On April 5, 2016, the Fraud Section of the US Department of Justice (DOJ) announced its Foreign Corrupt Practices Act (FCPA) Enforcement Plan and Guidance (Enforcement Plan). The Enforcement Plan formalizes DOJ’s efforts to provide greater transparency into its FCPA enforcement decision making and demonstrate the tangible benefits available for voluntary disclosure and cooperation. Most notably, the Enforcement Plan includes a new, one-year voluntary disclosure pilot program (Pilot Program) under which participating companies can potentially secure an additional fine reduction of up to 25 percent for initiating a voluntary disclosure and meeting the other requirements of the Pilot Program, along with other benefits up to and including declination of prosecution. Prior to announcing the Enforcement Plan, the leadership of the Fraud Section (and more generally DOJ’s Criminal Division) had utilized several recent speaking engagements and conference appearances to discuss the impact of voluntary disclosure and cooperation in the context of recent high-profile settlements—matters such as Avon and Alstom.
While it remains to be seen how the Enforcement Plan—and particularly the Pilot Program—is applied in practice, it is clear from the outset that it does not simplify a company’s analysis of whether or not to initiate a voluntary disclosure when faced with a potential FCPA issue. At first blush, this may seem counterintuitive given the tangible benefits available under the Pilot Program. However, as companies that have faced FCPA investigations and enforcement actions learn all too often, the costs of voluntary disclosure and full cooperation, including broad-ranging internal investigations and difficult-to-anticipate collateral consequences, can often dwarf the penalties handed down by DOJ. And these costs are only likely to increase in the current enforcement environment as the Enforcement Plan follows last fall’s issuance of the Yates Memorandum that upped the ante for cooperation, specifically regarding the amount of information required about individuals involved in underlying conduct. Additionally, the new DOJ resources and increased international cooperation announced as part of the Enforcement Plan further increase the detection risk for potential FCPA matters, and the Pilot Program’s requirements compress the time period that companies have to complete analyses of whether voluntary disclosure is the proper course.
Consequently, in the wake of the Enforcement Plan, it is now more important than ever that companies faced with potential FCPA matters partner with experienced counsel who can guide and assist them in making a clear-eyed assessment, without any predisposition, of whether voluntary disclosure makes sense in the current enforcement environment.
As noted above, the Enforcement Plan includes three principal components:
The elements of the Pilot Program are as follows:
The benefits of the Pilot Program are as follows:
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