The Justice Department is encouraging companies to voluntarily disclose criminal violations — “Come in and confess” and DOJ offers promises of a declination. But even a declination comes with a requirement — the company has to pay disgorgement.
DOJ has done everything it can do to incentivize voluntary disclosures — many companies are balancing the pros and cons and often deciding NOT to disclose. Such a strategy runs a significant risk — if detected (or caught), the company may have to enter a deferred prosecution agreement (“DPA”) or to enter a guilty plea. A declination is a terrific result and companies need to weigh these benefits against the cost of a hide and pray strategy.
In the latest declination case, Boston Consulting Group (“BCG”) earned a declination for FCPA violations stemming from conduct in Angola. BCG, a management consulting firm, earned the declination after self-disclosing the conduct, cooperating with the investigation and remediating its compliance program.
Between 2011 to 2017, BCG employees and agents participated in bribery — paying approximately $4.3 million in commissions to an Angolan agent to help BCG secure business with Angola’s Ministry of Economy and the National Bank of Angola.
BCG’s Portugal-based employees engaged the Angolan agent knowing that the agent had close ties to Angolan government officials and members of the ruling political party.
BCG paid the Angolan agent extraordinary commissions for securing contracts ranging from 20 percent to 35 percent. The Angolan agent received the funds in three differed offshore entities and passed on a portion of the funds to Angolan government officials linked to the Agolan Ministry of Economy.
In exchange for the bribes, the Angolan agent helped BCG secure a total of 11 contracts with the Ministry and one with the National Bank of Angola. BCG earned profits of $14.4 million from the contracts.
BCG’s Portugal-based employees obstructed the investigation by concealing the agent’s work for BCG when internal questions were posed, and backdated contracts and falsified the agent’s work product.
BCG voluntarily disclosed the bribery scheme to DOJ when it discovered a 2014 email containing evidence of the violation. BCG proactively cooperated in the investigation and fired the individuals involved in the bribery scheme.
Additionally, BCG withheld bonuses from the implicated partners in Portugal and required them to give up their equity in BCG.
To remediate, BCG enhanced its compliance program and internal controls — including by formalizing the employee training and screening protocols for vendors and clients, and by establishing risk committees and guidelines for opening offices in new markets.
BCG has closed its Angolan office and the employees involved are no longer with BCG.
