Justice Department firms up FCPA self-disclosure policy

The U.S. Justice Department will make permanent a program that encourages companies to self-disclose violations of the Foreign Corrupt Practices Act (FCPA), but it’s not a get-of-jail-free pass for wrongdoing.    The U.S. Justice Department will make permanent a program that encourages companies to self-disclose violations of the Foreign Corrupt Practices Act (FCPA), the department said Wednesday.
   The FCPA program had operated as a voluntary pilot since 2016, and was designed to ease penalties on corporations that actively report bribes to the Justice Department and cooperate with investigators.
   “The government should provide incentives for companies to engage in ethical corporate behavior,” the Justice Department’s Deputy Attorney General Rod J. Rosenstein said in a speech to the International Conference on the Foreign Corrupt Practices Act, held at Oxon Hill, Md., on Wednesday. “That means fully cooperating with government investigations, and doing what is necessary to remediate misconduct – including implementing a robust compliance program. Good corporate behavior also means notifying law enforcement about wrongdoing.”
   Rosenstein said the FCPA Pilot Program’s incentive system “motivates and rewards companies that want to do the right thing and voluntarily disclose misconduct.”
   In the first year of the pilot, the department’s FCPA Unit received 22 voluntary disclosures, compared to 13 during the previous year. In total, during the year and a half that the pilot program was in effect, the FCPA Unit received 30 voluntary disclosures, compared to 18 during the previous 18‑month period, he said.
   The Justice Department’s new policy, based on the FCPA pilot, however, doesn’t equate to a get-out-of-jail card to companies that report bribery incidents involving their firms and employees. 
   “Preserving a measure of prosecutorial discretion is central to ensuring the exercise of justice,” Rosenstein said. “But with this new policy, we strike the balance in favor of greater clarity about our decision-making process.
   “The advantage of the policy for businesses is to provide transparency about the benefits available if they satisfy the requirements. We want corporate officers and board members to better understand the costs and benefits of cooperation. The policy therefore specifies what we mean by voluntary disclosure, full cooperation, and timely and appropriate remediation,” he added.
   Under the department’s FCPA Corporate Enforcement Policy, companies that disclose FCPA wrongdoing and cooperate with investigators could expect a reduction in the severity of penalties, depending on the nature of the offense. 
   For example, a company which voluntarily discloses wrongdoing and satisfies all other requirements, but aggravating circumstances compel an enforcement action, the Justice Department will recommend a 50 percent reduction off the low end of the Sentencing Guidelines fine range. However, this treatment won’t apply to repeat offenders. 
   The policy also provides details about how the department evaluates an “appropriate” compliance program, which will vary depending on the size and resources of a business, Rosenstein said. 
   “The policy therefore specifies some of the hallmarks of an effective compliance and ethics program. Examples include fostering a culture of compliance; dedicating sufficient resources to compliance activities; and ensuring that experienced compliance personnel have appropriate access to management and to the board,” he said.
   Companies aren’t obligated to participate in the FCPA violation self-disclosure program. However, they risk being called out to the Justice Department by whistleblowers for the wrongdoing.
  “Since 2016, the Fraud Section’s FCPA Unit has secured criminal resolutions in 17 FCPA-related corporate cases, resulting in penalties and forfeiture to the department in excess of $1.6 billion. Of those 17 corporate criminal resolutions, only two were voluntary disclosures under the pilot program,” Rosenstein said. “Significantly, each of the two voluntary disclosure cases was resolved through a non-prosecution agreement, and in neither case did we impose a compliance monitor.”
   The Justice Department doesn’t expect any letting up on investigations involving FCPA violations. 
   Earlier this month, the department secured the guilty pleas of two former Rolls-Royce executives, along with another former employee and consultant, in connection with a scheme to bribe foreign official.
   The department announced a Two former executives of Rolls‑Royce and its subsidiaries, along with a former employee and a consultant, all pleaded guilty of conspiracy to bribe foreign officials.
   “The FCPA is the law of the land,” Rosenstein said. “We will enforce it against both foreign and domestic companies that avail themselves of the privileges of the American marketplace.”