As highlighted in the article “Grading the DOJ’s FCPA Pilot Program” and this post, it is difficult (if not impossible) to empirically assess whether one of the Pilot Program’s goals (to increase corporate voluntarily disclosures) is actually working. Simply put, many business organizations were voluntarily disclosing prior to the April 2016 Pilot Program and the precise question after the Pilot Program is whether the program is motivating voluntary disclosures to a greater extent than prior to the program.
Yet as highlighted below, it is possible to assess whether another of the DOJ’s stated “main goals” of its Pilot Program is working and at present the undeniable answer is that, as measured against this “main goal,” the Pilot Program is currently failing.
“the principal goal of [the Pilot] program is to promote greater accountability for individuals and companies that engage in corporate crime by motivating companies to voluntarily self disclose FCPA-related misconduct …”
“this pilot program is intended to encourage companies to disclose FCPA misconduct to permit the prosecution of individuals whose criminal wrongdoing might otherwise never be uncovered by or disclosed to law enforcement.”
At the DOJ’s April 2016 Pilot Program press conference, then Assistant Attorney General Leslie Caldwell stated that the goal of the “pilot program” is to “encourage self-reporting” because companies have information about individuals who have violated the FCPA and have documents relevant to FCPA violations. According to Caldwell, the goal of the program is to “encourage” companies to give the DOJ this information.
In other words, the goal of the Pilot Program is to bridge the information gap (discussed in this 2014 post) that often exists between those with evidence of FCPA violations (often companies and their counsel who conduct FCPA internal investigations) and the government agencies (DOJ and SEC) who enforce the FCPA.
In another FCPA speech, Caldwell again touched upon this information gap and how bridging the gap was one of the “main goals” of the Pilot Program.
In this clip, Caldwell states:
“[The] idea of the Pilot Program, in part, is get the company to self report by giving it some incentives so that when it comes in and self reports, it will give us the information that it has … that will in turn enable us to prosecute individuals because we recognize that prosecution of individuals is the biggest deterrent … to corporate wrongdoing, and criminal wrongdoing … that is really one of the main goals of the Pilot Program.”
Likewise, in this clip Caldwell discussed how defense counsel has investigative files about FCPA violations that the “DOJ doesn’t know about.”
Caldwell stated:
“We want that information because we want to be able to make cases against those individuals, but we don’t have that evidence … [the idea of the pilot program] is to get that information that we know is out there about culpable individuals so that we can make the cases against culpable individuals. Companies can’t go to jail. Individuals can … and the biggest deterrent to wrongdoing is prosecuting individuals.”
In short, the DOJ has clearly articulated that a “main goal” of its Foreign Corrupt Practices Act Pilot Program is to use voluntarily disclosures to learn about information that will allow it to prosecute individuals.
Unlike other aspects of the Pilot Program that are difficult (if not impossible) to measure, whether this “main goal” of the Pilot Program is being attained is fairly easy to measure by comparing the corporate resolutions that the DOJ has self-identified as being resolved pursuant to / or consistent with the Pilot Program and then seeing whether there have been any individual prosecutions related to those matters.
At present, the DOJ has self-identified seven corporate matters as being resolved pursuant to / or consistent with the Pilot Program: Nortek, Akamai Technologies, Johnson Controls, HMT LLC, NCH Corp, Linde Gas, and CDM Smith.
0 of the 7 instances (0%) have involved, at least yet, prosecution of individuals.
Thus, measured against the DOJ’s own “main goal” of the Pilot Program, the program is currently failing.
This current failing grade is perhaps incomplete.
For starters, none of the 7 instances listed above are believed to be “pure” voluntary disclosures “pursuant” to the Pilot Program. In other words, the disclosures are believed to have occurred prior to April 2016. In addition, individual prosecutions may follow, sometimes months or years, after a corporate resolution (hence the above qualifying language “at least yet”).
Nevertheless, the DOJ has provided a measuring stick to analyze the effectiveness of the Pilot Program and at present the failing grade is what it is.
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