Our White Collar, Government & Internal Investigations Team examines some pragmatic revisions to the Department of Justice’s FCPA Corporate Enforcement Policy.
- How to satisfy the voluntary self-disclosure element
- Identifying evidence the company is actually aware of
- Applying the presumption of a declination
On November 20, 2019, the Department of Justice (DOJ) released a revision to its Foreign Corrupt Practices Act (FCPA) Corporate Enforcement Policy. The changes—which are subtle but nonetheless significant— continue the DOJ’s trend of incentivizing companies to self-report FCPA violations to the government. This latest update comes just months after the DOJ made extensive revisions to the policy earlier this year. The most recent revisions clarify the steps that companies must take to obtain the full benefits of the policy and further demonstrate the DOJ’s desire to encourage prompt voluntary disclosure and proactive cooperation by companies.
The Revisions to the Policy
First, the DOJ clarifies what companies must do to satisfy the policy’s “voluntary self-disclosure” element. With these revisions, companies are now required to disclose only “all relevant facts known to it at the time of the disclosure.” This new phrase reflects a recognition by the DOJ that a company may not have knowledge of all the relevant facts and circumstances when disclosure is made. The DOJ emphasizes this point in a new footnote:
“The Department recognizes that a company may not be in a position to know all relevant facts at the time of a voluntary self-disclosure, especially where only preliminary investigative efforts have been possible. In such circumstances, a company should make clear that it is making its disclosure based upon a preliminary investigation or assessment of information, but it should nonetheless provide a fulsome disclosure of the relevant facts known to it at that time.”
Second, the policy has been revised to require companies to disclose facts regarding “any individuals substantially involved in or responsible for the misconduct at issue.” Companies are no longer required to disclose facts as to “all individuals,” as previously required. Moreover, whereas the policy previously stated that companies needed to disclose information relating to “violations of law,” the revisions now require disclosure related to “misconduct at issue.”
Third, the revisions to the policy ease one of the burdens imposed on companies under the prior version of the policy. Previously, a company had to timely disclose evidence when the company “is or should be aware of opportunities for the Department to obtain relevant evidence not in the company’s possession and not otherwise known to the Department.” The revised requirement simplifies this language and omits the “should be aware” phrase. This change reflects a recognition that a company can only identify evidence it is actually aware of. The new streamlined provision reads: “Proactive cooperation, rather than reactive; that is, the company must timely disclose all facts that are relevant to the investigation, even when not specifically asked to do so. Additionally, where the company is aware of relevant evidence not in the company’s possession, it must identify that evidence to the Department.”
Lastly, the final revision adds that the “presumption of a declination” applies when a company discovers misconduct by “the merged or acquired entity” during or after a merger or acquisition. The language clarifies that the focus is on the entity being merged or acquired and protects the acquiring entity from potential successor liability.
Takeaways
These welcome and pragmatic revisions highlight the DOJ’s desire to encourage companies to make FCPA disclosures at preliminary stages of internal investigations. The revisions may make it easier for companies to obtain the maximum credit possible by simplifying requirements and encouraging good compliance practices that uncover misconduct. Nevertheless, the decision on whether and when to voluntarily self-disclose FCPA misconduct to the DOJ is fact-specific, and companies should consult with counsel before going down this path.
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