On November 29, 2017, the Department of Justice (“DOJ”) announced significant revisions to its Federal Corrupt Practices Act (“FCPA”) Enforcement Policy. (For more information about the FCPA generally, see my earlier blog post from August 10, 2017.) The revisions provide guidance to companies seeking to avoid criminal charges for bribing foreign officials.
Previously, in April 2016, the DOJ had initiated a one-year pilot program providing guidance on how prosecutors would make charging decisions and encouraging voluntary self-disclosure of FCPA misconduct and cooperation with the DOJ. These revisions, in a number of respects, institutionalized the pilot program, which had been extended in April 2017. Its modifications appear aimed at providing more certainty about aspects of the pilot program. Having said that, because the revisions are non-binding, they do not provide certainty.
The significant revisions include the following:
Presumption of Declination
First, unlike under the pilot program, which only suggested that companies complying with the pilot program “might not” face criminal charges, the revisions provide a “presumption” that a company satisfying the standards of voluntary self-disclosure, full cooperation and timely and appropriate remediation will not be prosecuted. However, that presumption will not be given where “aggravating circumstances involving the seriousness of the offense or the nature of the offender” are manifested. Factors that will be considered include whether there is: (a) pervasive corruption, (b) repeat offenses, (c) corrupt schemes involving executives, or (d) schemes that generated a substantial profit.
Credit for Voluntary Self-Disclosure, Full Cooperation and Timely and Appropriate Remediation
A second significant modification of the pilot program relates to companies that fail to qualify for declination because of aggravating factors, but have adequately self-disclosed, cooperated and remediated. Those companies can earn a 50% discount from the bottom of the Sentencing Guidelines range. Prior to the revision, the DOJ only said that it might grant “up to” a 50% discount. Companies may also avoid the imposition of a corporate monitor intended to ensure future compliance.
Limited Credit in Matters Without Self-Disclosure
In circumstances where a company did not voluntarily report, but later cooperated fully and appropriately regarding remediation, the DOJ will recommend a 25% reduction rather than a 50% reduction.
As a part of the requirement of cooperation with the government, the DOJ has slightly modified its position on de-confliction. Typically, de-confliction means that the Department will ask the Company’s legal team to delay interviewing witnesses until the Department has done so first. Requests for de-confliction unsurprisingly are not popular with company counsel who see such requests as interfering with company efforts to root out and address problems. In an effort to assuage this concern, the Department has stated that all requests for de-confliction will be narrowly tailored and will be limited in time.
Control of Electronic Messaging
As a part of the remediation process, the company must bar employees from using software, such as Snapchat or Telegram, that generate electronic communications, but do not retain the messages or documents.
Root Cause Analysis
To demonstrate an adequate commitment to remediation, the Company must conduct a thorough analysis of the root causes of the underlying conduct. The Company must take appropriate remedial steps calculated to address the specific root causes it has identified.
In addition to the pilot program’s requirement that an FCPA compliance program be independent, the revisions also explicitly require the “authority and independence of the compliance function” as well as the “availability of compliance expertise to the board.”