On April 5, the Department of Justice launched a one-year pilot program in the Fraud Section’s FCPA Unit in hopes to promote both greater transparency and accountability that will motivate companies to self-report FCPA-related misconduct. The new program is intended to draw a clear distinction be credit eligibility for voluntary self-disclosure as opposed to companies waiting to see if they get caught, and then cooperate.
In the 90 days following the announcement, the DOJ has issued two declination letters which appear to demonstrate, for the first time, the benefits companies can anticipate if they are complaint with the pilot program’s provisions. The declination letters were issued to Nortek, Inc. and Akamai Technologies, Inc. On June 7, the DOJ published copies of the declination letters it had sent to each company, which stated that they were issued consistent with the FCPA Pilot Program. The letters followed the SEC’s announcement that it had entered into nonprosecution agreements with both companies. Click here to view or download the letters.
In the unrelated cases, both involved foreign subsidiaries’ payments to Chinese government officials. At Nortek, an internal audit discovered improper payments and gifts and at Akamai, a foreign subsidiary made payments to induce government-owned entities to purchase more services than needed.
In other recent FCPA cases, the DOJ citied each company’s voluntary disclosure, thorough investigation, full cooperation, remediation and additional enhancements to their compliance programs. On June 21, the DOJ announced its nonprosecution agreement with Analogic Corp. and its wholly owned Danish subsidiary, BK Medical. On July 11, the DOJ announced the settlement of FCPA bribery allegations against Johnson Controls for $14.3 million.
The new Pilot Program gives companies a detailed road map of the potential rewards for self-disclosure, cooperation and remediation. Companies should make the effort now to assess the effectiveness of their programs and if needed, make adjustments to adhere to the Pilot Program guidelines. If potential violations are uncovered, a company with an effective and properly implemented compliance program will well prepared to self-disclose and potentially benefit from the program.