DOJ's FCPA CEP's #1 Goal 'Individual Accountability'

DOJ Revises FCPA Corporate Enforcement Policy (CEP) to Promote & Incentivize Self-Disclosure
Having a 'functioning compliance program with effective detection mechanisms best positions companies'

Assistant Attorney General Kenneth A. Polite, Jr. Delivers Remarks on Revisions to the Criminal Division’s Corporate Enforcement Policy

The Corporate Message: Come Forward, Cooperate, and Remediate & Get 50% to 75% Reduced Sentencing

This past year alone, the Division’s Fraud Section (i) secured convictions of over 250 individuals, including more than 50 who were convicted at trial; (ii) entered into seven criminal resolutions with corporations; and (iii) announced two Corporate Enforcement Policy declinations. And the Money Laundering and Asset Recovery Section convicted more than two dozen individuals and obtained two corporate guilty pleas, including a guilty plea from a financial institution that agreed to forfeit $2 billion in connection with one of the largest international financial scandals in history.

And there will be more in 2023.

While we continue to utilize our investigative resources and partners to uncover wrongdoing, we could never completely identify and address this area of criminality without corporations – our corporate citizens – coming forward and reporting the conduct of these wrongdoers.

That is what motivated the Criminal Division back in April 2016, when we first announced a voluntary self-disclosure incentive program—the FCPA Pilot Program. To be as transparent as possible, at that time we laid out a roadmap for what companies could expect if they chose to self-disclose misconduct, fully cooperate with our investigation, and timely remediate.

In November 2017, we expanded the pilot program to become the FCPA Corporate Enforcement Policy (CEP), which we subsequently incorporated into the Department’s Justice Manual. Since at least 2018, we have applied this policy to all corporate cases prosecuted by the Criminal Division.

Our existing policy provides that, if a company voluntarily self-discloses, fully cooperates, and timely and appropriately remediates, there is a presumption that we will decline to prosecute absent certain aggravating circumstances involving the seriousness of the offense or the nature of the offender. These aggravating circumstances include, but are not limited to, 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.

Our existing policy also offers the potential benefit of a presumption of a declination to companies that uncover – during the M&A due diligence process – misconduct by subsidiaries or other entities that they are seeking to acquire, and then self-report that misconduct to the Criminal Division.

And if a company self-discloses, but a criminal resolution is warranted, our existing policy offers 50% off of the low end of the applicable Sentencing Guidelines penalty range

This policy has demonstrated the Department’s commitment to rewarding companies that do the right thing when learning about possible misconduct.

When a company has uncovered criminal misconduct in its operations, the clearest path to avoiding a guilty plea or an indictment is voluntary self-disclosure. It is also the clearest path to the greatest incentives that we offer, such as a declination with disgorgement of profits. And a functioning compliance program with effective detection mechanisms best positions companies to not only identify misconduct in the first instance, but to make the important decision of whether to disclose it.

But in providing transparency to the potential incentives, we are underscoring that a corporation that falls short of our expectations does so at its own risk. Make no mistake - failing to self-report, failing to fully cooperate, failing to remediate, can lead to dire consequences.

As you’ll hear, these changes offer companies new, significant, and concrete incentives to self-disclose misconduct. And even in situations where companies do not self-disclose, the revisions to the policy provide incentives for companies to go far above and beyond the bare minimum when they cooperate with our investigations.

CEP Revisions

The first significant changes to the Criminal Division’s CEP since 2017.

The revisions make clear that there will be very different outcomes for companies that do not self-disclose, meaningfully cooperate with our investigations, or remediate.

The revised CEP presents another path for companies facing such a choice. A path that incentivizes even more robust compliance on the front-end, to prevent misconduct, and requires even more robust cooperation and remediation on the back-end, if a crime occurs. Namely, even if aggravating circumstances are present, although a company will not qualify for a presumption of a declination, under the revised CEP I am announcing today, prosecutors may nonetheless determine that a declination is the appropriate outcome, if the company can demonstrate that it has met each of the following three factors:

• The voluntary self-disclosure was made immediately upon the company becoming aware of the allegation of misconduct;

• At the time of the misconduct and the disclosure, the company had an effective compliance program and system of internal accounting controls that enabled the identification of the misconduct and led to the company’s voluntary self-disclosure; and

• The company provided extraordinary cooperation with the Department’s investigation and undertook extraordinary

If a company voluntarily self-discloses misconduct, fully cooperates, and timely and appropriately remediates, but a criminal resolution is still warranted, the Criminal Division:

• will now accord, or recommend to a sentencing court, at least 50%, and up to 75% off of the low end of the U.S. Sentencing Guidelines fine range, except in the case of a criminal recidivist. In that case, the reduction will generally not be from the low-end of the fine range, and in all cases, prosecutors will have discretion to determine the starting point within the Guidelines range. This revision represents a significant increase from the previous potential maximum reduction of 50% off the Guidelines range; and

• in these circumstances, we will generally not require a corporate guilty plea—including for criminal recidivists—absent multiple or particularly egregious aggravating circumstances. While relevant and important, criminal recidivism alone will not always mean a plea.
 
This policy applies to all Criminal Division corporate resolutions, not only voluntary self-disclosure cases. There will be many instances in which a company will not have voluntarily self-disclosed conduct to the Criminal Division. In such circumstances, the revised CEP provides Criminal Division prosecutors with a greater range of options to distinguish among companies that commit crime.

The policy is sending an undeniable message: come forward, cooperate, and remediate. We are going to be closely examining how companies discipline bad actors and reward the good ones. Our number one goal in this area – as we have repeatedly emphasized – is individual accountability. And we can hold accountable those who are criminally culpable—no matter their seniority—when companies come forward and cooperate with our investigation.

The revised CEP provides incentives for companies that do not voluntarily self-disclose but still fully cooperate and timely and appropriately remediate. In such a case, the Criminal Division will recommend up to a 50% reduction off of the low end of the Guidelines fine range.

To be sure, while 50% off the low end of the Guidelines range is the maximum available (absent a voluntary self-disclosure) under the revised CEP, each and every company starts at zero cooperation credit and must earn credit based on the parameters and factors outlined in the CEP. This is not a race to the bottom. A reduction of 50% will not be the new norm; it will be reserved for companies that truly distinguish themselves and demonstrate extraordinary cooperation and remediation. But having a greater range of cooperation and remediation credit available—from 0% to 50%, instead of from 0% to 25%, and using the full spectrum of the Guidelines from which to apply those reductions—will allow our prosecutors to draw greater distinctions among the quality of companies’ cooperation and remediation.

To our corporate citizens – the message is the same. You see, our job is not just to prosecute crime, but to deter and prevent criminal conduct. Through our enforcement efforts and our policies, we are committed to incentivizing companies to detect and prevent crime in their own operations, and to come forward and cooperate with us when they identify criminal wrongdoing.

We need corporations to be our allies in the fight against crime.

And we believe that our revised policies will, at the end of the day, further our ability to bring individual wrongdoers—the corporate executives, employees, and agents who engage in misconduct—to justice.

Your resources – particularly your investment in your compliance function – can help increase your corporate civic engagement and lead to lasting solutions to corporate criminality. justice.gov

This is abbreviated. For the full press release: justice.gov