FCPA Penalties Just Got a Little Clearer
Posted on December 7, 2017
The Department of Justice announced last week that they’ve made a Foreign Corrupt Practices Act (FCPA) pilot program a permanent fixture. The pilot program had offered declinations – case closures without prosecution or criminal resolution – if a company had voluntarily disclosed a potential violation along with three other contingencies. Now that the program is permanent, it marks the Department of Justice’s first explicit rule on how to receive an FCPA declination through voluntary disclosure.
The Department of Justice’s pilot program began in April 2016 and dealt exclusively with the Fraud Section’s FCPA unit. On November 29th, Deputy Attorney General Rod Rosenstein announced that the pilot program would become permanent policy, noting that the policy “motivates and rewards companies that want to do the right thing and disclose misconduct.”
The permanent program – called the FCPA Corporate Enforcement Policy – is meant to provide guidance and certainty for companies wondering whether they should voluntarily disclose potential infractions. The policy states that along with voluntary disclosure, a company must offer full cooperation, remediation, and payment of disgorgement, forfeiture, and/or restitution. If these four requirements are fulfilled, the company will receive a declination.
The policy is only in effect absent aggravating circumstances such as involvement of executive management in the misconduct, significant profit from the misconduct, pervasive misconduct within the company or criminal recidivism.
But even if a criminal resolution is sought, if the company has voluntarily disclosed, cooperated, remediated and paid disgorgement, the fine will be a 50% reduction off of the lowest end of the U.S. Sentencing Guidelines range. If the company did not voluntarily disclose, yet cooperated, remediated and paid disgorgement, the fine will be a 25% reduction off the lowest end of the range.
So far, the program has worked. In the pilot program’s first 18 months, the FCPA unit received 30 voluntary disclosures. In comparison, the FCPA unit received 18 voluntary disclosures the previous 18-month period.
The full policy is available at the Department of Justice’s website here, https://www.justice.gov/criminal-fraud/file/838416/download.