The Justice Department is adding new detail to its procedures for offering reduced penalties when companies come clean about violations of the Foreign Corrupt Practices Act.
“Clarifying changes” made to the DOJ’s FCPA corporate enforcement policy, released Nov. 20, update language concerning the information companies are expected to hand over when seeking leniency. The policy establishes the factors prosecutors consider in determining how much credit is offered for self-disclosures of foreign bribery.
If a company voluntarily reports misconduct under the FCPA, fully cooperates with the DOJ, and “timely and appropriately” undertakes remediation, there is a presumption in most cases that it will not face criminal charges, according to the policy.
Prosecutors could still choose to pursue a criminal resolution against companies that self-disclose, cooperate, and remediate, in which case they are likely to offer a 50% fine reduction and waive the appointment of a corporate monitor.
The changes show DOJ leadership is making good on its stated commitment to continuously assess and refine the enforcement policy, James Koukios, a partner at Morrison & Foerster LLP and a former federal prosecutor, said.
“They’re actually hearing feedback—probably from both their own prosecutors and from the business community—and making those refinements to try to make the guidance more clear,” he said. The updated language most likely reflects lessons learned in practice, “where they saw that there were some ambiguities in some of their terms.”
Previously, a self-reporting company was required to reveal “all relevant facts known to it,” including those about every individual substantially involved in or responsible for the violation of law. Now, the policy asks for all relevant facts known to the company only “at the time of the disclosure.”
The DOJ, in a new footnote to the language, says it recognizes that companies might not know all relevant facts when they self-disclose, especially where only preliminary investigative efforts are possible. But when that happens, companies ought to clarify that their disclosures are based solely on a preliminary investigation or information assessment, while still providing a fulsome disclosure of the known, relevant facts, according to the footnote.
Koukios said this change could, in some cases, encourage companies to make earlier disclosures, which the DOJ appears to be looking for. However, he called the new policy language a “mixed bag” for companies, as it allows prosecutors to push them to come forward sooner and reveal everything they know, even if they’re still piecing together the circumstances surrounding the misconduct.
The DOJ also stripped language in the policy requiring companies to tell prosecutors of any opportunities they know of, or should know of, to obtain relevant evidence not in a company’s possession. It now encourages companies to simply identify any evidence they know of but don’t have.
“It says ‘Look, you actually have to be aware of these facts,’” said Koukios, a former senior deputy chief of the Fraud Section within the Justice Department’s Criminal Division. “So I think this is actually a pretty positive change for the business community.”