The Department of Justice’s white collar and fraud sections have been focused on domestic issues as of late, and Foreign Corrupt Practices Act (FCPA) prosecutions fell out of the limelight. Lest any corporation or defense counsel get too comfortable in that assumption, however, the DOJ issued a new guidance memo circling back to the FCPA and announcing a number of changes that signal a renewed focus on FCPA violations – and an increased focus on settlement.
The DOJ announced new hires in the Fraud Section’s FCPA ranks, and noted that the FBI is on board as well, having added “three new squads” of agents dedicated to FCPA investigation work. This ramp up on the FBI’s part shows how labor intensive FCPA investigations are for the government – and signals that the DOJ will continue to rely on corporations’ own investigative and preventative efforts in working to prevent and stop bribery and other FCPA problems.
In that vein, the new guidance memo announced a yearlong pilot project to reward companies’ self-reporting efforts. Companies that investigate and voluntarily disclose conduct potential violative of the FCPA – and name individual names – will see well below guidelines fine recommendations from the government. The memo details all the requirements for obtaining cooperation credit, and it is a long list. Documents, details, names, translated files and more must be handed over to the DOJ. The agency is clearly supplementing its own prosecutorial efforts by giving companies incentives to do the investigative work in house, and pass on the information to Washington.
For those that do self disclose, the memo suggests 50% off the low end of guidelines range may be a reasonable expected penalty. Any profits derived from the conduct also must be disgorged. We suspect this will be a contentious calculation process, and one that counsel should navigate carefully. The benefits also hinge on companies’ developing their own remediation programs – an important (and expensive) element of the DOJ’s new pilot program. It remains to be seen whether companies will actually elect to increase investigation and self disclose, but more clarity and specifics on the benefits of disclosure are a good thing in our book.