When the FCPA Pilot Program was first announced, questions arose as to whether it would lead to an uptick in voluntary self-disclosures. According to Assistant Attorney General Leslie Caldwell, it has.

As Compliance Week previously reported, the one-year pilot program announced earlier this year by the Fraud Section’s FCPA Unit was designed to motivate companies to voluntarily self-disclose FCPA-related misconduct, fully cooperate with the Fraud Section and, where appropriate, remediate flaws in their controls and compliance programs. The pilot program guidance explains the credit available to companies that take such measures.

The pilot program dovetails with a change made to the “Filip Factors,” making voluntary disclosure a separate factor to be evaluated in making corporate charging decisions, including in non-FCPA cases.

“What we’re seeing is that the pilot program is having an effect,” Caldwell said in recent remarks at the George Washington University Law School. “Although I can’t share precise figures, anecdotally we’ve seen an uptick in the number of companies coming in to voluntarily disclose potential FCPA violations.” 

One motivation may be that companies are seeing a “very real upsides to coming in and cooperating,” Caldwell said. “In the pilot program we said that companies who meet certain criteria—including timely disclosure and full cooperation—are eligible to receive an outright declination. And over the last six months, we have furthered our commitment to transparency and have made public a number of declination letters to show that this result is attainable for companies that come in and cooperate.”

Disgorgement requirements

In her remarks, Caldwell added that the Justice Department remains committed to ensuring that those who violate the law don’t profit from their crimes, even in cases where the agency declines to prosecute. “That is why the pilot program requires that companies disgorge the proceeds of bribery in order to be eligible for the full benefits, including possible declination, of the program,” she said.

In most FCPA cases, the Justice Department works in parallel with the SEC, and disgorgement of proceeds is usually part of the SEC resolution. “Under the pilot program, even when the SEC is not involved in an investigation, disgorgement is still a prerequisite,” Caldwell said.

Last month, for example, the Justice Department announced separate resolutions with two private companies—HMT and NCH Corporation—in which the enforcement agency declined to prosecute for FCPA violations, but required disgorgement. “We make those resolutions public, partly to show others that the pilot program provides real benefits, and partly so that the public understands that corporate wrongdoers are not being allowed to keep profits earned through briber,” Caldwell said.  

Beyond the pilot program, the Department has also sought over the past couple of years to more clearly communicate its analysis and evaluation of the considerations laid out in the nine Filip Factors. Each corporate resolution—be it a guilty plea, deferred prosecution agreement (DPA) or a non-prosecution agreement (NPA)—provides a written explanation of the key factors that led to the decision. “We are trying to provide the public with a greater insight into our thought processes, analyses and conclusions,” she added.

Corporate compliance

Plea agreements, DPAs, and NPAs also provide a transparent explanation of the Department’s expectations concerning compliance programs. “Companies seeking to measure their own compliance programs need look no further than many of the resolutions we have made publicly available,” Caldwell said.  

She further stressed the value of corporate compliance programs: “A consistent theme of the fraud, corruption, money laundering, and sanctions cases we’ve brought over the years has been a failure of corporate compliance.”

Most companies today have a compliance programs in place. The problem is that many of them are strong on paper, but weaker in practice.

Although many companies have tailored their compliance programs to make sense for their businesses, risk factors, geographic regions and their work, some have not. “There is no doubt that monitoring compliance on a global scale is a difficult, but difficulty cannot be used as an excuse to turn a blind eye to problematic business practices,” Caldwell said.

“Compliance programs must be put into place and—more importantly—communicated repeatedly and enforced properly throughout the entire organization,” she added. The emphasis on compliance must be heard not only in the C-Suite, but in the company’s operations around the globe.

Furthermore, one year into the appointment of Hui Chen as compliance consultant for the Fraud Section, Chen is “not simply assisting us in analyzing the compliance programs of companies in resolution negotiations, but is also helping prosecutors improve how they approach investigations,” Caldwell said.

“With the benefit of the experience of the compliance consultant, we are able to conduct more exacting interviews of compliance personnel and other witnesses, but the compliance consultant also brings with her a real-world understanding of the corporate compliance function in companies in different industries, both big and small,” Caldwell added.

“I am sure that my successor will continue the fight against international corruption and will do so transparently, in particular to encourage corporate and individual compliance with the law.”

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