10 Lessons Learned from the First Six Months of the DOJ's FCPA Pilot Program
The U.S. Department of Justice's Foreign Corrupt Practices Act Pilot Program reached its six-month anniversary on October 5, 2016. Since the program began, the DOJ has announced multiple corporate FCPA resolutions. While the U.S. Securities and Exchange Commission does not have an official FCPA Pilot Program, it too has been active in FCPA cases this year, often acting in concert with the DOJ on Pilot Program resolutions. With the first half-year of the Pilot Program in the books, it is useful to examine the FCPA enforcement activity undertaken by the DOJ and the SEC to see what lessons may be learned about how the program is working and what it means for practitioners and companies going forward.
DOJ FCPA Pilot Program
The DOJ's Pilot Program, announced on April 5, 2016, states that a company that voluntarily discloses FCPA misconduct, provides full cooperation (including as to all culpable individuals), and engages in appropriate remediation is eligible for up to a fifty percent reduction in the fine as calculated under the U.S. Sentencing Guidelines, and may also be considered for a declination. Any declination that is issued will be conditioned on the company disgorging all profits from the alleged misconduct. A company that does not voluntarily disclose, but does fully cooperate and appropriately remediate, is eligible for up to a twenty-five percent reduction in its fine. The Pilot Program will last for one year, at which time the DOJ will evaluate whether to continue it.
Since the Pilot Program began, the DOJ and the SEC have announced fourteen corporate FCPA enforcement actions, including resolutions with four companies that received formal declinations from the DOJ but were obligated to disgorge the profits reaped as a result of the alleged misconduct. In addition, one company - Harris Corporation - received a declination from the SEC that, combined with a prior declination from the DOJ, meant that the company avoided prosecution entirely. On the same day that the SEC announced its declination as to Harris, the SEC published an Administrative Order in which a former Harris employee consented to findings that he had violated the FCPA and agreed to pay a civil penalty. The SEC also obtained agreed Administrative Orders and civil penalties from individual employees involved in three other investigations.