DOJ Announces New FCPA Corporate Enforcement Policy

On November 29, 2017, Deputy Attorney General Rod Rosenstein unveiled a revised Corporate Enforcement Policy for the US Foreign Corrupt Practices Act (FCPA).¹ This policy, which incorporates key portions of the Obama Administration's FCPA Pilot Program into the US Attorneys' Manual, is "aimed at providing additional benefits to companies based on their corporate behavior once they learn of misconduct."²

The New Policy: Presumption of Non-Prosecution for Companies That Self-Disclose, Cooperate, and Remediate

The FCPA Corporate Enforcement Policy provides that "[w]hen a company has voluntarily self-disclosed misconduct in an FCPA matter, fully cooperated, and timely and appropriately remediated …, there will be a presumption that the company will receive a declination." In other words, under these circumstances there now will be a presumption that the company will not be prosecuted for FCPA violations. Where aggravating circumstances–such as high-level executive involvement in the misconduct, significant profit from the misconduct, or pervasiveness of the misconduct in the company–warrant a criminal resolution, companies still may receive a 50 percent reduction off the low end of the US Sentencing Guidelines fine range (except in the case of a criminal recidivist). Companies may also avoid the appointment of a compliance monitor if, at the time of the resolution, they have in place an effective compliance program. Notably, to qualify for favorable treatment under the Policy, a company must pay all disgorgement, forfeiture, and/or restitution from the misconduct at issue, even if the DOJ declines to bring charges.³

The FCPA Corporate Enforcement Policy also provides limited credit for full cooperation and timely and appropriate remediation in FCPA matters without voluntary self-disclosure. Consistent with the FCPA Pilot Program that was announced last April, companies that satisfy the DOJ's standards for cooperation and remediation are eligible for a reduction of up to 25 percent off the low end of the Sentencing Guidelines fine range.⁴

The Policy, moreover, defines what the DOJ considers "voluntary self-disclosure", "full cooperation," and "timely and appropriate remediation.". To receive credit for self-disclosure, a company must report the issue before "an imminent threat of disclosure or government investigation," and must report all relevant facts known to the company at that time. Meanwhile, "full cooperation" requires that a company not only disclose the findings of any independent or internal investigations and any relevant documents and information, but also, if requested, "deconflict" by deferring the interviews of employee witnesses or other investigative steps until after the government has had an opportunity to do so itself. Full credit for "timely and appropriate remediation" will be awarded only to companies that have analyzed and redressed the root causes of the misconduct, implemented an effective compliance program, appropriately disciplined any employees that participated in the misconduct, and taken steps that "demonstrate recognition of the company's misconduct," including acceptance of responsibility.⁵

Significance: Emphasis on Compliance and Individual Misconduct

The DOJ's FCPA Corporate Enforcement Policy makes permanent many of the core elements of the Pilot Program, which has guided the DOJ's FCPA enforcement decisions over the past year and a half.⁶What is new is the presumption in favor of non-prosecution when companies self-report, cooperate, and remediate. This presumption is intended to encourage more self-reporting of violations.

The decision to self-report, however, may not be an easy one, particularly if a company is unsure whether an FCPA violation has in fact occurred. The FCPA Corporate Enforcement Policy does not guarantee a declination or assure that a resolution will be kept confidential. Nor does it provide the equivalent of a "Get Out of Jail Free" card for companies that violated the FCPA. Even if a company receives a declination, the DOJ will not allow it to keep the profits from its misconduct. Companies therefore will need to weigh both the benefits and risks of self-reporting under DOJ policy.

In his remarks on the FCPA Corporate Enforcement Policy, Deputy Attorney General Rosenstein emphasized that the DOJ remains committed to holding individuals accountable for FCPA violations, as well as other crimes.⁷ His remarks echoed those of Attorney General Jeff Sessions, who earlier in the year stressed the importance of holding individuals accountable for corporate misconduct.⁸So while the FCPA Corporate Enforcement Policy may lead to lower penalties for companies that self-report, the DOJ's focus on individuals may intensify. Companies seeking the benefits of the FCPA Corporate Enforcement Policy will need to demonstrate their willingness to cooperate with the DOJ's investigation of individuals and their commitment to develop robust compliance programs that are designed to prevent and detect misconduct.

© 2017 Arnold & Porter Kaye Scholer LLP. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.