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Measured By This Goal, DOJ Policy Has Failed


Imagine a government enforcement agency unveiling an enforcement policy that had X as a stated goal and then nearly five years later, X occurred only 7% of the time.

The answer would seem clear: the goal of the enforcement policy failed.

As highlighted below, in releasing the 2016 FCPA Pilot Program and thereafter in 2017 in releasing the FCPA Corporate Enforcement Policy, the DOJ stated that a “main goal” was to encourage voluntary disclosures to permit prosecution of individuals. Yet, nearly five years later there have been FCPA prosecutions of individuals in only 7% of cases the DOJ has self-identified as being resolved pursuant to / or consistent with the Pilot Program or the CEP.

In announcing its April 2016 Foreign Corrupt Practices Act “pilot program,” the DOJ stated:

“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, 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 was 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 an FCPA speech, Caldwell touched upon this information gap and how bridging the gap was one of the “main goals” of the Pilot Program.

In this clip, Caldwell stated:

“[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 clearly articulated that a “main goal” of its Foreign Corrupt Practices Act Pilot Program was to use voluntarily disclosures to learn about information that would allow the DOJ to prosecute individuals.

In November 2017, the DOJ tweaked the Pilot Program and reintroduced it under the name of the “FCPA Corporate Enforcement Policy” (see here for the prior post). In announcing the CEP, Deputy Attorney General Rod Rosenstein stated that the new policy “will increase the volume of voluntary disclosures, and enhance our ability to identify and punish culpable individuals.”

So what has actually happpened?

Since April 2016, the DOJ has self-identified 13 corporate matters as being resolved pursuant to / or consistent with the Pilot Program or the CEP: Nortek, Akamai Technologies, Johnson Controls, HMT LLC, NCH Corp., Linde North America, CDM Smith, Dun & Bradstreet, Guralp Systems, Insurance Corporation of Barbados, Polycom, Cognizant Technology Solutions and Quad Graphics.

Just 1 of the 13 instances (7%) – Cognizant Technology Solutions – has involved an FCPA prosecution of an individual.

Thus, measured against the DOJ’s own “main goal” of the Pilot Program and one of the articulated rationales for CEP – the answer is clear: the programs have failed.

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