Albert Einstein is credited with saying that insanity is “doing the same thing over and over again and expecting different results.”
You don’t need to be an Einstein to realize that the main thrust of the DOJ’s recently announced FCPA “pilot program” (that is to encourage voluntary disclosure) is nothing new.
All you need to have done over the past decade is pay attention to DOJ enforcement agency speeches because the DOJ has been saying the same thing over and over again.
As noted in this original post announcing the DOJ’s “new” “pilot program,” the DOJ’s latest attempt to encourage voluntary disclosure should most certainly be seen as an acknowledgement that its long-standing efforts have not been as successful as the DOJ might hope.
Does the DOJ honestly believe that this most recent iteration is going to lead to any different results – particularly since (as will be explored in a future post) the “pilot program” really does not represent anything new despite the DOJ’s best effort to convince the corporate community otherwise?
Set forth below are numerous DOJ speeches since 2005 to encourage voluntary disclosure, including the DOJ’s repeated assurances that voluntary disclosure results in meaningful credit.
Knowledgeable observers know that the below speeches in the public domain represent just a small slice of DOJ public statements on this issue. For many years, including the present, there has been a “luncheon law” (see here for the prior post) aspect of the FCPA where enforcement agency officials speak on panels or deliver keynote addresses at conferences hosted by private for-profit organizations. Seldom are the comments by DOJ officials reduced to writing and only occasionally are the DOJ speeches released.
Nevertheless, as represented by the below examples, there are enough DOJ speeches in the public domain to more than adequately prove the point of this post.
February 2005 – DOJ Assistant Attorney General Christopher Wray
“[W]e’re seeing many more companies disclose FCPA violations voluntarily. As I said earlier, companies are getting the message that we’re serious about rooting out illegal corporate conduct, and that helping us get to the bottom of it is far wiser than laying low or trying to hide it.”
October 2006 – DOJ Assistant Attorney General Alice Fisher
“When serious FCPA issues do arise, we strongly encourage you and your clients to voluntarily disclose those issues. I know that there is a concern out there that there is not enough certainty in the voluntary disclosure process. And frankly, there are good reasons for that.
As many of you know, sometimes a single bribe is just the tip of the iceberg in terms of internal control problems, books-and-records violations, and other bribes. So it would not make sense for law enforcement to make one-size-fits-all promises about the benefits of voluntary disclosure before getting all of the facts.
It also would not be in the best interests of law enforcement to make promises about lenient treatment in cases where the magnitude, duration, or high-level management involvement in the disclosed conduct may warrant a guilty plea and a significant penalty. But what I can say is that there is always a benefit to corporate cooperation, including voluntary disclosure, as contemplated by the Thompson memo.
The fact is, if you are doing the things you should be doing – whether it is self-policing, self-reporting, conducting proactive risk assessments, improving your controls and procedures, training on the FCPA, or cooperating with an investigation after it starts – you will get a benefit. It may not mean that you or your client will get a complete pass, but you will get a real, tangible benefit.
There have been cases where companies have come in and voluntarily disclosed real FCPA violations that we have not prosecuted at all. On the other hand, in other cases a voluntary disclosure might result in a guilty plea, depending on the circumstances. So although nothing is off the table when you voluntarily disclose, I can tell you in unequivocal terms that you will get a real benefit – just like Schnitzer Steel did. As I said earlier, Schnitzer Steel was an excellent example of corporate cooperation.”
November 12, 2009 – DOJ Assistant Attorney General Lanny Breuer
“[A]ny pharmaceutical company that discovers an FCPA violation should seriously consider voluntarily disclosing the violation and cooperating with the Department’s investigation. If you voluntarily disclose an FCPA violation, you will receive meaningful credit for that disclosure. And if you cooperate with the Department’s investigation, you will receive a meaningful benefit for that cooperation—without any request or requirement that you disclose privileged material. Finally, if you remediate the problem and take steps to ensure that it does not recur, you will benefit from that as well.
We are fully aware that internal investigations and remedial measures may be costly. But the costs of not doing the responsible thing can be much higher – including significant criminal fines for the corporation, unwanted negative publicity, a potentially devastating impact on stock prices, and possible exclusion from Medicare and Medicaid. Conversely, a voluntary disclosure may result in no action being taken against a company, or the company may secure other preferred dispositions, such as a deferred or non-prosecution agreement, or a reduced fine under the Sentencing Guidelines. In this, as in so many areas, doing the right thing, in my view, also makes good business sense.”
November 17, 2009 – DOJ Assistant Attorney General Lanny Breuer
“[T]here is still the sometimes difficult question of whether to make a voluntary disclosure, a question I grappled with as a defense lawyer. I strongly urge any corporation that discovers an FCPA violation to seriously consider making a voluntary disclosure and always to cooperate with the Department. The Sentencing Guidelines and the Principles of Federal Prosecution of Business Organizations obviously encourage such conduct, and the Department has repeatedly stated that a company will receive meaningful credit for that disclosure and that cooperation.
That commitment has manifested itself in some of the resolutions just this past year. For example, while the Siemens case is, of course, by far the most egregious example of systemic corporate corruption ever prosecuted by the Department, it is also a prime example of the benefits that flow from truly exceptional cooperation. The benefits that Siemens received, even in the absence of a voluntary disclosure, were significant. First, the $450 million fine that was paid to the Department of Justice, as opposed to portions paid to the SEC and the German government, while a large amount of money in absolute terms, was dramatically less than the applicable Sentencing Guidelines range, which was $1.35 billion to $2.7 billion. Second. the resolution permitted Siemens to avoid mandatory debarment in certain locations and to make arguments about its suitability as a contractor in light of its extraordinary remediation. And third. the Department worked with Siemens to resolve this vast and remarkably complex matter in two years’ time, permitting the company to get its business out from under the ominous cloud of such a large and well known criminal investigation.
Another example, on a much more modest scale, was the resolution of the Helmerich & Payne matter, a company that self-disclosed improper or questionable payments. The case was resolved through a non-prosecution agreement with a term of two years, a penalty of $1,000,000, which was approximately 30 percent below the bottom of the guidelines range, and compliance self-reporting by the company for a period of two years in lieu of an independent compliance monitor. Helmerich & Payne benefitted in several, very tangible ways from their efforts. The fine, type of disposition, length of disposition, and treatment of the monitor issue all reflect the forward leaning, pro-active, highly cooperative approach taken there.
I can assure you that the Department’s commitment to meaningfully reward voluntary disclosures and full and complete cooperation will continue to be honored in both letter and spirit. I am committed to no less. Together, the Department and the private sector have the opportunity to ensure a climate of compliance and self-disclosure – one that offers very tangible benefits for both of us.”
February 25, 2010 – DOJ Assistant Attorney General Lanny Breuer
“I also want to assure you that the Department’s commitment to meaningfully reward voluntary disclosures and full and complete corporate cooperation will continue to be honored in both letter and spirit. I know that many of you often grapple with the difficult question of whether to advise your client to make a voluntary disclosure. I strongly urge any corporation that discovers an FCPA violation – or any other criminal violation, for that matter – to seriously consider making a voluntary disclosure and to cooperate with the Department. The Sentencing Guidelines and the Principles of Federal Prosecution of Business Organizations obviously encourage such conduct, and your clients will receive meaningful credit for that disclosure and cooperation.”
May 26, 2010 – DOJ Assistant Attorney General Lanny Breuer
“So, what should a corporation do when a problem has been discovered? Whether to voluntarily disclose potential criminality is admittedly a difficult question for business entities.
But I can offer you this: If you come forward and if you fully cooperate with our investigation, you will receive meaningful credit for having done so. In talking about “meaningful” credit, we are not promising amnesty for doing the right thing. But, self-reporting and cooperation carry significant incentives – by working with the Department, no charges may be brought at all, or we may agree to a deferred prosecution agreement or non-prosecution agreement, sentencing credit, or a below-Guidelines fine.
Ultimately, every case is fact-specific and requires an assessment of the facts and circumstances, as well as the severity and pervasiveness of the conduct and the quality of the corporation’s pre-existing compliance program. But, in every case of self-disclosure, full cooperation, and remediation, the Department is committed to giving meaningful credit where it’s deserved to obtain a fair and just resolution.”
May 2010 – Acting Deputy Attorney General Gary Grindler
“[You can advise your clients to make early, voluntary disclosure of misconduct. As you know, it is usually in your client’s best interest to cooperate with the government’s investigation through the disclosure of relevant facts, the production of documents and other evidence, and making witnesses available who have relevant information. Not only is such voluntary disclosure in your client’s interest, but the failure to do so — the failure to make timely voluntary disclosure following the discovery of a criminal violation — in some circumstances can itself be an independent violation of law. In December 2008, for example, the FAR was revised to require government contractors to disclose violations of criminal law and the False Claims Act in connection with award and performance of government contracts and subcontracts. Under this provision, contractors are subject to debarment and suspension from government contracting for knowingly failing to disclose such violations and overpayments on government contracts in a timely manner. Contractors are also required to establish internal control systems to facilitate timely disclosure of improper conduct and fully cooperate with government agencies responsible for audit, investigation, and corrective actions.
[…]
[Y] ou can guide your client’s decision to take meaningful remedial measures in response to criminal wrongdoing, including the payment of restitution and the disciplining or termination of culpable employees, officers, or directors.
In the end, all of these steps – robust compliance programs, information sharing between public and private sector anti-fraud efforts, voluntary disclosure, and meaningful remedial measures — will inure to the benefit of your clients in several significant ways. They will deter criminal conduct from occurring in the first place. They will ensure that if and when misconduct does occur, it is detected early on and can be rooted out before too much damage is done. Your client will receive credit for such actions during the prosecutorial decision-making process. Finally, such steps will make your clients stronger corporate citizens, and will empower your clients’ officers, directors, and employees to fulfill their fiduciary obligations to shareholders and their duties of honest dealing to the investing public and the taxpayers.”
November 2010 – Assistant Attorney General Lanny Breuer
“[V]oluntarily disclose wrongdoing if you discover it. As a former defense lawyer, I understand that the question of whether to self-report is a difficult one. But I can assure you that if you do not voluntarily disclose your organization’s conduct, and we discover it on our own, or through a competitor or a customer of yours, the result will not be the same. Of course, voluntary disclosure is not the only factor we consider in deciding how to resolve a particular case. We take into account all the factors set forth in the Principles of Federal Prosecution of Business Organizations, and we consider the particular facts and circumstances of each individual case. But there is no doubt that a company that comes forward on its own will see a more favorable resolution than one that doesn’t.”
April 2011 – DOJ Press Release
“We are committed to holding corporations accountable for bribing foreign officials while, at the same time, giving meaningful credit to companies that self-report and cooperate with our investigations.”
May 2011 – DOJ NPA
“This substantially reduced monetary penalty reflects the DOJ’s determination to meaningfully credit Tenaris for its extraordinary cooperation with the Department, including its timely and voluntary disclosure, its subsequent investigation, and the effective manner in which Tenaris conveyed information to the [DOJ and the SEC].”
November 2013 – Deputy Attorney General James Cole
“What is the benefit of voluntary disclosure and cooperation?” We fully understand that companies will act in their own best interest. So we have sought to incentivize companies with tangible benefits for their voluntary disclosure and cooperation – beyond the reductions already built into the Sentencing Guidelines. Such benefits have taken the form of declinations like that in the Morgan Stanley case, resolutions short of a guilty plea like deferred prosecution agreements and non-prosecution agreements, and allowing companies to self-report their remediation efforts instead of being subject to the oversight of a corporate monitor. We have also, in appropriate cases, supported reduced penalties below those suggested by the Sentencing Guidelines.
Because your role in the enforcement of the FCPA is vital to its success, I want to assure you that we are committed to demonstrating the benefits of your working cooperatively with us. But, this does not mean that we will blindly accept the conclusions of internal investigations. To the contrary, we will continue to actively pursue our own investigations in order to pressure test the results of your internal investigations and be able to identify those companies that are truly cooperating. It also does not mean that companies that claim to be cooperating, but that are, in fact, engaging in gamesmanship, will reap such benefits. Indeed, just as it is important to reward true voluntary disclosures and actual cooperation, it is critical that we hold companies accountable when they choose to conceal misconduct, obstruct investigations, and attempt to mislead investigators. For those companies, there will be serious consequences.
November 2015 – Assistant Attorney General Leslie Caldwell
“[V]oluntary self-disclosure in the FCPA context does have particular value to the department. Because of that, we want to encourage self-disclosure by making clear that, when combined with cooperation and remediation, voluntary disclosure does provide a tangible benefit when it comes time to make a charging decision.”
November 2015 – Deputy Assistant Attorney General Sung-Hee Suh
“I have also heard companies and their counsel say that they have no idea how the government’s monetary resolutions were arrived at – that it sometimes appears as if the government just picks these numbers out of thin air. Also notable has been the trend among companies over the last several years against voluntary self-reporting, including – and perhaps especially – in the FCPA space, in part due to what is perceived, as noted during this morning’s sessions, that there is little or no benefit to self-reporting. Some lawyers have advised their clients that it’s simply more rational to wait to see if the government comes knocking and then cooperate if and when that happens.”
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“[T]o those companies that are disinclined to self-report in the belief that the government will never know – I say, think again. In the anti-corruption space, the Fraud Section and the Federal Bureau of Investigation are deploying significantly more resources to detect and prosecute companies that choose not to self-disclose in FCPA cases. We’re hiring an additional 10 prosecutors in the FCPA Unit, an increase of over 50%, and the FBI has established three new squads devoted to international corruption investigations and prosecutions.”
