The Justice Department, the Securities and Exchange Commission and the FCPA bar spend extraordinary amounts of time discussing and explaining FCPA enforcement and compliance issues. But one of the most important issues never sees the light of day. That is the decision whether or not to disclose a potential FCPA violation to the DOJ and the SEC. That decision has significant implications for a company – it may result in hefty fines, remedial steps across the entire company and possibly the agreement to hire an independent monitor for several years to watch over a company’s entire business operations.
No one can doubt that the engine fueling DOJ’s record fine collections for FCPA violations is the voluntary disclosure process. Company after company walks through the doors of the Justice Department, confesses their sins and then argues about the proper resolution. But the voluntary disclosure process remains shrouded in mystery and some have suggested that they have been subjected to varying policies and results. This is not a good development for the administration of justice. The process requires effective and fair enforcement through the consistent application of policies and results.
These are not new issues in the criminal enforcement world. Criminal defendants face a similar decision everyday in the justice system: should a defendant plead guilty? Should the defendant cooperate? Such a decision requires a weighing of the potential punishment after a trial, after a guilty plea, or after a guilty plea with cooperation. Once the potential benefits are clarified, the risks of each choice is weighed against the potential benefits. To assist in this process, prosecutors and defense counsel try to provide some guidance. In some districts, the US Attorney’s Office has adopted rules for guideline calculations so that defendants know the potential risks and benefits, including specific formulas for cooperation.
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