On January 17, 2023, Assistant Attorney General Kenneth Polite announced important revisions to the Corporate Enforcement Policy of the Criminal Division of the US Department of Justice. Back in April 2016, in an effort to increase transparency and consistency, the DOJ launched the FCPA Pilot Program, which was intended as a “voluntary self-disclosure incentive program.” The program was revised in November 2017 to become the FCPA Corporate Enforcement Policy (the “CEP”), and was later incorporated into the DOJ’s Justice Manual. Polite stated that since “at least 2018,” the DOJ has “applied this policy to all corporate cases prosecuted by the [DOJ] Criminal Division.”
The policy offers a presumption of a declination to companies that voluntarily self-disclose, cooperate fully with the DOJ’s investigation, and remediate in a timely fashion, provided that certain aggravating factors, such as involvement in the misconduct by executive management, criminal recidivism, or excessive profits, are not present. The presumptive declination also applies to companies that discover legacy misconduct in target entities during pre-acquisition due diligence, as long as the company reports the conduct to the Criminal Division. In the event that the DOJ determines a criminal resolution is warranted, a self-disclosing company that fully cooperates and remediates could historically obtain up to a 50% discount off of the low end of the applicable Sentencing Guidelines penalty range.
The revisions announced by the Assistant Attorney General are intended to provide clarity and increased incentives to companies considering whether to self-disclose misconduct to the DOJ as well as the extent to which they should cooperate and remediate. The revised CEP allows prosecutors to grant declinations to companies that voluntarily self-disclose misconduct, despite aggravating factors that, under the previous CEP, would have prevented them from obtaining a declination. To receive such a declination, the company must:
1. Voluntarily self-disclose “immediately upon . . . becoming aware of the allegation of misconduct” (emphasis added);
2. At the time of the misconduct, have an effective compliance program and internal accounting controls that “enabled the identification of the misconduct and led to the company’s voluntary self-disclosure;” and
3. Provide “extraordinary cooperation” with the DOJ’s investigation, and undertake “extraordinary remediation.”
Polite stressed that even under this new criteria, not all companies could “overcome the aggravating factors.” Nevertheless, even if a company does not receive a declination, the new CEP offers greater incentives for cooperation. For such companies, the Criminal Division will recommend a discount of “at least 50% and up to 75% off of the low end of the US Sentencing Guidelines fine range, except in the case of a criminal recidivist.” Under the prior policy, the maximum reduction was 50%. For recidivists, the reduction “will generally not be from the low-end of the fine range,” with prosecutors having “discretion to determine the starting point.”
Moreover, if a company voluntarily self-discloses, fully cooperates, and timely and appropriately remediates, the DOJ Criminal Division “will generally not require a corporate guilty plea . . . absent multiple or particularly egregious aggravating circumstances” (emphasis added). This presumption against guilty pleas applies to criminal recidivists.
The revised CEP also offers incentives to companies that do not voluntarily self-disclose but provide full cooperation and timely remediation. In such cases, the DOJ Criminal Division will recommend up to a 50% reduction off of the low end of the Sentencing Guidelines fine range—twice the maximum discount allowed by the previous version of the CEP—except in the case of criminal recidivists. For recidivists, reductions will “likely not be off of the low end” of the Sentencing Guidelines fine range.
It remains to be seen how these revisions will be implemented. In particular, Polite’s speech contained little information as to how the DOJ Criminal Division would distinguish between “full” and “extraordinary” cooperation. Rather, he stated that the DOJ “know[s] ‘extraordinary cooperation’ when [it] see[s] it.” He also acknowledged the “differences between ‘full’ and ‘extraordinary’ cooperation are perhaps more in degree than kind.” By way of differentiating, Polite stated, “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.” Given this, companies will want to carefully review future Criminal Division settlements to gain further insight as to how the DOJ is defining these terms.