Just one day after Deputy Attorney General Lisa Monaco announced the U.S. Department of Justice’s (“DOJ’s” or “Department’s”) whistleblower pilot program on March 8, 2024, the DOJ’s Criminal Division highlighted its plans to apply the program in its fight against global corruption. Specifically, the Criminal Division described its plan to apply the new whistleblower initiatives to Foreign Corrupt Practices Act (“FCPA”) cases as part of its overarching priority of targeting the “most complex financial crimes and having the greatest possible impact on corporate conduct.”[1]
Speaking at the American Bar Association’s 39th National Institute on White Collar Crime in San Francisco, Acting Assistant Attorney General (“AAAG”) Nicole Argentieri detailed how the Criminal Division will use the pilot whistleblower program in FCPA cases to increase both enforcement actions and voluntary disclosures of violations by corporate entities. Under the pilot program, individuals who provide “original, nonpublic, truthful information” about major corporate wrongdoing may be eligible for a cut of any resulting forfeiture proceeds. Once formally established and implemented later this year, the DOJ intends to use this new whistleblower rewards program to incentivize individuals to come forward and aid the DOJ in its fight against corporate corruption.
Since 1977, the FCPA has served as the U.S.’s robust tool in combatting bribery and corruption on an international scale. The FCPA prohibits U.S. citizens and “domestic concerns” from obtaining an improper business advantage by making payments to foreign government officials to influence the officials’ behavior. Working in tandem with the anti-bribery provisions, the FCPA also includes accounting provisions requiring all companies with securities listed in the U.S. to keep accurate books and records and maintain adequate systems of internal accounting controls.
Historically, whistleblowers could earn a reward for reporting FCPA violations under the U.S. Securities and Exchange Commission’s (“SEC’s”) whistleblower program. Though tremendously successful, the SEC’s whistleblower program is limited only to public companies within the SEC’s jurisdictional reach. For cases involving private companies, the SEC program typically does not apply. Additionally, the DOJ’s enforcement authority is substantially greater than the SEC’s. The DOJ whistleblower program will apply across the Department and is intended to “fill gaps” not covered by existing whistleblower programs, like the SEC’s.
The DOJ expects to develop its plans for the whistleblower program in the next 60 days before formally implementing it as a pilot program later this year. It hopes to build on the success of the SEC’s program, but expand the scope to encourage reporting of a broader range of misconduct, including global corporate corruption, to the Department. The Criminal Division touted the fact that it is prosecuting more white collar cases against individuals than ever before with the Fraud Section trying over 100 cases in the last two years. But it also emphasized that the DOJ is focused on having a real impact on corporate culture and incentivizing companies to “act as good corporate citizens.” The DOJ expects that this new policy will foster self-disclosure and will help it achieve that goal.
AAAG Argentieri made it clear that the whistleblower program is intended to push companies to voluntarily disclose misconduct and to make those disclosure quickly. A whistleblower will only receive a portion of the forfeiture if the information provided is voluntary and new to the DOJ. In other words, the information must: (1) not be in response to any government inquiry, preexisting obligation to disclose, or an imminent risk of the information being otherwise discovered; and (2) has not already been disclosed voluntarily by the company or already discovered by an independent government investigation. The DOJ said it expects this to reinforce other incentives already in place, encouraging both companies and individuals to report information as soon as they have it.[2]
With this new whistleblower pilot program, companies should invest in and enhance their internal compliance and reporting policies as well as seriously consider the benefits of making timely and voluntary disclosures when necessary. An FCPA investigation initiated by the DOJ could result in complex criminal proceedings and millions of dollars in criminal penalties. But, when a company makes a voluntary disclosure and cooperates with the DOJ, the Government will often settle for a fraction of the criminal penalty. This new landscape significantly increases the urgency for timely voluntary disclosures to counter any potential whistleblowers. While whistleblowers will be incentivized to report any wrongdoings, disclosures cannot hurt a company that has already investigated and reported any discoveries.
Through this announcement, the DOJ emphasized its interest in significant and impactful instances of foreign corruption. AAAG Argentieri remarked that the Department expects to establish a monetary threshold for the pilot program and indicated that the new program could be comparable to the SEC or the Commodities Futures Trading Commission whistleblower programs which limit rewards to cases with sanctions of $1 million or higher.
The program is not yet finalized, but this statement shows the Department’s growing focus on both substantial corporate crime and foreign corrupt practices. This pilot whistleblower program will work concurrently with the recent Foreign Extortion Prevention Act (“FEPA”), which closes a loop-hole in the FCPA, making it illegal to solicit or accept bribes from U.S. residents or companies, not just illegal for the U.S. entities to offer them, as the FCPA does.
This is yet another signal of how the current administration continues to target global corporate corruption. But more importantly, it highlights the immense benefit a proactive response to any indication of a potential FCPA violation can provide. Now more than ever, it is essential that a company take quick decisive action to tighten its global compliance measures, investigate any indication of FCPA violations, and voluntarily disclose, if necessary, to get out ahead of any potential whistleblowers.
FOOTNOTES
[1] Office of Public Affairs | Acting Assistant Attorney General Nicole M. Argentieri Delivers Keynote Speech at the American Bar Association’s 39th National Institute on White Collar Crime | United States Department of Justice
[2]Office of Public Affairs | Deputy Attorney General Lisa Monaco Delivers Keynote Remarks at the American Bar Association’s 39th National Institute on White Collar Crime | United States Department of Justice
