisfied by a company when the FCPA is violated, there will be a “presumption of a declination [of prosecution].” He added that the DOJ’s FCPA Corporate Enforcement Policy “also enumerates a non-exhaustive list of aggravating circumstances that can overcome that presumption.” If a company satisfies the above conditions but “aggravating circumstances” are present, the FCPA Corporate Enforcement Policy instructs that:
- Prosecutors shall seek up to a 50 percent reduction off the bottom of the applicable fine range pursuant to the U.S. Sentencing Guidelines, unless the company was a criminal recidivist;
- Prosecutors normally will not require the appointment of a monitor assuming an effective compliance program has been implemented; and
- If companies fail to voluntarily self-disclose, they still are eligible for limited credit – up to a 25 percent reduction off of the low end of the Sentencing Guidelines fine range – provided they fully cooperate and engage in timely and appropriate remediation.
Cronan added that the DOJ “want[s] to make sure companies understand what these terms mean” and that the “FCPA Corporate Enforcement Policy therefore contains detailed, multi-factor definitions of ‘voluntary self-disclosure,’ ‘full cooperation,’ and ‘timely and appropriate remediation.’”
Principal Deputy Attorney General Cronan’s remarks are of significance to all companies with FCPA exposure. The DOJ’s efforts to establish clear guideposts and incentives for good corporate behavior underscore the importance of effective anti-corruption compliance programs that seek to prevent corruption, uncover misconduct if and when it does occur, and encourage employees to report corrupt behavior to the appropriate designated personnel. If misconduct is discovered, the DOJ encourages companies to self-report, cooperate, and remediate. In order to best position companies to address the DOJ’s new guidelines, we recommend consulting with outside counsel to review and update existing compliance programs and, where necessary, design and implement effective new anti-corruption programs and internal controls.