The
US Department of Justice ("DOJ") had announced a pilot program[1]
("Pilot Program") on April 5, 2016, which created new mitigation opportunities
for companies that (i) voluntarily self-disclosed, (ii) cooperated fully, and
(iii) took timely and appropriate remedial actions in FCPA matters that fell
within the Fraud Section's mandate. The Pilot Program was to remain in effect
for 1 year, starting from the day of its announcement. On March 10, 2017, the
Acting Assistant Attorney General, Kenneth A. Blanco, announced in a speech
that the Pilot Program would continue in full force until the DOJ reached a
final decision on whether to extend it, and what revisions, if any, should be
made to it.[2]
The evaluation period of the Pilot Program ended on November 29, 2017, when
Deputy Attorney General Rod Rosenstein announced the new FCPA Enforcement
Policy ("Policy"), which effectively makes the Pilot Program permanent with
some revisions. According to Deputy Attorney General Rosenstein, the FCPA Unit
received 30 voluntary disclosures during the time period that the Pilot Program
was in force, as opposed to 18 voluntary disclosures that were received during
the previous 18-month
period. The Policy has been incorporated into the United States Attorneys' Manual
in order to "be readily understood and easily applied by busy prosecutors" as
opposed to being promulgated in memorandum format.[3]

[1] For more information regarding
the Pilot Program, please see ELIG's previous article at: http://www.mondaq.com/turkey/x/490980/White+Collar+Crime+Fraud/DOJ+Launches+FCPA+Pilot+Program+For+Voluntary+SelfDisclosure+What+Does+It+Offer

[2]See https://www.justice.gov/opa/speech/acting-assistant-attorney-general-kenneth-blanco-speaks-american-bar-association-national

[3] See
https://www.justice.gov/opa/speech/deputy-attorney-general-rosenstein-delivers-remarks-34th-international-conference-foreign

Deputy
Attorney General Rosenstein highlighted a few key aspects of the new Policy
during his speech on November 29. Accordingly, there will be a presumption that,
if a company duly engages in voluntary self-disclosure, full cooperation, and
timely and appropriate remediation, then that company will be granted a
declination decision. However, this presumption may not be applicable in
certain cases, depending on the seriousness of the offense and whether the
company is a recidivist (i.e., whether it has previously engaged in such misconduct.)
Furthermore, in case a company satisfies all of the requirements of the Policy,
but aggravating circumstances exist that necessitate an enforcement action,
then the DOJ will recommend a 50% fine reduction off of the low end of the fine
range that is set forth in the Sentencing Guidelines. The new Policy also helps
to concretize and shed light on the elements of an effective compliance program,
by putting forth specific conditions, such as the compliance department being
provided with sufficient resources and the compliance personnel having access
to the management team and the board of directors of their companies. Deputy
Attorney General Rosenstein also stated that the Policy is aimed at clarifying the
DOJ's decision-making processes. He also declared that the Policy concerns the internal
operating policies of companies and noted that it did not create any private
rights.

I. What Advantages Does the New Policy Bring?

The
advantages brought about by the Policy are similar to those provided under the
Pilot Program; however, they are stated in clearer and more concrete language. Under
the Policy, the DOJ will act under the presumption that it will give a
declination decision for those who (i) voluntarily self-disclose, (ii)
cooperate fully, and (iii) take timely and appropriate remedial actions. This section
of the Policy differs significantly from the Pilot Program, where there was no
presumption of a declination decision but only a promise. As opposed to the a
priori nature of a presumption, a promise is a weaker potential decision.

However,
if a particular case requires a criminal resolution, then the DOJ will "(i) accord, or recommend to a sentencing
court, a 50% reduction off of the low end of the U.S. Sentencing Guidelines
("USSG") fine range, except in the case of a criminal recidivist; and (ii)
generally will not require appointment of a monitor if a company has, at the
time of resolution, implemented an effective compliance program."[1]

Furthermore,
companies have to make all disgorgement, forfeiture and/or restitution payments
resulting from the misconduct in order to qualify for the Policy, as was the
case with the Pilot Program.

Similar
to the Pilot Program, the Policy continues to provide advantages for companies that
fail to voluntarily self-disclose, but nevertheless (i) cooperate fully and
(ii) remediate in a timely and appropriate fashion. These companies will be
awarded up to a 25% reduction off of the low end of the fine range that is provided
by the US Sentencing Guidelines ("USSG").

II.
How Can Companies Become Eligible for the Policy?

In
order to benefit fully from the Policy, companies have to (i) voluntarily
self-disclose, (ii) cooperate fully, and (iii) take timely and appropriate
remedial actions with regard to FCPA matters.

1.
Voluntary Self-Disclosure

The
DOJ will require the fulfillment of the following criteria for a company to
receive credit for voluntary self-disclosure of wrongdoing: "(i) The voluntary disclosure qualifies under
USSG Section 8C2.5(g)(1) as occurring "prior to an imminent threat of
disclosure or government investigation"; (ii) the company discloses the conduct
to the DOJ "within a reasonably prompt time after becoming aware of the
offense," with the burden being on the company to demonstrate timeliness and
(iii) the company discloses all relevant facts known to it, including all
relevant facts about all individuals involved in the violation of law."[2]

2.
Full Cooperation in FCPA Matters

The
following are the criteria that must be met for a company to be considered "fully
cooperative" under the Policy, similar to the Pilot Program:

"(i) Disclosure on a timely basis of all
facts relevant to the wrongdoing at issue, including: all relevant facts
gathered during a company's independent investigation; attribution of facts to
specific sources where such sources does not violate the attorney-client
privilege, rather than a general narrative of the facts; timely updates on a
company's internal investigation, including but not limited to rolling
disclosures of information; all facts related to involvement in the criminal
activity by the company's officers, employees, or agents; and all facts known
or that become known to the company regarding potential criminal conduct by all
third-party companies (including their officers, employees, or agents);

(ii) Proactive cooperation, rather than reactive; that
is, the company must timely disclose facts that are relevant to the
investigation, even when not specifically asked to do so, and, where the
company is or should be aware of opportunities for the Department to obtain
relevant evidence not in the company's possession and not otherwise known to
the Department, it must identify those opportunities to the Department;

(iii) Timely preservation, collection, and disclosure
of relevant documents and information relating to their provenance, including
(a) disclosure of overseas documents, the locations in which such documents
were found, and who found the documents, (b) facilitation of third-party
production of documents, and (c) where requested and appropriate, provision of
translations of relevant documents in foreign languages;

(iv) Where requested, de-confliction of witness
interviews and other investigative steps that a company intends to take as part
of its internal investigation with steps that the Department intends to take as
part of its investigation; and

(v) Where requested, making available for interviews
by the Department those company officers and employees who possess relevant
information; this includes, where appropriate and possible, officers,
employees, and agents located overseas as well as former officers and employees
(subject to the individuals' Fifth Amendment rights), and, where possible, the
facilitation of third-party production of witnesses."[3]

According
to the Policy, if a company claims that it cannot disclose overseas documents
due to data privacy rules and regulations, blocking statutes or other reasons
related to foreign law, the burden falls upon the company to establish and
provide evidence for such a prohibition.

3.
Timely and Appropriate Remediation in FCPA Matters

The
following are the criteria that must be fulfilled in order for a company to
receive full credit for timely and appropriate remediation, similar to the
Pilot Program:

"(i) Demonstration of thorough analysis of
causes of underlying conduct (i.e., a root cause analysis) and, where
appropriate, remediation to address the root causes;

(ii) Implementation of an effective compliance and
ethics program, the criteria for which will be periodically updated and which
may vary based on the size and resources of the organization, but may include:

(a) The company's culture of compliance, including
awareness among employees that any criminal conduct, including the conduct
underlying the investigation, will not be tolerated;

(b) The resources the company has dedicated to
compliance;

(c) The quality and experience of the personnel
involved in compliance, such that they can understand and identify the
transactions and activities that pose a potential risk;

(d) The authority and independence of the compliance
function and the availability of compliance expertise to the board;

(e) The effectiveness of the company's risk assessment
and the manner in which the company's compliance program has been tailored
based on that risk assessment;

(f) The compensation and promotion of the personnel
involved in compliance, in view of their role, responsibilities, performance,
and other appropriate factors;

(g) The auditing of the compliance program to assure
its effectiveness; and

(h) The reporting structure of any compliance
personnel employed or contracted by the company.

 

(iii) Appropriate discipline of employees, including
those identified by the company as responsible for the misconduct, either
through direct participation or failure in oversight, as well as those with
supervisory authority over the area in which the criminal conduct occurred;

(iv) Appropriate retention of business records, and
prohibiting the improper destruction or deletion of business records, including
prohibiting employees from using software that generates but does not
appropriately retain business records or communications; and

(v) Any additional steps that demonstrate recognition
of the seriousness of the company's misconduct, acceptance of responsibility
for it, and the implementation of measures to reduce the risk of repetition of
such misconduct, including measures to identify future risks."[4]

In
general, we observe that the Pilot Program and the new Policy do not differ with
respect to their substances or contents, but in their promises. As can be
understood from the speech given by Deputy Attorney General Rosenstein on November
29, 2017, the Policy, which will henceforth be in permanent effect, aims to provide
more clarity as to how the DOJ will act with respect to companies that have
engaged in misconduct, but have also duly satisfied three essential criteria,
namely: (i) voluntary self-disclosure, (ii) full cooperation, and (iii) timely
and appropriate remediation.

Authors: Gönenç Gürkaynak, Esq., Ç. Olgu
Kama and Burcu Ergün, ELIG, Attorneys-at-Law

(First published in Mondaq on December 7, 2017)

[1] United States Attorneys' Manual,
9-47.120.

[2] Ibid.

[3] Ibid.

[4] Ibid.