The Department of Justice (DOJ) has been making significant strides in emphasizing the importance of voluntary self-disclosure in corporate enforcement cases, particularly in the realm of the Foreign Corrupt Practices Act (FCPA). This shift in approach is evident in recent policy announcements and enforcement actions, beginning with the 2022 ABB Foreign Corrupt Practices Act (FCPA) settlement, to the 2023 Albemarle FCPA resolution and continuing through to the 2024 SAP Foreign Corrupt Practices Action settlement. Through these three resolutions,  the DOJ made clear that its most important criteria for evaluating a company for a fine under the FCPA is whether or not it self-discloses.

This incentive was further discussed by DOJ representatives Kenneth Polite and Lisa Monaco in speeches in 2023. Kenneth Polite in announcing a revision to the 2017 FCPA Corporate Enforcement Policy, which became the 2023 Corporate Enforcement Policy, emphasized the ‘need for speed’ both in self disclosure and thereafter during the pendency of any FCPA or compliance related investigation which involves the DOJ.

The DOJ’s focus on incentivizing self-disclosure is a strategic move aimed at encouraging companies to come forward with violations and cooperate with authorities. The new Corporate Enforcement Policy offered up to a 75% reduction in penalties for voluntary disclosure. This discount is available even if there were ‘aggravating factors’ in the matter, such as C-Suite involvement in the bribery and corruption. The DOJ could not be sending a clearer signal and be more transparent about what they want and what they will incent. This approach reflects a broader trend towards rewarding companies that take proactive steps to address compliance issues and work collaboratively with law enforcement agencies.

One of the key factors influencing the DOJ’s enforcement actions is the impact of recidivism. In October 2021, the DOJ, through a speech by Lisa Monaco and memorialized in the 2023 Evaluation of Corporate Compliance Programs (2023 ECCP), made it clear that it will not tolerate repeat offenders and is prepared to impose harsh penalties on companies that fail to self-disclose violations. However, even recidivist companies are encouraged to come forward and address compliance issues head-on, with the potential for significant penalty reductions if they demonstrate genuine cooperation and remediation efforts. Once again these current focus of the DOJ could not have been made clearer by the DOJ than in the ABB resolution where the company was the first three-time FCPA recidivist yet received a superior result. The attempted self-disclosure fell short by only a day or two as ABB had scheduled a meeting with the DOJ to self-disclose but had not formally done so. In this interim, a news story broke in South Africa of the systemic bribery and corruption by ABB in that country.

While this factor was not present in the SAP enforcement action, the message sent by the DOJ could not be clearer on not simply the expectation of the DOJ for self-disclosure but also the very clear and demonstrable benefits of self-disclosure. Under the Corporate Enforcement Policy, SAP’s failure to self-disclose cost it an opportunity of at least 50% and up to a 75% reduction off the low end of the U.S. Sentencing Guidelines fine range. Its actions as a criminal recidivist, resulted in it not receiving a reduction of at least 50% and up to 75% from the low end of the U.S.S.G. fine range but rather at 40% from above the low end. SAP’s failure to self-disclose cost it an estimated $20 million under the Sentencing Guidelines. It’s failure to self-disclose and recidivism cost it a potential $94.5 million in discounts under the Corporate Enforcement Policy. The DOJ’s message could not be any clearer.

There was a significant discussion in the NPA around Albemarle’s voluntary self-disclosure to the DOJ. However, NPA noted “the disclosure was not “reasonably prompt” as defined in the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy and the U.S. Sentencing Guidelines.” The NPA reported that Albemarle learned of allegations regarding possible misconduct in Vietnam approximately 16 months before disclosing to the DOJ. Interestingly the SEC Order only stated “Albemarle made an initial self-disclosure to the Commission of potential FCPA violations in Vietnam following its completion of an internal investigation of such conduct and, at the same time, self-reported potential violations it was investigating in India, Indonesia, and China. Albemarle later self-disclosed to the Commission potential violations in other jurisdictions as part of an expanded internal investigation.”

This meant the self-disclosure “was not within a reasonably prompt time after becoming aware of the misconduct in Vietnam” and it means that Albemarle did not meet the standard for voluntary self-disclosure under the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy. While the DOJ “gave significant weight”, to the Company’s voluntary, even if untimely, disclosure of the misconduct; it is certainly cautionary.

The tradeoffs involved in balancing different factors, such as self-disclosure, cooperation, and remediation, can present challenges for companies navigating the complex landscape of FCPA enforcement. While the DOJ’s emphasis on self-disclosure offers potential benefits in terms of penalty reductions and monitorship requirements, companies must carefully weigh the risks and rewards of voluntary disclosure against the potential consequences of non-disclosure.

The importance of considering the impact of decisions about the DOJ’s FCPA enforcement actions cannot be overstated. Companies that prioritize a culture of compliance, proactive monitoring, and data-driven analytics are better positioned to detect and address potential violations before they escalate into costly enforcement actions. By aligning their compliance programs with the DOJ’s expectations and demonstrating a commitment to ethical business practices, companies can mitigate the risks associated with FCPA violations and build a strong foundation for long-term success.

What the DOJ wants is self-disclosure as soon as possible. One only needs to recall the case of Cognizant Technologies where the company received a full Declination where there were allegations of C-Suite involvement in the bribery schemes. This Declination was provided in large part because the company made its self-disclosure only two weeks after the information filtered up the Board of Directors. While Cognizant Technologies may be the gold standard, it shows that if a company timely self-discloses it can be considered for a full Declination.

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