The DOJ and SEC may agree to settle FCPA matters against companies through a declination or a negotiated resolution that may take several forms, including a non-prosecution agreement (NPA), deferred prosecution agreement (DPA), or a guilty plea.
A declination is an exercise of the government’s discretion not to bring charges when the facts may otherwise allow it to do so. Traditionally, declinations were not made public unless the company disclosed its receipt of a declination in a securities filing or other public statement. In 2016, however, the DOJ began publicly disclosing some declinations in order to demonstrate transparency in its decision-making. This practice has continued under the Corporate Enforcement Policy in the form of one- to two-page letters that briefly describe the company’s misconduct and the circumstances of the declination. Public declinations have been issued to companies that self-report an FCPA issue, cooperate with the government’s investigation, and implement appropriate remedial measures. In some instances, declinations are conditioned upon disgorgement of any ill-gotten gains.1
Under an NPA, the government maintains the right to file charges but refrains from doing so to allow the company to demonstrate its good conduct during the term of the NPA. While the NPA is not filed in a court, it is made available to the public. An NPA generally will require a waiver or tolling of the statute of limitations, ongoing cooperation, admission of the material facts, compliance and remediation commitments, and the payment of a monetary penalty.2
Under a DPA, the government publicly files a charging document and simultaneously requests that the prosecution be postponed for the purpose of allowing the company to demonstrate its good conduct. DPAs generally require a defendant to agree to pay a monetary penalty, waive or toll the statute of limitations, cooperate with the government, admit the relevant facts, and enter into certain compliance and remediation commitments.3
In the UK, DPAs can be used by the Crown Prosecution Service and the Serious Fraud Office. DPAs allow organizations that have co-operated with the authorities during the course of investigations to have the proceedings brought against them suspended. The terms of the DPA will contain provisions such as the payment of a financial penalty, the payment of compensation, and an agreement to co-operate in the future. A DPA requires judicial approval. The Serious Fraud Office and the Crown Prosecution Service have published a Code of Practice setting out guidance in relation to DPAs. For more on DPAs in the UK, see Schedule 17 of the Crime and Courts Act 2013.
In France, the CJIP is a settlement mechanism akin to a DPA. The CJIP is available for legal entities (but not their representatives, directors and officers of the company, who remain subject to prosecution) for the offenses of: (i) corruption, (ii) influence peddling, and (iii) money laundering related to tax fraud.
Under this mechanism, the Public Prosecutor can, prior to the commencement of criminal proceedings, propose that a company enter into a settlement agreement requiring:
- The payment of a fine capped at 30% of the company’s average turnover over the last 3 years;
- The implementation of an effective compliance program under the supervision of the AFA at the company’s expense (supervised for a maximum of 3 years); and/or
- The payment of damages to the victims of the offense.
The settlement agreement, which has to be upheld by a judge, allows the company to avoid criminal conviction, without having to admit any wrongdoing, provided that the company complies with its obligations under the agreement. Agreements are published on the AFA’s website. A settlement agreement can be entered after a company has been formally charged. However, in such a cases the company must admit to both the facts and legal violations (i.e., must admit guilt).
On June 26, 2019, the National Financial Prosecution Service (PNF) and the AFA jointly issued guidelines on the CJIP, notably listing the conditions for granting a CJIP and the aggravating and mitigating circumstances to be considered in calculating the financial penalty.
In France, another procedure available for corruption and influence peddling offenses is the CRPC (appearance in court following prior guilty plea), a plea bargaining procedure that allows offenders (whether individuals or legal entities) to enter into a plea bargain with the Public Prosecutor. In such a case, with judicial approval, the offender does not face trial, but instead may be subject to: (i) a fine not to exceed the fine amount provided by law for the relevant offense(s); (ii) imprisonment for a term not to exceed one year; and (iii) ancillary sanctions provided by law for the relevant offense(s). In practice, this procedure has never been used for corruption-related offenses.
1 DOJ, Justice Manual 9-47.120.
2 DOJ & SEC, A Resource Guide to the U.S. Foreign Corrupt Practices Act 75 (2012) (FCPA Guide).
3 FCPA Guide 74.