DOJ’s New FCPA Pilot Program: The Offer of Enhanced Credit
DOJ’s continuing focus on individuals has spawned a new one year FCPA Pilot Program which offers companies enhanced cooperation credit The new Pilot Program is part of an overall effort to bolster FCPA compliance. Those efforts include increasing the size of the Fraud Unit which supervises such investigations by 50%, adding 10 additional prosecutors, establishing three new FBI squads of special agents devoted to FCPA investigations and prosecutions and enhancing coordination with foreign counter-parts.
For companies that qualify for the additional cooperation credit under the Pilot Program there is the prospect of receiving a significant reduction off the bottom of the fine amount calculated under the sentencing guidelines and perhaps a declination. To be eligible for this new credit the company must disgorge all profits and meet the following criteria, according to a Memorandum authored by Fraud Section Chief Andrew Weissmann, dated April 5, 2016:
Self report: The firm must voluntarily self-report prior to an imminent threat of disclose by a government investigation. If the company has an obligation to take such action the DOJ will not consider it to be self-reporting. Likewise, the report must be timely, meaning that it is within a reasonable time after the company becomes aware of the offense. The report must contain all of the facts including those relating to individuals who participated in the offense.
Full cooperation: In addition to the requirements under the Principles of Federal Prosecution of Business Organizations, the reporting organization must meet a series of criteria to receive full credit under the Pilot Program. Those include:
- Disclosure on a timely basis of all facts relevant to the wrongful conduct, including those relating to actions by individuals;
- taking proactive steps to disclose facts related to the investigation and identifying opportunities for the government to obtain relevant evidence not within the firm’s possession or otherwise known to the government;
- preserving all relevant evidence;
- providing timely updates on the internal investigation of the company; where requested, de-confliction of a internal investigation with the government investigation;
- furnishing all relevant facts regarding the potential criminal conduct of third-party companies and their employees;
- on request making current and former employees available for interview by the DOJ;
- making all relevant facts gathered by the company along with those from its internal investigation availalbe, including the attribution of facts to specific sources where that will not violate privilege;
- the disclosure of overseas documents and where they were located, unless such disclosure is prevented by foreign law; the firm has the burden of establishing that it worked diligently to identify all available legal avenues for making the evidence available but that it is precluded;
- facilitating the third party production of documents and witnesses from foreign jurisdictions unless prohibited; and
- when requested furnishing translations.
To qualify for full credit under the Test Program the firm must also take a series of remedial actions. Those include demonstrating that the firm: has a culture of compliance; that sufficient resources are dedicated to compliance and that the function is independent; that an effective risk assessment tailored to the situation has been done; how compliance personnel are compensated and promoted compared other employees; that auditing is done of the compliance function to assure effectiveness; the reporting structure of compliance within the company; that appropriate discipline is undertaken; and any additional steps necessary to demonstrate recognition of the seriousness of the firm’s misconduct, acceptance of responsibility and the implementation of the remedial steps.
Firms which quality may secure a 50% reduction off the bottom end of the guideline range for the fine and generally should not require a monitor. If the firm does not self-report but meets all the other criteria of the program it may obtain up to a 25% reduction off the bottom of the guideline range for the fine.
The goal of the Program is enhanced compliance. As the Memorandum makes clear, the Test Program “is intended to encourage companies to disclose FCPA misconduct to permit the prosecution of individuals whose criminal wrongdoing might otherwise never be uncovered by or disclosed to law enforcement. Such voluntary self-disclosures thus promote aggressive enforcement of the FCPA and the investigation and prosecution of culpable individuals.”