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Pilot Program Seeks to Encourage Self-Disclosure of FCPA Violations

Friday, April 08, 2016
Sandler, Travis & Rosenberg Trade Report

The Department of Justice announced April 5 a one-year pilot program designed to motivate companies to voluntarily self-disclose Foreign Corrupt Practices Act-related misconduct, fully cooperate with the Fraud Section of the DOJ’s Criminal Division and, where appropriate, remediate flaws in their controls and compliance programs. The pilot could be extended or modified after the initial one-year period.

Assistant Attorney General Leslie Caldwell said this pilot program articulates in a written framework the credit available to companies that voluntarily self-disclose FCPA misconduct. Specifically, when a company not only cooperates and remediates but also voluntarily self-discloses, it is eligible for the full range of potential mitigation credit. That means that if a criminal resolution is warranted, the Fraud Section may grant a reduction of up to 50 percent off the low end of the applicable U.S. Sentencing Guidelines fine range and generally will not require the appointment of a monitor if the company has implemented an effective compliance program at the time of resolution. In addition, when those same conditions are met, the Fraud Section’s FCPA Unit will consider a declination of prosecution. By contrast, a company that chooses not to voluntarily self-disclose but later fully cooperates and timely and appropriately remediates will receive a maximum of 25 percent off the low end of the applicable fine range.

A guidance document for DOJ staff on this pilot program states that the government cannot require business organizations to self-disclose, cooperate or remediate and that companies remain free to reject these options and forego the credit available under the pilot program.

According to Caldwell, the pilot applies only to FCPA matters brought by the Fraud Section. It does not apply to any other Fraud Section matters, any other section in the Criminal Division, any other part of the DOJ or any other agency.

Caldwell added that the pilot is the latest in a string of efforts to ensure that the DOJ has “a robust and transparent enforcement program” targeting FCPA violations. Other initiatives have included expanding the size of the FCPA Unit by more than 50 percent, establishing three new squads of FBI special agents devoted to FCPA investigations and prosecutions, and strengthening coordination with foreign counterparts.

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