Last April, the DOJ’s Criminal Division launched the one-year Pilot Program. The remaining four months of the Pilot Program promise to provide valuable information on several fronts.
Building on the Yates Memo, the Pilot Program provides structured incentives for companies to self-disclose, cooperate, and remediate FCPA violations.
So far, the DOJ has issued five declination letters under the Pilot Program.
Three were in June 2016, and two in September 2016. All five involved conduct in China.
In all five, the DOJ pointed to six common factors for its reasons to decline prosecution:
1) timely self-disclosure
2) thorough investigation
3) fulsome cooperation (including identifying responsible individuals)
4) a promise to cooperate in the future regarding individual investigations
5) remediation (including termination of employees in all five declinations), and
6) full disgorgement.
All but one also pointed to the establishment of an enhanced compliance program.
And only one mentioned a civil penalty in addition to a disgorgement.
One declination also cited as a factor that the company’s internal audit program had discovered the reported conduct.
Most of these factors can take a relatively long time to put into place. But many targets of ongoing FCPA investigations are likely to have significant incentives to seek to reach a resolution with DOJ before next April when the Pilot Program is set to expire.
Uncertainty pertaining to the upcoming change in DOJ leadership may further motivate companies to seek quick resolutions. That in turn will provide more data points about the DOJ’s approach to Pilot Program actions.
The new administration that begins next month could terminate the Pilot Program before its April 2017 expiration. The administration could also let the Pilot Program expire on April 2017, extend it, or even apply it to non-FCPA enforcement actions.
Any of these courses of action will also signal the way ahead for FCPA investigations and enforcement.
Rebecca Gantt, pictured above, is an Associate at McGuireWoods. She focuses on appeals in state and federal courts and other major matters. She was previously a law clerk to U.S. Supreme Court Justice Stephen Breyer and has clerked at all three levels of the federal judiciary. She can be contacted here.
A version of this post previously appeared on McGuireWood’s Subject to Inquiry Blog and is republished here with permission.