By: Christopher D. Carusone
On Nov. 29, 2017, U.S. Deputy Attorney General Rod Rosenstein announced a revised Foreign Corrupt Practices Act Corporate Enforcement Policy. The new policy contains a clear roadmap for avoiding corporate criminal liability that corporate counsel would be wise to follow.
The Foreign Corrupt Practices Act of 1977, 15 U.S.C. Section 78dd-1 et seq. (FCPA) makes it unlawful for an “issuer” or “domestic concern” defined by the act to make payments to foreign officials for the purpose of obtaining or retaining business. Specifically, the FCPA prohibits the willful use of the mails or interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person.
In November 2012, the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) released “A Resource Guide to U.S. Foreign Corrupt Practices Act” to help businesses understand and comply with the FCPA. This guide breaks down the requirements of the FCPA and includes guidance on what the DOJ and the SEC consider when deciding whether to open an investigation or bring criminal charges. It also includes a description of the hallmarks of an effective corporate compliance program. However, while the guide contains a description of the factors that the federal government is to consider when evaluating a company’s self-disclosure, cooperation, and remediation of FCPA violations, it does not establish a detailed roadmap for avoiding corporate criminal liability.
Enter Rod Rosenstein. On Nov. 29, 2017, Rosenstein announced a revised FCPA Corporate Enforcement Policy. Under this new policy, which came on the heels of a successful one-year pilot program, when a company satisfies the standards of voluntary self-disclosure, full cooperation, and timely and appropriate remediation, there is a presumption that DOJ will resolve the company’s case through a declination of prosecution. That presumption may be overcome only if there are aggravating circumstances related to the nature and seriousness of the offense or if the offender is a criminal recidivist. Even if such aggravating circumstances exist, a company can still earn a 50 percent reduction off the low end of the U.S. Sentencing Guidelines fine range for voluntary self-disclosure, full cooperation, and timely and appropriate remediation, except in cases of a criminal recidivist. A company facing prosecution in this situation can also avoid the appointment of a monitor if the company has, at the time of resolution, implemented an effective compliance program. Details on what constitutes an effective compliance program are included in the policy. Finally, the policy also includes a limited cooperation credit of 25 percent off the low end of the U.S. Sentencing Guidelines fine range for full cooperation and timely and appropriate remediation, even in the absence of voluntary self-disclosure.
What is “voluntary self-disclosure?” Voluntary self-disclosure under the new policy must occur within a “reasonably prompt time” after becoming aware of the offense but prior to an “imminent threat” of involuntary disclosure or government investigation. The company also must disclose all relevant facts known to it, including facts about all individuals involved in the FCPA violation.
How about “full cooperation?” Full cooperation under the new policy includes five elements: disclosure of all relevant facts; proactive rather than reactive cooperation; timely preservation, collection, and disclosure of relevant documents and information; where requested, de-confliction of witnesses interviews and other investigative steps the company intends to take as part of its internal investigation; and making company officers and employees who possess relevant information available for interviews by DOJ personnel.
What about “timely and appropriate remediation?” Full credit for timely and appropriate remediation includes an analysis of the causes of the underlying FCPA violation(s), identification and remediation of any root causes of the conduct, implementation of an effective compliance and ethics program, appropriate discipline of employees, and appropriate retention of business records.
For a copy of the DOJ’s revised Foreign Corrupt Practices Act Corporate Enforcement Policy, visit the DOJ’s website at https://www.justice.gov/criminal-fraud/file/838416/download.