Monday April 25, 2016
Earlier this month, the Department of Justice announced a new one-year pilot program under which companies that self-report violations of the Foreign Corrupt Practices Act (“FCPA”), fully cooperate in the resulting investigation, and engage in appropriate remediation measures can receive substantial reductions in sanctions. In addition to the pilot program, the Department is increasing its FCPA law enforcement resources (including raising the number of prosecutors in its FCPA unit by 50%) and “strengthening its coordination with foreign counterparts in an effort to hold corrupt individuals and companies accountable.”
The Department’s memorandum outlines in detail the requirements for satisfying each of the pilot program’s criteria. In summary:
Voluntary self-disclosure must occur “prior to an imminent threat of disclosure or government investigation”; “within a reasonably prompt time after becoming aware of the offense”; and must include disclosure of “all relevant facts known” to the company, including facts about the individuals involved.
- Full cooperation requires, among many items, timely disclosure of all facts relevant to the wrongdoing, “including all facts related to involvement in the criminal activity by the corporation's officers, employees, or agents”; proactive cooperation; preservation, collection, and disclosure of relevant documents; and disclosure of all relevant facts gathered during the company’s own investigation.
- Timely and appropriate remediation requires implementation of an effective compliance and ethics program (the criteria for which are listed in the memorandum); appropriate discipline of employees; and the implementation of measures to reduce the risk of repetition of the misconduct.
If these criteria are met, the Department’s Fraud Section’s FCPA unit “may accord up to a 50% reduction off the bottom end of the Sentencing Guidelines fine range,” if a criminal resolution is warranted. In such case, the FCPA unit will also consider declination of prosecution. The Department acknowledges that “not all companies will satisfy all the components of full cooperation, either because they decide to cooperate only later in an investigation or they timely decide to cooperate but fail to meet all of the criteria.” Nonetheless, such companies “should be eligible for some cooperation credit under this pilot”: “at most a 25% reduction off the bottom of the Sentencing Guidelines fine range.”
The pilot program’s emphasis on companies disclosing criminal activity by all individuals involved—including a company’s own officers and employees—is consistent with the Department’s focus on individual wrongdoing in the so-called Yates memorandum, issued last fall. Indeed, the Department’s memorandum on the pilot program mentions the Yates memorandum multiple times and makes clear that companies seeking cooperating credit must “fully cooperate in a manner consistent with the DAG Memo on Individual Accountability” [the Yates memorandum].
SKV regularly represents corporations and individuals in internal investigations, government investigations, and government prosecutions. If you have any questions, please contact Dane Ball, David Isaak, Shaun Clarke, or Karima Maloney.