Next week marks the 40th anniversary of the Foreign Corrupt Practices Act – it became effective December 19, 1977. Deputy Attorney General Rod Rosenstein marked the occasion this month by providing an update on the FCPA Pilot Program announced in spring 2016 and detailed in this Compliance Gap blogpost. Bottom line: the FCPA policy now provides for a presumed declination of prosecution for companies that complete a fulsome self-disclosure disgorgement, and remediation program.
AG Rosenstein’s update amounted to a repeated endorsement of the program, which credits voluntary self-disclosure by companies with FCPA issues, and a decision to transition from pilot status to full-fledged Department of Justice (DOJ) program run out of the Fraud section of the DOJ. The update also aimed to provide more clarity to participating companies regarding what they can expect if they elect to self-disclosure rather than risk federal investigation and possible charges. While before the pilot program provided discounts off the sentencing range for companies that self-disclose and cooperate, the revised program provides for a presumption that the DOJ will resolve the matter through a declination of prosecution, provided the programmatic requirements (self-disclosure, cooperation, remediation) are met. That presumption will only be overcome if there are “aggravating circumstances” such as repeat FCPA offense issues or particularly serious conduct.
The cooperation requirement also received additional attention, and continues to be a particularly fraught aspect of the self-disclosure analysis. Cooperation, in the FCPA context, means not only proactively sharing information about the relevant bribery or violative conduct, but also attributing the information to its source, and possibly naming third-parties as well. Remediation, on the other hand, is limited to the company doing the disclosing, and involves possibly disgorging any ill-gotten gains as well as implementing and maintaining a functioning, effective compliance program.
The new non-pilot FCPA policy is going to live in the U.S. Attorneys’ manual, and AG Rosenstein expects that will lead to broader use and compliance with the policy. It is not a marked change from the prior regime, in fact it may be viewed primarily as building on Holder and Lynch-era FCPA efforts, but the new presumption does give a little more weight and clarity to the benefits of self-disclosure, should a company elect to pursue that path. Weighing the benefits and downsides of disclosure, however, is still a challenging and highly company and fact-specific exercise, particularly since FCPA program participation is designed to reward and protect cooperating companies, not individual executives, board members, or the like.