More summer reading for those with an interest in anti-corruption enforcement: The latest thinking on how federal prosecutors can encourage cooperation by rewarding companies for self-reporting transgressions of U.S. anti-bribery laws, courtesy of Baker & McKenzie partners Robert Tarun and Peter Tomczak.

In their proposal for leniency for self-reporting and cooperation by companies that uncover Foreign Corrupt Practices Act violations, Tarun and Tomczak say the model used by the Department of Justice's Antitrust Division to give a break to cooperators who report antitrust violations should be applied to companies that voluntarily disclose FCPA missteps.

As Compliance Week has previously noted, the long-standing debate over what benefits companies actually get for confessing their FCPA sins has been the subject of numerous articles and spurred a number of suggestions for giving companies and their counsel some much-desired predictability about what they can expect to get for their efforts. For example, as noted on this blog in June, former Deputy Attorney General George Terwilliger, now head of the white-collar practice at White & Case, also publicly called for an FCPA leniency policy.

Patterned after the Antitrust Division's Corporate Leniency Program, the authors' proposed FCPA leniency policy, "A Proposal for a United States Department of Justice Foreign Corrupt Practices Act Leniency Policy," originally published in the American Criminal Law Review's 25th Annual Survey of White Collar Crime, would reward companies that promptly disclose FCPA wrongdoing and fully cooperate with the government and would penalize those that fail to investigate credible allegations of improper payments or don't promptly stop the payments.

"If the left arm of government—the Antitrust Division—can be clear and transparent about their carrots and sticks, surely the right arm—the Fraud Section—can be equally transparent and clear," Tarun, a former federal prosecutor, tells Compliance Week.

The Department of Justice through a spokeswoman declined to comment. In a May speech at Compliance Week's annual conference, DoJ Assistant Attorney General Lanny Breuer promised that companies that come forward and fully cooperate will receive "meaningful credit."

While DoJ officials "talk about ‘meaningful credit,' their policy isn't transparent," says Tarun. "We need a policy that tells companies what they're going to get."

"As a matter of good governance, boards should be well-equipped to understand the costs, benefits, and consequences of self-reporting and cooperation," he says.

Tarun and Tomczak's proposal includes four "carrots" in the form of possible discounts. Corporations that self-disclose misconduct before an investigation begins would be eligible for a non-prosecution agreement and a 40 percent discount off of the minimum fine range under the U.S. Sentencing Guidelines.

Corporations that self-report and cooperate after an investigation has begun would be eligible for non-prosecution and a 20 percent cooperation discount off of the minimum Sentencing Guidelines fine range.

Most directors, officers, and employees of corporate leniency applicants would also be eligible for amnesty.

If a company has an FCPA compliance program in place at the time of the misconduct that meets 12 criteria (detailed in the proposed policy) it would be eligible for an extra 20 percent discount off of the minimum fine range. Finally, companies that provide information leading to the investigation and prosecution of another company or its officers or employees would be able to get an additional 20 percent cooperation discount.

The policy also includes two "sticks" in the event of a conviction. For companies that either don't conduct internal investigations when they receive credible bribery allegations or that fail to promptly stop the misconduct, the DoJ will recommend a penalty of 10 percent above the maximum Sentencing Guidelines.

The idea is to "truly reward companies that genuinely cooperate," says Tarun. "The government never could have done an investigation like the one done by Siemens—they just don't have the resources."

Under the proposed leniency policy, Siemens would've gotten a 20 percent cooperation discount, and paid a total of $1.35 billion to end its FCPA woes, instead of the combined $1.76 billion it actually paid. Kellogg Brown & Root would've received a total fine of $301 million instead of the combined penalties of $579 million, according to the article.

The proposal (here) details a number of eligibility criteria. Among other things, the company must report the improper payments before the Fraud Section gets credible information from any other source and it can't have been named in an FCPA enforcement proceeding, including a deferred prosecution agreement or a non-prosecution agreement, in eight years.

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