The U.S. Department of Justice published a revised version of its corporate enforcement policy yesterday. The changes give companies an interesting mix of carrot and stick, prompting them into “immediate” self-disclosure and “extraordinary” cooperation. So how will it work?
According to the revised version, now called the Corporate Enforcement and Voluntary Self-Disclosure Policy, companies will not be presumed to qualify for a declination where aggravating circumstances are present. However, with the revisions, a company could be eligible if they meet three factors:
- Voluntary self-disclosure was made immediately upon the company becoming aware of the allegation of misconduct.
- At the time of the misconduct and the disclosure, the company had an effective compliance program and system of internal accounting controls that enabled the identification of the misconduct and led to the company’s voluntary self-disclosure.
- The company provided extraordinary cooperation with the DOJ’s investigation and undertook extraordinary remediation.
The DOJ will require companies to provide newly categorized “extraordinary” cooperation to get a declination.
What’s the difference between “full” and “extraordinary” cooperation? To answer that question, Assistant AG Kenneth Polite said Tuesday:
In many ways, we know “extraordinary cooperation” when we see it, and the differences between “full” and “extraordinary” cooperation are perhaps more in degree than kind. To receive credit for extraordinary cooperation, companies must go above and beyond the criteria for full cooperation set in our policies—not just run of the mill, or even gold-standard cooperation, but truly extraordinary.
Additional revisions to the corporate enforcement policy include reduction up to 75 percent from the low end of the U.S. Sentencing Guidelines (up from 50 percent) if a company voluntarily self-discloses misconduct, fully cooperates, and timely and appropriately remediates, but a criminal resolution is still warranted.
In such circumstances, the DOJ will “generally not require a guilty plea,” Polite said.
This new path for more companies to obtain declinations and reductions in financial penalties coincides with the DOJ’s stated intention of prosecuting individuals.
In Tuesday’s release, Assistant AG Kenneth Polite said, “Our number one goal in this area – as we have repeatedly emphasized – is individual accountability.”
In 2021, Deputy AG Monaco said, “It is unambiguously this department’s first priority in corporate criminal matters to prosecute the individuals who commit and profit from corporate malfeasance.”
In 2022, the DOJ and SEC brought FCPA enforcement actions against eight companies and imposed financial penalties totaling $1.5 billion.
One individual settled FCPA offenses with the SEC.
One individual, former Goldman Sachs executive Roger Ng, was convicted of FCPA offenses, two individuals pleaded guilty, and four were indicted.
No individuals were sentenced for FCPA offenses in 2022.