In a recent speech during an Anti-Corruption Compliance event, held in Washington D.C., Deputy Assistant Attorney General Matthew S. Miner announced that the provisions from the FCPA Corporate Enforcement Policy, released in November 2017 and incorporated to the U.S. Attorneys Manual, will be applied to companies in the context of mergers and acquisitions.

Following the FCPA Corporate Enforcement Policy, successor companies that become aware of wrongdoing of acquired companies and voluntarily disclose the information to the Department of Justice, fully cooperate and properly remediate the detected misconduct, including establishing an effective compliance program, will be presumed eligible for a declination, subject to disgorgement, forfeiture or restitution of the gains resulting from the misconduct.

The application of the FCPA Corporate Enforcement Policy to companies subject to successor liability is intended to give more clarity to companies considering a corporate acquisition in circumstances presenting a risk of corruption. Previously, there was some guidance on this issue in the DOJ/SEC Resource Guide to the FCPA, but the provisions stated only the likelihood that the enforcement agencies would not pursue an action against the successor company that duly disclosed, remediated and cooperated with the government. As DAAG Miner explained, “there is a big difference between a theoretical outcome and one that is concrete and presumptively available”. 

This announcement was welcomed by Daniel Stein, anti-corruption & compliance partner in Mayer Brown's New York office and co-leader of the White Collar Defense & Compliance group, and his colleague Michel Sancovski, anti-corruption partner in the São Paulo office of Tauil & Chequer Advogados in Association with Mayer Brown.

Mr. Stein said “Businesses looking to conduct strategic transactions in areas involving a high risk of corruption have long struggled with how to manage and mitigate those risks.  The new DOJ policy will go a long way towards helping companies in these situations”.

Michel Sancovski added “it reinforces the importance of adequate and complete anti-corruption and compliance due diligence in the context of mergers and acquisitions as a protection for a compliant acquiring company, particularly in transactions in high risk markets”.

Provisions on successor liability for corruption issues are also found in Brazil in the Clean Company Act (Law n. 12,846/2013), also known as the Anti-Corruption Law. The Brazilian law demands the successor company to pay the fine and to indemnify all damages caused by the acquired company, limited to the amount of the property transferred, but exempts the successor of all other sanctions included in the law for the misconducts prior to the acquisition. However, this protection is not applied when there is proved simulation or fraud.

With offices across the world and global white collar crime and anti-corruption & compliance practices, including the United States, Brazil, the United Kingdom, France, and Hong Kong, Mayer Brown is uniquely placed to assist clients who have national and international bribery and corruption concerns.