The U.S. Department of Justice (“DOJ”) Criminal Division yesterday announced that its Fraud Section’s Foreign Corrupt Practices Act (“FCPA”) Unit is conducting a one-year FCPA enforcement pilot program (“Program”). A company that discovers a violation of the FCPA and meets the Program’s exacting requirements related to voluntary disclosure, full cooperation, and appropriate remediation will be eligible to receive substantial mitigation credit. That mitigation credit may include a 50% reduction from the bottom of the U.S. Sentencing Guidelines fine range, avoidance of a requirement to appoint a corporate monitor for the typical 3- or 5-year period, and a possible declination of prosecution.
In his 9-page memorandum (“FCPA Enforcement Plan”) describing the details of the Program, Fraud Section Chief Andrew Weissmann explains that the credit contemplated by the Program is in addition to any fine reduction or mitigation credit applicable based on the Sentencing Guidelines or Principles of Federal Prosecution of Business Organizations, and that a company must still disgorge profits associated with the FCPA violation.
The requirements to qualify for credit in the program are more exacting than those outlined in the Sentencing Guidelines. First, a company must make a voluntary disclosure of the violation, which is defined as one the company is not otherwise required to make, or which is made under imminent threat of disclosure, and which consists of all known relevant facts, including about individuals involved in the violation. Second, full cooperation is required. The FCPA Enforcement Plan describes 11 items required to receive credit for full cooperation, including proactive disclosure of all relevant facts (not just those specifically requested), provision of all facts related to potential criminal conduct by any third party company or individual, and coordination of overseas data collection and witness interviews. Finally, a company must show that it has made timely and appropriate remediation, which includes implementation of an effective compliance and ethics program, appropriate discipline of employees, and any additional steps to show recognition of the seriousness of the misconduct.
A company that does not satisfy the voluntary disclosure requirement but does achieve full cooperation and appropriate remediation will receive, at most, a 25% reduction off the bottom of the Sentencing Guidelines fine range.
The Program is effective for self-disclosures of FCPA violations to the DOJ’s Fraud Section for one year beginning April 5, 2016. The Fraud Section will determine by the end of that year whether to extend or modify the Program.
The Program is one of three elements of the Fraud Section’s broader FCPA enforcement plan, as outlined in Weissmann’s memorandum. Another element, announced last year, is the increase in enforcement resources, in the form of a 50% increase in prosecutors in the FCPA Unit and three new FBI squads devoted to FCPA investigations and prosecutions. The other element is the increased coordination with foreign counterparts by sharing leads, documents, and witnesses across borders. As stated in the FCPA Enforcement Plan and in comments yesterday by Criminal Division Chief Leslie Caldwell, by these efforts, DOJ is trying to send a message that fewer FCPA violations will go undetected, inspire voluntary self-disclosure of foreign bribery, and increase prosecutions of individuals responsible for related criminal activity.