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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
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Richard L. Cassin
Editor at Large

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Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
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Bill Waite
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Russell A. Stamets
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Richard Bistrong
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Eric Carlson
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Bloomberg: DOJ making Pilot Program permanent

Tom Schoenberg of Bloomberg reported this morning that the DOJ will convert the Pilot Program to a permanent guideline to encourage companies to self-report possible violations of the FCPA in return for leniency.

Deputy Attorney General Rod Rosenstein will roll out the guidelines Wednesday in an appearance at an FCPA conference in Maryland, the report said.

The DOJ launched the one-year Pilot Program in April 2016 and extended it on a temporary basis this year.

The Pilot Program gives companies incentives to self-disclose, cooperate, and remediate FCPA violations.

Thirty companies have self-reported since the Pilot Program began, Bloomberg said.

Officials spoke to Bloomberg “on the condition of anonymity.”

Bloomberg said,

Even if the conduct warrants criminal enforcement, those companies could still receive a 50 percent reduction in the financial penalty [under the new guildelines], they said. They could also avoid the imposition of a corporate monitor. Companies that choose not to report misconduct may still receive some credit if they later cooperate with investigators, the officials said.

So far, the DOJ has issued seven declination letters under the Pilot Program.

Of the seven declinations, four involved non-Issuers (privately held companies) not subject to SEC jurisdiction. The DOJ required those non-issuers — HMT LLC, NCH Corporation, Linde North America Inc., and CDM Smith — to disgorge tainted profits to the U.S. Treasury.

That hadn’t happened before. So a new category of FCPA enforcement actions was created, “declinations with disgorgement.”

Bloomberg said the new guidelines based on the Pilot Program will be added to the U.S. Attorneys Manual.

The DOJ has also continued to issue declinations outside the Pilot Program.

*    *    *

Update: Here’s what Rod Rosenstein said Wednesday in prepared remarks about the new guidelines:

First, the FCPA Corporate Enforcement Policy states that when a company satisfies the standards of voluntary self-disclosure, full cooperation, and timely and appropriate remediation, there will be a presumption that the Department will resolve the company’s case through a declination. That presumption may be overcome only if there are aggravating circumstances related to the nature and seriousness of the offense, or if the offender is a criminal recidivist.

It makes sense to treat corporations differently than individuals, because corporate liability is vicarious; it is only derivative of individual liability.

Second, if a company voluntarily discloses wrongdoing and satisfies all other requirements, but aggravating circumstances compel an enforcement action, the Department will recommend a 50% reduction off the low end of the Sentencing Guidelines fine range. Here again, criminal recidivists may not be eligible for such credit.  We want to provide an incentive for good conduct. And scrutiny of repeat visitors.

Third, the Policy provides details about how the Department evaluates an appropriate compliance program, which will vary depending on the size and resources of a business.

The Policy therefore specifies some of the hallmarks of an effective compliance and ethics program.  Examples include fostering a culture of compliance; dedicating sufficient resources to compliance activities; and ensuring that experienced compliance personnel have appropriate access to management and to the board.

We expect that these adjustments, along with adding the FCPA Corporate Enforcement Policy to the U.S. Attorneys’ Manual, will incentivize responsible corporate behavior and reduce cynicism about enforcement. 


Richard L. Cassin is the publisher and editor of the FCPA Blog.

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