Companies Alter Handling of Bribery Cases Due to DOJ Push

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By Che Odom

May 4 — Companies already are changing the way they approach cases in which employees or vendors bribe foreign officials as a result of recent Justice Department policy changes.

Companies are moving more quickly to get individual employees their own attorneys and tightening their disciplinary procedures, attorneys and consultants told Bloomberg BNA.

Because of the Yates memorandum, “companies are thinking, ‘You know, maybe we need to get him or her a lawyer' earlier in the process,” said Thaddeus R. McBride, a partner at Bass Berry & Sims Plc who represents companies facing government investigations.

However, the DOJ initiatives also may be resulting in unintended consequences, such as pushing some companies to sit on the problems they find.

In September, Assistant Attorney General Sally Quillian Yates issued guidance directing federal prosecutors to extend cooperation credit only to companies that report the names of individual wrongdoers (13 CARE 1952, 9/11/15).

More recently, the DOJ in April announced a one-year pilot program in which companies that voluntarily self-report violations of the Foreign Corrupt Practices Act and take other remedial steps may be eligible for as much as a 50 percent reduction in penalties (66 CARE, 4/6/16).

Internal Deliberations

The DOJ's focus on individual culpability has changed the discussion inside companies when potential FCPA violations are discovered, McBride told Bloomberg BNA.

“I had a call the other day from a client, and one of the first things brought up was whether they needed to get the employee a lawyer,” he said.

Randy Stephens, a vice president at advisory services provider NAVEX Global, told Bloomberg BNA that because of the Yates memo, companies have become more diligent in documenting the disciplinary actions taken against individuals.

“We see that more from clients, who want to demonstrate a holistic compliance approach,” Stephens said. Disciplinary actions, which run the gamut from training to firing, must be applied even-handedly, he added.

Opposite Effect

While DOJ officials are hoping that the FCPA program will get companies to more readily self-report any problems they uncover, an in-house lawyer for a large technology firm told Bloomberg BNA that it may have the opposite effect.

“Honestly, our automatic approach is to rectify the problem, discipline the officer or employees involved, then take our chances on the government finding out, especially now,” after the Yates memo and the FCPA initiative, said the attorney, who requested anonymity to prevent bringing attention to her company.

The DOJ's policy changes also make it more difficult for general counsel to get cooperation from employees worried about being targeted by federal prosecutors, she said.

McBride said he knows of at least one company that decided not to self-report what it found but instead implemented stronger disciplinary actions. The company's thinking in that instance was that if the authorities discovered the incident, they would see that it had taken the matter seriously, which it felt might be considered a mitigating factor in any enforcement action, he said.

“Companies are not obligated to report,” McBride added.

Moreover, employees are more hesitant about assisting in internal investigations because of the Yates memo, Stephens said.

“They are probably being very cautious” that their director and officer liability insurance can cover the matter, he said. “‘If they come after me, am I protected? Will the company protect me or will I be hung out to dry?' Some of them think about” those issues.

To contact the reporter on this story: Che Odom in Washington at codom@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com