Over this series, I have reviewed the messages communicated by the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) from three key Foreign Corrupt Practices Act (FCPA) enforcement actions regarding their priorities in investigations, what they want to see in remediations and what they consider as best practices compliance programs. These enforcement actions warrant close study for their lessons learned. They should guide not simply your actions should you find yourself in an investigation but also how you should think about the priorities. One thing is abundantly clear, it all begins with self-disclosure.
The three FCPA enforcement actions we have reviewed are ABB from December 2022; Albemarle from November 2023 and SAP from January 2024. I added a fourth, the Gunvor S.A. enforcement action as a discussion point as it was released while I was writing this series. I have also cited to several speeches by DOJ officials including those from Deputy Attorney General Lisa Monaco and Assistant Attorney General Kenneth Polite. Taken together they pointed a clear path for the company which finds itself in an investigation, using extensive remediation to avoid a monitor and insight for the compliance professional into what the DOJ expects in a best practices compliance program on an ongoing basis.
Late last week, there were two speeches at the ABA White Collar Conference; one by DAG Lisa Monaco and a second by Acting Assistant Attorney General Nicole M. Argentieri which re-emphasized the points I have articulated. Today I want to use their speeches to add another factor to my Top Ten lessons list; that being a Speak Up Culture, effective Triage and quick, efficient and accurate internal investigation when information is brought forward.
DAG Monaco could not have been clearer when she said, “When a business discovers that its employees broke the law, the company is far better off reporting the violation than waiting for DOJ to discover it. Now, when DOJ does discover the violation, the company can still reduce its exposure by proactively cooperating in our investigation. But I want to be clear: no matter how good a company’s cooperation, a resolution will always be more favorable with voluntary self-disclosure.” [emphasis supplied]
DAG Monaco went on to note that the DOJ has structured its “Voluntary Self Disclosure (VSD) programs to encourage companies to take responsibility for misconduct within their organizations. And we’ve conditioned benefits on the company’s willingness to step up and own up — requiring it to disgorge profits, upgrade compliance systems, and cooperate in investigations of culpable employees…We want to empower them to make the business case for investing in compliance. And when they do, they can point to our policies. Early reports on this work are promising. We directed all components and U.S. Attorneys to implement self-disclosure programs.”
The benefits of the VSD come from this self-disclosure. This idea was further emphasized by the announcement that the DOJ was instituting a whistleblower program for payments to persons who step forward with information about criminal conduct. While obviously the SEC, CFTC, IRS and other agencies have whistleblower reward programs; this is a very strong message from the DOJ that if your company has an issue, it is far better to self-disclose than investigate, remediate and hope the DOJ (or any other agency) never finds out about the matter. Put another way, Argentieri spoke about “the benefits that await those that voluntarily disclose misconduct.”
All of this means you need to be able to intake the information, evaluate it and investigate it.
Culture of Speak Up
Your organization must have an effective and efficient means of allowing employees to raise their hands and speak up. That speak up can be through an anonymous hotline, by going into their supervisor’s office to report something or coming to the compliance function. Or it could be another avenue of reporting. The point is that every company must be ready, willing and able to hear and act on internal reports of wrongdoing.
Triage
Given the number of ways that information about violations or potential violations can be communicated to the government regulators, having a robust triage system is an important way to separate the wheat from the chaff and bring the right number of resources to bear on a compliance problem. One important area is making an initial determination of whether to bring in outside counsel to head up an investigation and the resources that you may want or need to commit to a problem. You literally need to “kick the tires” of any allegations or information so that you know the circumstances in front of you before you make decisions. You can achieve this through a robust triage process.
Internal Investigations
You can make the decision on whether or not to investigate with consultation with other groups such as the Compliance Committee of the Board of Directors or the Legal Department. The head of the business unit in which the claim arose may also be notified that an allegation has been made and that the Compliance Department will be handling the matter on a go-forward basis. Using a detailed written procedure, you can work to ensure there is complete transparency on the rights and obligations of all parties once an allegation is made. This allows compliance to have not only the flexibility but also the responsibility to deal with such matters, from which it can best assess and then decide on how to manage the matter.
We concluded this series where we began, the need or at least benefits of self-disclosure. The benefits laid out by the DOJ as clear, tangible and direct. If you self-disclose, provide extraordinary cooperation, extensively remediate and disgorge any ill-gotten gains through profit disgorgement; there will be a presumption of a declination. Even if you do not meet the self-disclosure threshold, you can still garner significant discounts under the DOJ’s Corporate Enforcement Policy through extraordinary cooperation and extensive remediation.
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