New DOJ Guidance: FCPA Self-Reporting Pilot Program

Self-reporting shaves off 50 percent in fines, encourages transparency

The Department of Justice’s FCPA unit is doubling in size and three new FBI squads will be formed of special agents dedicated solely to FCPA investigations and prosecutions. All this is part of a one-year pilot program announced yesterday by DOJ’s Assistant Attorney General Leslie Caldwell. The move is an attempt to hold individuals and companies more accountable for corrupt actions. The agency hopes this will send a strong and urgent message to companies that they are honing in on violations and to dust off the ones that may have been swept under the rug.

Companies are encouraged to self-report FCPA offenses and cooperate with the Fraud Section. Under the program, a 50 percent reduction of the low end of the applicable fine range under the U.S. Federal Sentencing Guidelines is available for companies that meet the requirements and self-disclose while collaborating with the agency.

“One of my priorities in the Criminal Division has been to ensure that we have a robust and transparent enforcement program targeting violations of the Foreign Corruption Practices Act (FCPA),” Caldwell wrote in the DOJ blog. “Bribery of foreign officials harms those who play by the rules, siphons money away from communities, and undermines the rule of law.”

“The flag has been pitched by the DOJ that signals a sense of urgency and commitment to transparency in the compliance world,” says Stephen Martin, partner at the firm Arnold & Porter. “Compliance is being placed high on the priority list for a clear reason. This program is the DOJ’s way of saying, help us help you – we, the regulators, are taking compliance seriously and here is added guidance on how to be effective in what you do. This is a grand slam for fully-developed compliance programs. Companies should be, if they are not already, investing in compliance and work within the program’s requirements to bargain for full declination or a reduced fine.”

As of September 2015, 79 companies—including Cisco, JP Morgan and Wal-Mart—were undergoing an FCPA investigation, according to a disclosed corporate investigations list. However, the number should be higher due to non-issuers and issuers that have a pending investigation but haven’t disclosed it. Those companies do not appear on the DOJ and SEC list, according to the FCPA.

Key points to keep top-of-mind about the program from the agency:

  • This is a substantial increase in FCPA law enforcement resources
  • DOJ’s Fraud Section is adding 10 more prosecutors to its FCPA unit
  • The pilot program enhances global coordination that holds corrupt individuals and companies accountable
  • The program is designed to motivate companies to:
    • Voluntarily self-disclose FCPA-related misconduct
    • Fully cooperate with the Fraud Section
    • Remediate flaws in controls and compliance programs, as appropriate
  • The Guidance sets forth standards for what constitutes:
    • Voluntarily self-disclosure of criminality
    • Full cooperation
    • Remediation by companies for purposes of qualifying for mitigation credit from the Fraud Section in a FCPA matter

“The Guidance explains the credit that the Fraud Section will apply under the pilot program for companies that voluntarily self-disclose, fully cooperate and remediate,” states the DOJ. “The level of credit may include the type of disposition, the reduction in fine or the determination of the need for a monitor.”

Concluding the pilot period, the Fraud Section will determine if the Guidance, which is only applicable to the Fraud Section’s FCPA Unit, will be extended or adjusted based on how it pans out over the next year.

Download the FCPA Enforcement Plan here.