The U.S. Department of Justice (DOJ) announced on March 10, 2017 that it will temporarily extend the “Pilot Program” applicable to offenses under the U.S. Foreign Corrupt Practices Act (FCPA). Previously set to expire on April 5, 2017, the Pilot Program expressly states conditions under which entity violators of the FCPA are afforded leniency—and potentially a complete “pass” on enforcement—for disclosing FCPA violations and cooperating with the DOJ. The Pilot Program also stresses the DOJ’s focus on individual liability under the FCPA. The extension will remain in place until the DOJ is able to determine the Program’s “utility and efficacy.”
Self-Disclosure and Cooperation are Still Encouraged
Under the Pilot Program, a company may enjoy “mitigation credit”—“up to a 50% reduction off the bottom end of the Sentencing Guidelines fine range”—if a company voluntarily discloses FCPA related misconduct, provides full cooperation to the DOJ and engages in proper FCPA remediation. Cooperation is analyzed by considering disclosure of relevant facts, preservation and disclosure of documents, availability of individuals for interviews and transparent and coordinated internal investigations. Remediation is judged by evaluating a company’s implementation of an effective compliance program and reforms, discipline of employees and acceptance of responsibility.
Declinations are Real
For companies subject to the FCPA, one of the most interesting components of the Pilot Program is the DOJ’s public disclosure of its decisions to decline to bring FCPA enforcement actions despite solid evidence and/or acknowledgement of FCPA violations. These decisions are commonly referred to as “declinations.” The DOJ has struggled for years to find a way to demonstrate to the marketplace the real value of FCPA self-reporting and cooperation. Public declinations under the Pilot Program seem to have solved that problem. Not all successful voluntary disclosures under the Pilot Program will result in declinations—some will lead to reduced fines and other compromised settlement terms. Under the Pilot Program, however, the DOJ so far has issued five public declinations for companies that met the self-disclosure, full cooperation and remediation requirements described above.
Shifting Tides Under Trump Administration?
Many FCPA practitioners and commentators have questioned how the Trump administration will view FCPA enforcement given the administration’s perceived “pro-business” perspective. Indeed, in 2012 President Trump was quoted as declaring that the FCPA is a “horrible law that should be changed.” The extension of the Pilot Program, although temporary, likely signals that the new administration will not significantly de-emphasize FCPA enforcement against companies and individuals—at least for the time being. That may not be welcome news to U.S. companies eager to aggressively compete in international markets. Such companies, and their leadership, should continue to ensure that they have robust FCPA compliance programs, and proactively address any potential FCPA violations with an eye toward the mitigation credit established in the now extended Pilot Program.