On April 5, 2016, the U.S. Department of Justice's ("DOJ") Foreign Corrupt Practices Act ("FCPA") Unit published an FCPA Enforcement Plan and Guidance, announcing a one-year FCPA Pilot Program. The FCPA Pilot Program is designed to guide Federal prosecutors toward resolving FCPA cases, and to encourage companies to voluntarily self-disclose FCPA-related violations, fully cooperate with the Fraud Unit, and remediate deficiencies in their internal controls and compliance programs. By doing so, companies may potentially maximize mitigation credit, lower fines and in some instances avoid criminal prosecution.
The FCPA Pilot Program applies only to FCPA matters brought by the DOJ Criminal Division's Fraud Section, and does not replace the Principles of Federal Prosecution of Business Organizations, which have long provided guidance on whether a criminal disposition is appropriate. Instead, the FCPA Pilot Program aims to provide a clearer understanding of how the Fraud Unit evaluates an FCPA case.
To that end, the Pilot Program explains the requirements to qualify for credit for voluntarily self-disclosure, full cooperation and remediation, and then sets forth the credit that should be accorded if a company meets these criteria:
- Voluntary Self-Disclosure:
- The voluntary disclosure qualifies under the U.S. Sentencing Guidelines as occurring "prior to an imminent threat of disclosure or government investigation";
- The company discloses the conduct "within a reasonably prompt time after becoming aware of the offense," with the burden on the company to demonstrate timeliness; and,
- The company discloses all relevant facts known to it, including all relevant facts about the individuals involved in any FCPA violation.
- Full Cooperation involves (among other items):
- Disclosure on a timely basis of all facts relevant to the wrongdoing at issue;
- Proactive and not reactive cooperation in relating the facts that are relevant to an investigation;
- Preservation, collection, and disclosure of all relevant documents and information; and,
- Making officers and employees (including those overseas) available for interviews upon request.
- The Fraud Unit will assess a company's remediation efforts by considering whether the company has implemented an effective compliance and ethics program; and
- Specifically, the Fraud Unit will evaluate whether the company (among additional criteria): fosters a culture of compliance through employee awareness of prohibited conduct, dedicates sufficient resources to the compliance function, employs qualified and experienced compliance personnel, maintains the compliance function independently, performs an effective risk assessment and tailors compliance based on that assessment, and audits the compliance program.
Credit Under the FCPA Pilot Program
The FCPA Pilot Program provides that when a company has voluntarily self-disclosed, cooperated, and remediated in accordance with its guidance, the company may qualify for the full range of mitigation credit. Specifically, the Fraud Unit may offer up to a 50 percent reduction off the bottom end of the U.S. Sentencing Guidelines' fine range; may not require the appointment of a monitor upon the company; and, may consider a declination of prosecution.
Notably, reasonable exceptions to the FCPA Pilot Program's requirements are considered. Recent reports indicate that the Assistant Attorney General for the DOJ's Criminal Division, Leslie Caldwell, told attendees at an American Bar Association seminar that companies that delay self-reporting in order to pursue adequate internal investigations will not lose out on mitigation credit under the FCPA Pilot Program.
For more information on the FCPA Pilot Program, please contact Michael Himmel or Steven Llanes.