The US Department of Justice (DOJ) declined to prosecute Liberty Mutual after the insurer voluntarily self-disclosed misconduct.
The government’s investigation found evidence that between 2017 and 2022, employees at Liberty Mutual’s Indian subsidiary paid approximately $1.47 million in bribes to officials at six state-owned banks to obtain business at those banks. These payments, which were often disguised as marketing expenses and routed through third-party intermediaries, resulted in $9.2 million in revenue and $4.7 million in profits, which Liberty Mutual has agreed to disgorge.
This is the first Foreign Corrupt Practices Act (FCPA) since President Trump paused and then restarted foreign-bribery enforcement. The DOJ credited Liberty Mutual’s prompt disclosure, full cooperation, including separation from involved personnel, and significant enhancements to its compliance program and internal controls. The August 7 declination letter also cited the company’s root-cause analysis, improved third-party payment monitoring, and increased compliance resources, with Liberty Mutual agreeing to continue cooperating with ongoing investigations.
While the DOJ’s decision signals genuine benefits for companies that self-disclose, it also highlights the importance of having a robust compliance program and the potential for broader investigations.
Key Takeaways
Clarity on the DOJ’s Policy
The Liberty Mutual case serves as an early test of the DOJ’s updated corporate enforcement policy, which promises a “clear path” to declination for companies that timely self-report, fully cooperate, and remediate. Despite evidence of bribery, the DOJ’s decision to decline to prosecute Liberty Mutual demonstrates that the government is prepared to follow through on its guidance, provided companies meet the outlined criteria. For companies, this provides a measure of predictability and reassurance that coming forward with misconduct can result in tangible benefits, such as avoiding prosecution, if aggravating factors are not present.
Emphasis on Compliance
The DOJ’s declination letter specifically highlighted Liberty Mutual’s “significant improvements” to its compliance program and internal controls. Among other enhancements, the company (1) enhanced its vetting, monitoring, and oversight of payments to third parties; (2) improved compliance policies and procedures, including those related to ephemeral messaging applications for business purposes; and (3) increased legal and compliance resources. Liberty Mutual was also credited for conducting a thorough and systematic root-cause analysis of the conduct at issue. The enhancements set a useful benchmark for the level of remediation and compliance program effectiveness expected by the government.
Broader Implications for Enforcement Landscape
This declination may mark a shift in the enforcement landscape, with the DOJ seeking to incentivize corporate cooperation and transparency. However, it also serves as a reminder that self-disclosure can open the door to further scrutiny, including potential civil or individual prosecutions, and that the DOJ’s approach may continue to evolve as more cases are resolved under the new policy.
Conclusion
The Liberty Mutual declination is a significant development that helps clarify the DOJ’s current approach to FCPA enforcement. It offers hope for companies that invest in compliance and transparency, but also highlights the need for caution and thorough preparation before self-disclosing potential misconduct.
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