On November 20, 2019, the Department of Justice (DOJ) announced a number of changes to its FCPA Corporate Enforcement Policy, seeking to clarify what information companies are required to provide when submitting voluntary self-disclosures and offering additional guidance on how companies may qualify for “declination.”
Specific changes to the Enforcement Policy include:
- In order for a company to receive credit for self-disclosing, a company must disclose “all relevant facts known to it at the time of the disclosure, including as to any individuals substantially involved in or responsible for the misconduct at issue.” The language previously stated that a company must disclose “all relevant facts known to it, including all relevant facts about all individuals substantially involved in or responsible for the violation of law.” This language change, as well as the addition of a related footnote, emphasizes the DOJ’s recognition of the fact that a company could (and should) submit a disclosure prior to a full internal investigation, where more information on the misconduct in question would be obtained at a later time.
- In regards to receiving full cooperation credit, a company that “is aware” of evidence not in their possession must inform the DOJ of the same. In previous versions of the Enforcement Policy, a company that “is or should be aware” of such evidence was obligated to alert the DOJ. This new language simplifies a company’s requirements by eliminating the possibility of negligence on their part.
- With respect to “M&A Due Diligence and Remediation,” language was revised to clarify that, when a company discovers misconduct “by the merged or acquired entity,” the acquiring company can disclose this misconduct without liability or punitive measures towards them.
- A “declination” is defined as a case where the DOJ has declined to prosecute or criminally penalize an entity due to mitigating efforts made in the form of a “voluntary disclosure, full cooperation, remediation and payment of disgorgement, forfeiture, and/or restitution.” Changes to the Enforcement Policy state that the DOJ may decline to bring an enforcement action if companies opt to self-disclose misconduct, even if some aggravating factors may be present.
These policy modifications are part of an effort to encourage companies to actually utilize the self-disclosure process, since it has not been as active as the DOJ had originally hoped, and to do so substantively and at an early stage. Due to the DOJ’s more broad use of language in previous versions of the policy, many companies have been reluctant to make the high-risk decision to file a self-disclosure, with uncertainty surrounding what the end results might’ve been following an investigation. While these changes may help, it is unclear at this point whether the DOJ’s goal to increase consistency and transparency, while also taking into consideration practicality in these situations, will produce an influx of self-reporting.
For more information on how these could impact your business, contact:
- Martin Lutz, Partner (mlutz@mcginnislaw.com, 512-495-6024),
- Lindsey Roskopf, Attorney (lroskopf@mcginnislaw.com, 713-615-8534), or
- Another member of the McGinnis Lochridge International Trade and Transactions Practice Group