DOJ Clarifies FCPA Corporate Enforcement Policy

Financial Services Law

In the latest update to the Department of Justice’s (DOJ) Foreign Corrupt Practices Act (FCPA) Corporate Enforcement Policy, the agency formalized prior guidance as to how companies can voluntarily disclose information in order to receive leniency.

Aimed at providing benefits to companies based on their corporate behavior once they learn of misconduct, the policy emphasizes voluntary disclosure and full cooperation, including even holding off investigating while the DOJ interviews employees, for companies to be eligible for a declination.

What happened

Pursuant to the DOJ’s FCPA Corporate Enforcement Policy, for companies that voluntarily self-disclose misconduct in an FCPA matter, fully cooperate, and timely and appropriately remediate, the presumption is that the company will receive a declination, absent aggravating circumstances involving the seriousness of the offense or the nature of the offender, including such factors as executive officer involvement, pervasiveness and profit earned by the company on account of the misconduct.

Where aggravating factors are present, thus warranting a criminal resolution as opposed to a declination, the DOJ may still credit the company with up to a 50% reduction off the low end of the Sentencing Guidelines fine range. To qualify for such credit, the company must voluntarily disclose, fully cooperate and take steps prior to discovery of the misconduct to remediate.

To qualify for the FCPA Corporate Enforcement Policy, including a declination, the company must pay still all disgorgement, forfeiture and/or restitution resulting from the misconduct at issue.

While the policy has undergone several changes—such as a March 2019 amendment to address the use of ephemeral messaging apps by companies seeking credit and requests by the DOJ to hold off investigating—three additional modifications were made in November.

Recognizing that a company might not be in a position to know all relevant facts at the time of a voluntary self-disclosure, especially where only preliminary investigative efforts have been possible, the DOJ revised the disclosure language to note that the facts to be disclosed are those known at the time of the disclosure, and if those facts are limited, the company “should make clear that it is making its disclosure based upon a preliminary investigation or assessment of information.” But the DOJ added that the company “should nonetheless provide a fulsome disclosure of the relevant facts known to it at that time.” Along the same line, the DOJ clarified that full disclosure includes all facts relating to the “misconduct” of individuals. This is an important change from having to provide all facts relating to “violations” of the law by individuals.

A second point clarified that the cooperating company is expected to advise the DOJ of the existence of evidence that may not be in the company’s possession.

Finally, the DOJ stated that in appropriate cases, an acquiring company that discloses misconduct may be eligible for a declination where aggravating circumstances existed as to the acquired entity.

To read the updated DOJ policy, click here.

Why it matters

The latest tweaks to the FCPA Corporate Enforcement Policy continue to clarify with more precision what a company discovering an FCPA violation needs to do in order to be eligible for a declination from the DOJ.

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