‘Turn Yourself In,’ Justice Dept. Says, But Companies Need Data

Stay current on changes and developments in corporate law with a wide variety of resources and tools.

By Victoria Graham

Dun & Bradstreet Co. became the first company to avoid criminal prosecution under the Justice Department’s updated anti-bribery policy because it turned itself in, but it’s unclear how many companies will follow.

The company’s violations arose from bribes paid by employees in its Chinese subsidiaries to third party agents from 2006 to 2012 in order to obtain non-public information, according to the Securities and Exchange Commission administrative settlement.

The DOJ didn’t press charges because the business research company cooperated. But Dun & Bradstreet still must pay a $9.2 million dollar fine to the SEC for accounting irregularities stemming from the same violations. Under the settlement terms, the company doesn’t admit or deny the findings.

The success of DOJ’s new policy, under which companies that self-report Foreign Corrupt Practices Act violations are given partial or complete leniency, hinges on whether it brings enforcers to cases they wouldn’t have found otherwise, a former DOJ official said.

“The measure of this enforcement policy’s success will be its effectiveness as an investigative tool,” said Hui Chen, a compliance consultant and former compliance counsel for the DOJ.

The DOJ offered leniency for self-disclosure of bribery violations as a pilot program for 18 months before making it permanent in November. There were 30 voluntary self-disclosures in the pilot program, which Deputy Attorney General Rod Rosenstein declared a success.

But Chen told Bloomberg Law it’s too soon to tell if the enforcement program is actually contributing to meaningful disclosures. “I view those as nothing but preliminary indicators of how many potential cooperators their might be, not results of what their cooperation could lead to,” she said.

Offenders Can Benefit

Dun & Bradstreet’s confession demonstrated the full benefits for companies the new system can offer, but the DOJ’s decision in this one case won’t immediately change any company’s rationale about self reporting, Jennifer Saperstein, partner at Covington & Burling LLP, told Bloomberg Law.

“The jury is still out, and companies will still be watching for further settlements,” said Saperstein, who advises clients on compliance issues including FCPA violations.

The DOJ’s program offers companies various perks, such as discounted settlement fees, if a company voluntary reports FCPA violations and fully complies in an investigation.

Dun & Bradstreet received the ideal outcome under the program’s guidelines, but that doesn’t mean it’ll happen that way every time.

A DOJ letter to Dun & Bradstreet’s attorney, released April 23, outlined numerous reasons why the agency chose to forgo criminal prosecution. The company fully cooperated throughout the DOJ’s investigation, identified all individuals involved in the bribery, and made former and current employees available for interviewing, the DOJ said.

“Based upon the information known to the department at this time, we have declined prosecution consistent with the FCPA Corporate Enforcement Policy,” the letter stated.

Saperstein said the DOJ letter didn’t offer a complete picture of the conduct surrounding the case. Without all the facts, it will be hard for other companies to completely understand the DOJ’s reasoning.

“A lot of companies look for declinations where there are publicly available fact points,” she said. By choosing to self-report, companies are vying for concrete benefits when the Dun & Bradstreet case doesn’t wholly show them since details surrounding the conduct weren’t disclosed.

Self-Assessment

The decision to self-report will be a particular for every company, Chen said. “The cost-benefit analysis companies have to perform in terms of self-disclosure, cooperation, and remediation will continue to evolve,” she said.

Companies need to be aware of the public interest principles the department uses when prosecuting businesses. If their illegal behavior led to a tangible harm to customers or competitors, for example, the DOJ’s punishment will be harsher.

Dun & Bradstreet pretty much hit a home run under the new policy. But more cases need to come forward to truly demonstrate the DOJ’s thought process, Saperstein said.

“I wonder, absent the policy, would the results have been different? Would the resolutions with the DOJ be different?” Without more data points, it’s hard to tell what an alternative outcome could have been, she said.

To contact the reporter on this story: Victoria Graham in Washington at vgraham@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Corporate on Bloomberg Law