The U.S. Department of Justice (DOJ) recently announced a one-year enforcement pilot program intended to encourage companies to voluntarily self-report misconduct under the Foreign Corrupt Practices Act (FCPA). Building on the Yates Memo of 2015, companies that submit a timely voluntary self disclosure, fully cooperate in the DOJ's investigation, and implement effective remedial measures can qualify for substantial mitigation credit. Qualifying companies are eligible for benefits ranging from a complete declination of prosecution to up to a 50 percent reduction from the bottom of the applicable Sentencing Guidelines' fine range. Cooperating companies that fail to voluntarily self-report may still be eligible for up to a 25 percent reduction from the bottom of the Guidelines' range. The guidance issued by the DOJ also highlights the agency's increased domestic enforcement resources, as well as increased coordination with foreign counterparts.

The new program sets a high bar for companies to qualify for the full range of mitigation credit. Reporting companies will need to satisfy the DOJ's criteria in three primary areas: (1) timely voluntary self-disclosure of misconduct; (2) cooperation in the DOJ's investigation; and (3) implementation of remedial measures.

Voluntary Self-Disclosure

In order to receive full credit, a company's disclosure of misconduct must be voluntary, timely, and complete. In order to be voluntary, the disclosure must not be required under law, by contract, or by agreement. To be timely, the disclosure must be made "prior to an imminent threat of disclosure or government investigation," and "within a reasonably prompt time after becoming aware of the offense."¹ To qualify for full credit from the DOJ, the disclosure must also include all relevant facts known to the company, including facts about those individuals involved in potential FCPA violations.

Cooperation

To be eligible for full credit under the new program, a company's cooperation must be "proactive" and include, among other things:

• the preservation, collection, and disclosure of relevant documents, including those located overseas where permissible under foreign law, as well as the identification of opportunities for the government to obtain evidence not in the company's possession;
• providing the DOJ with timely updates on and findings from the company's internal investigation including "the attribution of facts to specific sources where such attribution does not violate the attorney-client privilege, rather than a general narrative;"² and
• making relevant employees and officers available for interview by the DOJ, including those individuals located overseas.

The guidance notes that once the threshold requirements are met, cooperation and the internal investigation conducted should be evaluated based on the size and sophistication of the disclosing company, and that the internal investigation completed may be tailored to the allegations at issue. The DOJ specifically states that, "absent facts to suggest a more widespread problem, evidence of criminality in one country, without more, would not lead to an expectation that an investigation would need to extend to other countries."³

Remedial Measures

In order to qualify for full credit under the new program, companies must also demonstrate the implementation of an effective internal compliance and ethics program. While conceding that an effective compliance program will vary based on the size and resources of the company, the guidance includes criteria for Fraud Section attorneys to consider in their evaluation. The listed criteria includes: the corporate culture of compliance; the level of resources dedicated and quality of the company's compliance personnel; auditing and tailoring of the compliance program; and the discipline enforced against employees who engage in misconduct. Remedial measures implemented must also include disgorgement of all profits derived from the misconduct at issue in order for companies to qualify for the full range of benefits under the pilot program.

Benefits and Takeaways

If a company's disclosure, cooperation, and remediation satisfy the DOJ, that company is eligible—at the DOJ's discretion—for significant benefits under the program, including:

• a declination to prosecute the misconduct;
• up to a 50 percent reduction off the bottom of the Sentencing Guidelines' fine range; and
• no appointment of a monitor.

Additionally, companies who decline to disclose, but still cooperate in the DOJ's investigation and implement remedial measures, are eligible for up to a 25 percent reduction off the bottom of the Sentencing Guidelines' fine range.

While the DOJ's guidance provides some needed clarity on the enforcement of FCPA cases, the program stills endows investigators and prosecutors with significant discretion in the evaluation of participating companies' disclosures, cooperation, and remediation. The guidance also requires prosecutors to take into account: the seriousness of the misconduct; involvement by the company's management in the misconduct; the size of the profit from the misconduct in proportion to the size of the company; and the company's history of compliance. Additionally, the benefits derived from this program do not extend to individuals. Rather, the DOJ predicts that the pilot program will result in an increase in individual prosecutions.⁴

Wilson Sonsini Goodrich & Rosati is well placed to assist companies in evaluating and participating in the DOJ's new program. The attorneys in the firm's FCPA, white collar crime, and government investigations practices have substantial experience representing public and private companies in FCPA matters, including defending individuals or companies that are investigated or prosecuted for FCPA violations, conducting internal or government investigations, responding to subpoenas, designing and implementing anticorruption compliance programs, and providing general FCPA counseling advice regarding clients' day-to-day operations. If you would like to discuss the DOJ's new program, or have any FCPA-related questions, please contact the attorneys in the firm's FCPA, white collar crime, or government investigations practices.