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U.S. businesses should take note of the enhanced benefits now available to companies that self-disclose misconduct or otherwise cooperate with the U.S. Department of Justice (DOJ) under the DOJ Criminal Division’s new Corporate Enforcement Policy.^[1] The policy, as revised, governs not only the DOJ’s handling of matters under the Foreign Corrupt Practices Act (FCPA),[2] but also the DOJ’s handling of matters under other federal criminal statutes as well.

Broadly, the FCPA bars U.S. companies, foreign public companies, and certain foreign persons subject to U.S. jurisdiction “from giving bribes or kickbacks to any foreign official to obtain or retain business.” It also imposes record-keeping and internal accounting control requirements on U.S. public companies and foreign public companies listed on U.S. stock exchanges, as well as their subsidiaries and affiliates.[3]

Seeking corporate help in combating foreign bribery, the Criminal Division launched a pilot voluntary self-disclosure program in 2016 to encourage companies to “come forward, cooperate, and remediate.”[4] The DOJ then issued its FCPA Corporate Enforcement Policy in 2017, building on the pilot program and incorporated the Policy into the Justice Manual in 2018.[5] 

Key enforcement changes under the new revised policy include the following:

• Extended reach. The policy now applies not just to misconduct under the FCPA, but to “all other corporate criminal matters handled by the Criminal Division.”[6]
• Presumption of declination. Companies that voluntarily self-disclose misconduct to the DOJ, fully cooperate, and timely and appropriately remediate, all in accordance with the policy’s standards, will enjoy “a presumption that the company will receive a declination” absent aggravating circumstances.[7] To qualify, a company must pay all disgorgement, forfeiture, and/or restitution due.
• Benefits under aggravating circumstances. Even with aggravating circumstances (such as particularly egregious misconduct)[8] that may warrant a criminal resolution, prosecutors may still opt for declination if the company can show it: (i) voluntarily self-disclosed immediately on learning of the alleged misconduct; (ii) had an effective compliance program and internal accounting controls, that enabled it to identify the misconduct and led to the voluntary self-disclosure; and (iii) provided extraordinary cooperation with the DOJ and conducted remediation above and beyond the policy guidelines.[9] And, where criminal resolution is warranted, a company can receive a fine reduction of 50% to 75% below the low end of the U.S. Sentencing Guidelines (U.S.S.G.) range.[10]
• Benefits even without self-disclosure. Companies that do not voluntarily self-disclose, but later fully cooperate and remediate in a timely manner, can be eligible for up to a 50% reduction below the low end of the U.S.S.G. fine range.[11]
• Corporate acquisitions. An acquiring company that discovers misconduct in an acquisition target through timely due diligence (or under certain circumstances, through post-acquisition audits) and voluntarily self-discloses, as well as implements an effective compliance program at the acquired entity and takes other appropriate action, will receive a presumption of declination.  In certain cases, an acquiring company following the policy may be eligible for a declination, even where aggravating circumstances affect the acquired entity.[12]

The DOJ’s revisions signal a continued commitment to fostering corporate self-policing, self-disclosure, and remediation with their considerable reductions in potential fines and other adverse consequences for misconduct.  In particular, the new policy aims to ease the inherently tough self-disclosure decision by ensuring that aggravating factors no longer foreclose the possibility of a declination.  While possible voluntary self-disclosure and related compliance measures still require careful legal attention, the revised policy certainly reshapes the terrain more favorably for companies facing such decisions.

For more information, please contact authors Ivan W. Bilaniuk, head of the Dinsmore & Shohl LLP International Trade and Regulatory Compliance Practice, or Lindsay K. Gerdes, a former Assistant United States Attorney in the Eastern District of New York and now a partner in Dinsmore’s White Collar Crime group.

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[1] Formerly known as the FCPA Corporate Enforcement Policy, the policy is now titled the Corporate Enforcement and Voluntary Self-Disclosure Policy.  See U.S. Department of Justice, 9-47.120 – Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy, at 1, https://www.justice.gov/criminal-fraud/file/1562831/download.

[2] The Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq.; see also DOJ, FCPA Resource Guide, https://www.justice.gov/criminal-fraud/fcpa-resource-guide.

[3] Freuler v. Parker, 803 F. Supp. 2d 630, 644 (S.D. Tex. 2011). The classic case of FCPA liability involves a U.S. company with overseas operations that bribes a foreign official in order to obtain or renew a contract with a foreign government. A number of other scenarios, however, can also trigger FCPA exposure, such as when a company’s foreign representative or overseas distributor engages in bribery. See, e.g., Yeatts v. Zimmer Biomet Holdings, Inc., No. 3:16-CV-706-MGG, 2019 U.S. Dist. LEXIS 10097, at *3–4 (N.D. Ind. Jan. 18, 2019), aff’d, 940 F.3d 354, 356 (7th Cir. 2019).

[4] Assistant Attorney General Kenneth A. Polite, Jr. Delivers Remarks on Revisions to the Criminal Division’s Corporate Enforcement Policy (Jan. 17, 2023), https://www.justice.gov/opa/speech/assistant-attorney-general-kenneth-polite-jr-delivers-remarks-georgetown-university-law.

[5] Id.

[6] See DOJ, Corporate Enforcement Policy at 1. While the new policy’s scope has broadened beyond FCPA to become a more general enforcement framework, particular misconduct may potentially subject a company to an enforcement policy of another DOJ Division.  See, e.g., DOJ, National Security Division (NSD), Export Control and Sanctions Enforcement Policy for Business Organizations (2019), about which we wrote here.

[7] See DOJ, Corporate Enforcement Policy at 1.

[8] The Assistant Attorney General enumerated the following non-exhaustive list of possible aggravating circumstances: “involvement by executive management of the company in the misconduct; a significant profit to the company from the wrongdoing; egregiousness or pervasiveness of the misconduct within the company; or criminal recidivism.”  Kenneth A. Polite, Jr. Remarks, supra n.4.

[9] See DOJ, Corporate Enforcement Policy at 1–2. This may be the most dramatic of all the shifts in the revised policy, as previously the existence of an aggravating factor ruled out declination; see also Kenneth A. Polite, Jr. Remarks, supra n.4.

[10] See DOJ, Corporate Enforcement Policy at 2. Under the previous version of the policy, the possible reduction was capped at 50%.  See Kenneth A. Polite, Jr. Remarks, supra n.4.

[11] See DOJ, Corporate Enforcement Policy at 2–3.

[12] Id. at 3.

 

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