New DOJ Program Aims to Beef Up FCPA Prosecutions

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By Che Odom

April 5 — Companies that self-report violations of the Foreign Corrupt Practices Act and take other remedial steps may be eligible for a 50-percent reduction in sanctions under a new initiative unveiled April 5 by the Justice Department.

The goal of the DOJ's one-year pilot program is to encourage companies to voluntarily self-disclose violations and increase the department’s ability to bring charges against individual wrongdoers, Assistant Attorney General Leslie Caldwell told reporters during a conference call April 5.

According to DOJ officials, federal prosecutors will be able to offer a 50-percent reduction off the low end of the U.S. Sentencing Guidelines' penalty range to companies that self-report FCPA violations, disclose all known facts and remediate the bad acts, including disgorgement of any improper benefits.

In some cases, the DOJ may decide not to bring any charges, said Caldwell, who heads the DOJ's Criminal Division.

The FCPA, enacted in 1977, is a federal law that addresses bribery of foreign officials and related accounting requirements. The department has long known that companies have kept quiet after discovering employees have committed FCPA violations, hoping regulators never find out, Caldwell said.

When regulators do discover the violation, some companies then cooperate to receive non-prosecution or deferred-prosecution agreements with the DOJ, she said.

Under the pilot program, cooperation after the violation is discovered by authorities will not be viewed the same as voluntary reporting, Caldwell said.

Caldwell added that the department has beefed up the FCPA unit of its Fraud Section by 50 percent to 30 prosecutors, and the FBI has increased its number of investigators, dedicating three units to FCPA and kleptocracy investigations .

Kleptocracy cases are those in which government officials take assets that don't belong to them. The DOJ hopes to remove “stolen or ill-gotten gains” misappropriated by government officials from the U.S. financial system, Caldwell said.

‘Little' New

Southern Illinois University law professor Mike Koehler told Bloomberg BNA in an e-mail April 5 that he sees little that is new in the announcement.

“Just by holding a press conference and ascribing a new label to something, does not make that something new,” said Koehler, who also is founder and editor of the FCPA Professor blog.

This is not the first time the department has said it will offer reduced penalties in exchange for cooperation.

Last fall, Deputy Attorney General Sally Quillian Yates issued a memo outlining the DOJ's new policy that only companies that disclose information about individual wrongdoing may be eligible for lesser penalties in exchange for their cooperation .

The changes come after public criticisms of the government for failing to punish wrongdoers in the financial crisis.

Self-Reporting Push

The DOJ is calling its latest initiative a “pilot program” because it may be tweaked or ended if it doesn't work as hoped, Caldwell said.

The goal is to encourage companies to come forward voluntarily and work with prosecutors to uncover the roots of bribery, said Andrew Weissmann, chief of the DOJ's Fraud Section.

While federal prosecutors have already said they would give credit to companies that turn over information about individual wrongdoers, this pilot program “draws a clear distinction” between credit available for self-disclosure, “as opposed to being a company that waits until it gets caught and then cooperates,” Weissmann said.

DOJ representatives previously told Bloomberg that federal prosecutors brought about 80 FCPA cases from 2005 to 2015 .

Caldwell said the number of FCPA cases vary from year to year, and that the DOJ has many cases in the pipeline. “I expect that as we increase our resources we will see an increase in numbers,” she said.

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

For More Information

Guidance on the pilot program is available at https://www.justice.gov/opa/file/838386/download.