When a company learns that an employee or third-party business partner may have bribed a foreign official, it is never an easy question as to whether the company should turn itself in to the U.S. government. On November 29, 2017, the Deputy Attorney General of the U.S. Department of Justice (DOJ), Rod J. Rosenstein, announced a new FCPA Corporate Enforcement Policy intended to make it easier for companies to answer that question with a "yes."1 The Enforcement Policy, which governs DOJ criminal investigations, but not DOJ or U.S. Securities and Exchange Commission civil actions, has been incorporated into the U.S. Attorneys' Manual and posted on the DOJ's website.2
The Enforcement Policy builds off of the FCPA Pilot Program that the DOJ launched in April 2016 to motivate "companies to voluntarily self-disclose FCPA-related misconduct, fully cooperate with the Fraud Section, and, where appropriate, remediate flaws in their controls and compliance programs."3 The new Enforcement Policy aims to provide further clarity and incentives to those that choose to voluntarily disclose FCPA issues, promote consistency in prosecutorial decisions, and offer companies a greater level of transparency into the DOJ's decision-making process.4
FCPA Corporate Enforcement Policy
The Enforcement Policy addresses three circumstances in which cooperation credit may be received, some of which include departures from the previously promulgated FCPA Pilot Program.
The Enforcement Policy states that when a company voluntarily self-discloses misconduct, fully cooperates with further DOJ investigative efforts, and timely and appropriately remediates (including by disgorging ill-gotten gains), there will be a presumption that the company will not be criminally prosecuted, in the absence of aggravating circumstances relating to the seriousness of the offense and prior offenses by the company. That appears to be a significant change from the FCPA Pilot Program, under which companies that voluntarily self-disclosed misconduct, fully cooperated, and timely and appropriately remediated were only entitled to consideration of a declination of prosecution.5
The new policy will still reward companies for self-reporting even when the presumption that the company will not be prosecuted does not apply. That is, when there are certain aggravating circumstances.6 The Enforcement Policy notes that aggravating circumstances include, but are not limited to, "involvement by executive management of the company in the misconduct; a significant profit to the company from the misconduct; pervasiveness of the misconduct within the company; and criminal recidivism."7 If a company self-reports and satisfies all other requirements, but aggravating circumstances exist, the DOJ will still reward self-reporting by recommending a 50 percent reduction off the low end of the U.S. Sentencing Guidelines (USSG) fine range and "generally will not" require appointment of a monitor if the company has, at the time of resolution, implemented an effective compliance program.8 This increases the likelihood of the company being rewarded for self-reporting compared to under the prior policy: the FCPA Pilot Program, in the same circumstances, allowed that the DOJ "may" accord "up to a 50% reduction" off the bottom of the USSG fine range and "generally should not" appoint a monitor.9 The new policy thus more affirmatively directs prosecutors to recommend the 50 percent reduction under these circumstances.
Finally, even in circumstances where a company does not voluntarily self-disclose, but otherwise fully cooperates, and timely and appropriately remediates, the company may receive up to a 25 percent reduction off the low end of the USSG range.10 This policy has not changed from the FCPA Pilot Program.11
Key Takeaways
The Enforcement Policy clearly signals the DOJ's continued objective to incentivize companies to voluntarily self-disclose, fully cooperate, and timely remediate FCPA issues by establishing the presumption of a declination of prosecution under certain circumstances. While nothing in the FCPA or the Enforcement Policy requires companies to voluntarily self-disclose, cooperate, or remediate FCPA violations, the new policy provides more clarity and certainty regarding a company's incentives to do so. This, in turn, helps inform a company's calculus when deciding whether or not to voluntarily self-disclose FCPA issues to the DOJ. Notwithstanding the greater clarity and certainty afforded by the Enforcement Policy, the Deputy Attorney General emphasized that it "does not provide a guarantee" and will not "eliminate all uncertainty" or prosecutorial discretion in FCPA enforcement actions.12 However, the Deputy Attorney General certainly set the expectation that more declinations will be granted for companies that self-report, cooperate and remediate.
The Enforcement Policy also reaffirmed the DOJ's commitment to pursue criminal charges against individuals in FCPA matters. Indeed, during the speech in which he announced the Enforcement Policy, the Deputy Attorney General specifically emphasized "the Department's commitment to hold individuals accountable for criminal activity," because "[e]ffective deterrence of corporate corruption requires prosecution of culpable individuals."13 He noted that the DOJ desired to work together with companies "to protect them from criminals who seek unfair advantages" and to not "just announce large corporate fines and celebrate penalizing shareholders."14 He further indicated that 19 individuals had either pleaded guilty or been convicted in 2017.
In sum, the new Enforcement Policy represents an increase in the incentives to voluntarily self-disclose FCPA violations by increasing the likelihood that self-reporting will spare the company from criminal prosecution and providing greater clarity into the DOJ's decision-making process. The calculus of determining whether to self-report nevertheless remains complicated, given the potential collateral consequences for a company and its shareholders.
