In April, the Fraud Section of the United States Department of Justice announced several measures designed to enhance its effort to discover and prosecute violations of the Foreign Corrupt Practices Act (FCPA).[1] See, 15 U.S.C. §§ 78dd-1, et. seq. In sum, the FCPA makes it illegal for companies and their supervisors to influence anyone with any personal payment or reward. The FCPA applies to any person who has a certain degree of connection to the United States and engages in foreign corrupt practices. The Act also applies to any act by U.S. businesses, foreign corporations trading securities in the U.S., and American nationals, citizens, and residents acting in furtherance of a foreign corrupt practice whether or not they are physically present in the U.S.
The Fraud Section’s announcement contained three key parts: (1) enhanced resources; (2) enhanced international cooperation; and (3) a self-reporting pilot program:
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Enhanced Resources: The Fraud Section’s FCPA unit is being enlarged by 50% to a total of 20 full-time prosecutors; and, the FBI has established three new squads of special agents devoted solely to FCPA investigations and prosecutions.
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Enhanced International Cooperation: Citing prosecutions of 12 specifically named companies, the Department pledged itself to continuing and strengthened international cooperation to include the sharing of leads, sharing of witnesses and documents, and collaborative investigations between DOJ and foreign governments.
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Self-reporting pilot program: Incentive based program designed to encourage corporations to self-report corporate crime, fully cooperate with DOJ and remedy flaws in their control and compliance programs. The incentive is a 50% discount on the ultimate sentencing fine and the Department’s agreement to forego the requirement that a monitor be appointed as part of the compliance regimen.
This announcement is interesting in many respects. Chief among those is its intersection with the Department’s rollout last year of the Yates Memorandum.[2] That pronouncement, in essence, requires corporations to disclose all information regarding the wrongdoing (or potential wrongdoing) by specific employees in exchange for any concessions in the form of a Deferred Prosecution Agreement or other agreement by which the corporation avoids formal prosecution or obtains other mitigation in punishment. The FCPA memorandum now adds specific requirements regarding the evaluation of cooperation in the FCPA context and incentivizes corporations by offering a potential financial benefit – or bounty – for disclosing individual wrongdoing.
