JUSTICE DEPARTMENT MAKES FOREIGN CORRUPTION PROBES MORE TRANSPARENT

 

Boardroom

As promised, the Justice Department is more transparent about how companies get rewarded for cooperating in Foreign Corrupt Practices Act investigations.

Significantly, the DOJ is providing insights into why some companies escape prosecution altogether for violations of the antibribery statute. This addresses a long-standing complaint among in-house attorneys and the defense bar: that the rewards of corporate cooperation aren’t always clear, particularly when the DOJ decides not to take any action.

The transparency is part of the department’s new FCPA Pilot Program. Under the program, announced in April, companies that self-report FCPA violations and take remedial measures may be eligible for significant reductions in their sanctions.

After the program was announced, the DOJ made public letters to Akamai Technologies Inc., Nortek Inc. and Johnson Controls Inc. explaining why it closed its probes of possible FCPA violations by the companies without bringing an enforcement action.

According to the letters, the common strands include:

  1. The companies promptly self-reported the violations.
  2. They rendered “fulsome cooperation” and undertook a “thorough investigation” of the circumstances.
  3. They took steps to improve their compliance programs.
  4. They fired the employees at fault.

Conversely, the DOJ June 21 hit an Analogic Corp. subsidiary with a $3.4 million fine and a non-prosecution agreement for improper payments in Russia and elsewhere. Although the company self-disclosed the violations, it only received partial cooperation credit because “it did not initially disclose certain relevant facts that it learned in the course of its internal investigation,” the DOJ said.

The DOJ July 25 also imposed a $12.75 million penalty on LATAM Airlines for bribes to Argentinian officials. In its deferred prosecution agreement with the company, the DOJ also required LATAM to hire an independent compliance monitor for at least 27 months, and beef up its compliance program. According to the DOJ, LATAM didn’t voluntarily self-disclose the violations, and didn’t implement adequate remedial measures.

The DOJ’s FCPA pilot program is available only for a year, after which the department will decide whether it should be extended. In the meantime, it’s pointing the way, albeit in very general terms, as to how companies can weigh their options when they uncover violations by employees and executives.