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What Others Are Saying About The DOJ’s “New” FCPA “Pilot Program”

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One thing that is not in dispute about FCPA Inc. is that it is an active group of writers.

Since release of the DOJ’s “new” Foreign Corrupt Practices Act “pilot program on April 5th (see here, here, here, here and here for prior FCPA Professor posts), there have been a flurry of law firm client alerts, etc. on the topic.

Many of the alerts have been purely factual and of course, just like most other FCPA developments, there are those who are calling the development a big deal or something similar perhaps in a subtle attempt to market FCPA compliance services.

However, certain of the alerts move beyond the pure facts of the “pilot program” and take a position on the value and likely success of the “pilot program.” Those alerts are excerpted below.

As highlighted below, the general thrust of practitioner comments is a “thumbs down” for the DOJ’s latest effort to encourage voluntary disclosure with some of the most pointed criticisms coming from former high-ranking DOJ FCPA officials.

In this Law360 article titled “DOJ’s New FCPA Pilot Program Will Have Only Marginal Impact,” former DOJ FCPA Unit Chief Chuck Duross and former DOJ FCPA Unit Assistant Chief James Koukios write:

Our Take

The department deserves credit for engaging in an effort to provide more clarity in the self-disclosure process and greater certainty in the results. But there is a natural tension between the department’s understandable desire to maintain its discretion to resolve each case based on its own facts and circumstances, and the business community’s equally reasonable desire for certainty and finality. In the end, the DOJ’s need to build flexibility into the pilot program limits its ability to provide the greater certainty that the business community wants, as the guidance’s promises to provide benefits are qualified with words like “may,” “generally” and “will consider.”

As such, the guidance represents a step forward on the path to greater transparency and certainty, but not as great a step forward as it might have been. In fact, there is not much that is new in the guidance, which notes that the Fraud Section has “historically provided” reductions below the low end of the sentencing guidelines to companies that self-report, cooperate and remediate. Moreover, self-disclosure, cooperation and an effective compliance program have long been factors that have militated against the imposition of an independent monitor requirement.

Interestingly, however, there are possible hints that a bolder version of the guidance was once contemplated. Although the guidance states an intention to “set[] forth … the manner” in which the additional credit earned pursuant to the pilot program “should be determined, whether it be in the type of disposition, the extent of reduction in fine, or the determination of the need for a monitor,” it actually focuses exclusively on the latter two issues, suggesting that a bolder approach — such as limiting the availability of nonprosecution agreements to self-reporting companies — may have been considered but ultimately rejected. Whether a bolder approach will eventually be pursued and whether it might have a greater impact on the self-disclosure discussion will remain to be seen. In the meantime, the current pilot program will likely only have a marginal overall impact on a given company’s overall approach to voluntary disclosure.”

Billy Jacobson, a former DOJ Assistant Chief of FCPA Enforcement, wrote:

“Unfortunately, the Guidance falls short of accomplishing its intended goal and certainly is not the bold policy pronouncement for which many were hoping.


While this guidance is a step forward in terms of providing clarity and providing more incentive for companies to voluntarily disclose FCPA problems, it falls short of what could have been.

First, the Guidance itself acknowledges that DOJ often already provides companies that disclose, cooperate and remediate with a reduction below the bottom end of the guidelines range.

Second, the benefits set forth in the Guidance are articulated in such a way as to leave DOJ with ample room to avoid according the full benefit. The Guidance says that DOJ “may accord up to a 50 percent reduction,” that cases in which companies meet the designated criteria “generally should not require the appointment of a monitor” and, in those cases DOJ “will consider a declination of prosecution.” (emphasis added).

Third and most importantly, the Guidance does not go nearly as far as it could have in serving the goals of law enforcement, while also providing more certainty to companies.


With the new Guidance, DOJ has missed a wonderful opportunity to establish bold and clear guidance that would both provide real transparency to companies and serve the ends of law enforcement.

Instead, a distinct lack of clarity remains — companies are still forced to guess at how they will be treated at the hands of DOJ — and law enforcement does not get nearly the assist it could have received. Unfortunately, this guidance, issued just as the baseball season gets underway, is — and as a lifelong fan of the New York Mets I know something about this — a swing and a miss.”

In response to Jacobson, Paul Pellieter, a former Principal Deputy Chief of the DOJ’s fraud section, wrote:

[T]he Pilot Program falls short by failing to provide a reliable metric of certain benefits sufficient to entice businesses to more frequently self report. As [Jacobson] notes, businesses desire some modicum of certainty before prostrating themselves before the DOJ. The missed opportunity of the Pilot Program to provide more definitiveness with respect to the financial, logistical and penal consequences of self-reporting is in and of itself at least perplexing. The Pilot Program further fails to sufficiently address controlling the sometimes absurd duration of FCPA investigations which can cause the expenditure of extraordinary sums in non-penalty costs — an obvious factor that can drive some business to decline the invitation to self report.

This Wilmer Hale publication states:


The Guidance states that a company that self-discloses, cooperates and remediates must also “disgorge all profits from the FCPA misconduct at issue” in order to receive any mitigation credit under the pilot program. While seemingly straightforward, this requirement raises a number of issues and complications. In FCPA cases involving issuers, FCPA resolutions often involve settlements with the Securities and Exchange Commission (SEC) in addition to the DOJ, and SEC settlements usually have disgorgement as a component of the financial resolution. Although not stated in the Guidance, presumably disgorgement paid to the SEC would count for this purpose. It is not clear how this will be handled by the DOJ in cases where there is no SEC settlement (or there is an SEC settlement that contains only a civil penalty but no disgorgement) or where the DOJ and SEC might have different views as to the amount of profits subject to disgorgement.

The Guidance is also silent on how disgorgement interplays with a criminal fine. In the context of a deferred prosecution agreement or a non-prosecution agreement, the DOJ financial penalty is generally set based on a calculation of a criminal fine under the U.S. Sentencing Guidelines. That calculation includes a profits-related component, but it is ultimately a criminal fine based on a variety of factors (including the mitigation credit, if any, afforded by the pilot program) that may or may not be similar to the amount of profits when the calculation is completed. It is unclear whether the DOJ would expect disgorgement separate and apart from the criminal fine. Moreover, where the DOJ concludes that a declination is appropriate, it is unclear what legal mechanism would be used to compel the disgorgement, and it is unclear to whom the disgorgement would be paid. Such issues could dramatically impact the amount of a company’s financial payment at the end of an investigation.


The pilot program appears to be another effort by the DOJ to answer calls for greater transparency in terms of the credit companies can obtain through voluntary disclosure and cooperation. Like other public pronouncements by law enforcement, its effectiveness will depend on how it is implemented in practice. The Guidance gives the DOJ substantial flexibility, with significant discretion afforded to the DOJ in considering each of the relevant factors. In comparison to the substantial costs and risks of making a voluntary disclosure, it is not clear that the benefits of the program (which may not be any greater than some companies have already received in prior cases) will outweigh those costs and risks. The ability of the public to make an assessment of the program’s effectiveness may depend on how many cases are brought (or declined) under the program in the next year, and the message the DOJ sends in those cases.”

This Holland & Knight publication states:

“As the memo makes clear, no company is required to cooperate by self-disclosing, complying with the investigation and taking remediation measures. A company, like an individual, is free to do as it sees fit, and there are risks and benefits to both approaches. On one hand, self-disclosure is an assurance that the government will find out about a violation when it otherwise might not, a guarantee that there will be an expensive and possibly lengthy investigation, and a near certainty that there will be some type of sanction. The risk of not self-disclosing, on the other hand, is that the DOJ will come to learn about an FCPA violation some other way.”

[A comment regarding the “will come to learn” language used above. The notion that the DOJ “will come to learn about an FCPA violation some other way” if a company does not voluntary disclose is pure speculation. Never in my nearly decade long FCPA private practice career did this happen, to my knowledge this has never happened in connection with my other professional work, and in speaking to other FCPA practitioners about this precise topic, never has it happened to their clients.]

This Arnold & Porter advisory states:

“While the Fraud Section’s new guidance provides some welcomed transparency on how foreign bribery cases will be handled, companies considering voluntary disclosure should still exercise caution.  Under the program, as noted, prosecutors and agents continue to wield significant discretion, and factors such as the severity of the underlying conduct, the completeness of the disclosure, and the sufficiency of remediation efforts are still likely to play a major role in determining the disposition of the case.

This Foley & Lardner publication states, under “Takeaways,” as follows:

“[T]he DOJ’s efforts to reward cooperators are laudable, but do not replace meaningful and deep-dive internal investigations. Only by lifting the hood and examining whether a crime occurred, who was responsible, and what should be done in remediation can companies truly and proactively comply with the FCPA and other statutes. The DOJ’s encouragement to law-abiding companies notwithstanding, the agency’s view of the world is often that mistakes are based on ill intent rather than oversight. With the DOJ’s imposing more and more oversight requirements, it is increasingly important that companies and their counsel investigate allegations fully before contacting the DOJ, which remains an adversary.”

Regarding the “de-conflicting” footnote in the “pilot program” the Foley publication states:

“The “de-conflicting” requirement raises a particularly troubling development, as the DOJ apparently is reserving the right to insert itself into — and veto — company counsel’s determinations regarding potential conflicts. This example constitutes another attempt by the DOJ to intervene in potentially privileged investigation work and heightens the compliance challenges for many companies, including those that act in good faith to implement effective programs and instill a culture of compliance.”

This Steptoe & Johnson publication states:

“Too Many Caveats:  Unfortunately, the Guidance does not go far enough in providing certainty to companies facing FCPA issues.  The Guidance is riddled with caveats that provide plenty of room for FCPA prosecutors to award something less than full mitigation credit to a cooperating company.  Indeed, even a company that has cleared all the hurdles of voluntary self-disclosure, full cooperation, and timely and appropriate remediation is not guaranteed a certain outcome.  Where such conditions are met, the FCPA Unit “may accord” up to a 50% discount, “generally” should not require a monitor, and “will consider” declining prosecution.  Those heavily caveated provisions still do not give companies the certainty they need when evaluating the important self-disclosure question.”

This King & Spalding Client Alert states:

“When viewed in the context of recent settlements, however, one wonders whether the new Program contains enough incentives to change the calculus of voluntary disclosures. Indeed, several companies have recently resolved cases with DOJ under terms equally or more favorable than those prescribed by the Program. As recently as February of this year, VimpelCom received an eye-popping 45% reduction from the bottom of the Guidelines range, without self-disclosure. Hewlett-Packard Russia and Alcoa received discounts of 33% and 53%, respectively, and neither involved voluntary disclosures. Whether the Pilot Program’s new caps of 25% and 50% will materially change the landscape is thus an open issue. Depending on the particulars of DOJ resolutions in the coming months, it seems just as possible that putative corporate defendants will see the Program as imposing a ceiling for the credit they could receive, and therefore view it as an unhelpful development.

The specificity of the 25% and 50% ranges is also limited in significance by the very nature of settlement negotiations with DOJ in these cases. Determining the Sentencing Guidelines range (to which the new deductions will apply) is not a scientific exercise, and is often the result of lengthy negotiation. The significance of any set percentage “discount” is therefore limited by the awkward reality that profits, loss, pervasiveness, duration, and other factual issues critical to the Guidelines calculation are often difficult to determine with any degree of certainty.

For companies seeking more definitive guidance on whether or not to self-report, the Pilot Program may be somewhat disappointing. The Program’s specificity starts and stops with the 25-50% differential. Aside from that calculation, the Program discusses factors surrounding cooperation that have long been familiar to the white collar bar, and are well publicized in prior DOJ publications, including the US Attorney’s Manual and the DOJ/SEC DOJ FCPA Guidance from 2012.”

This Willkie Farr memo states:

“The Guidance is the latest sign that the DOJ is intent on incentivizing companies to self-disclose potential FCPA violations and pursuing charges against culpable individuals. The Guidance adds a measure of clarity to the degree of credit a selfdisclosing, cooperating company may receive and the nature of the cooperation it must provide to receive that credit. Although any additional clarity is a welcome development for management and boards who may face difficult decisions regarding self-disclosure, the Guidance by no means eliminates the uncertainties that surround self-disclosure decisions. Particularly with the DOJ’s emphasis on early disclosure, companies will continue to be presented with disclosure decisions in the context of imperfect information, uncertain outcomes and potentially profound consequences.”

This Pepper Hamilton alert states:

“The concept of reduced sanctions in return for cooperation is not new in the context of the FCPA. For years, companies that cooperated and remediated past conduct were offered some percentage reduction in sentences and, in some cases, non-prosecution or deferred prosecution agreements. The new pilot program appears to put a tangible number on the potential amount of reduction in sanctions for cooperation. However, as has been the case in the past, it will be within the DOJ’s judgment to determine whether a company’s cooperation and remediation efforts were sufficient to warrant a reduction as well as the size of that reduction.”


For a number of years, companies and defense lawyers have questioned whether any true benefit came from such cooperation. However, whether this policy turns out to be significant will depend heavily on how it is applied in practice, i.e., what level of cooperation and remediation will be necessary to obtain a significant decrease in potential sanctions.

At the end of the day, this uncertainty will exist much as it did before the announcement of the pilot program. The more fundamental question remains as to whether the use of a pilot program such as this one is the best incentive for companies to cooperate with the DOJ in their efforts to prosecute foreign bribery, as opposed to adopting a compliance defense similar to the “adequate procedures” defense that was adopted under the UK Bribery Act 2010.”

In this post, Judy Kreig (Shepherd and Wedderburn) asks “Does the DOJ Pilot Program Undermine Compliance Officers?” and states:

“There may be many benefits to the new pilot programme under the DOJ FCPA Enforcement Plan and Guidance, but empowering compliance officers isn’t one of them. Quite to the contrary.

The DOJ pilot programme tries to encourage self-reporting of FCPA issues  by informing companies what benefit they can expect for meeting all three requirements of “full cooperation” : disclose, cooperate, remediate.

The remediate element impacts compliance officers the most. That is where the DOJ discusses the compliance programme requirements and how companies need to “where appropriate, remediate flaws in their controls and compliance programs.” The DOJ thereby leaves open the possibility that a company can starve its compliance resources unless (and until) a problem arises.  Indeed, as long as the company has implemented an effective compliance program by the time the matter is resolved with the DOJ, no monitor will be required. Given the time it takes to conclude a FCPA matter with the DOJ, companies have several years of breathing room to get their act together and still earn full cooperation credit.

So much for an ounce of prevention being worth a pound of cure. By incentivising only what the companies do in reaction to the discovery of a problem, the DOJ necessarily provides a disincentive for companies to invest in their compliance programmes on a purely proactive basis. In sharp contrast, the adequate procedures defence under the UK Bribery Act assesses (and gives credit for) compliance policies and procedures in place at the time the bribery occurred.

Strangely enough, the DOJ says it hopes the pilot programme will “serve to further deter individuals and companies from engaging in FCPA violations in the first place [and] encourage companies to implement strong anti-corruption programs to prevent and detect FCPA violations. . . .“ But companies tend to make rational decisions about budget allocation. The effect on compliance officers is clear. Compliance officers can expect fewer resources to develop or strengthen the compliance programme unless or until a breach is discovered. In other words, by telling companies they can remediate after they fess up to the DOJ, they have undercut the message of empowering compliance officers in their day-to-day jobs.”

This DLA Piper publication states:

“DOJ’s latest policy prescription for FCPA enforcement seems to recognize that lack of clarity and predictability in FCPA enforcement provided little incentive for companies to voluntarily disclose violations. Often companies found it difficult to calculate the amount or likelihood of receiving any benefits by voluntarily self-reporting a violation, whereas the drastic consequences of facing a government investigation were guaranteed following such a disclosure.

DOJ’s new FCPA pilot program seeks to change that calculus. By offering greater transparency to the benefits of early and complete cooperation with the government − as well as greater predictability for the potential negative consequences for not voluntarily disclosing such conduct − DOJ hopes more companies will disclose and cooperate with authorities. It remains the case, however, that DOJ retains discretion to judge the completeness of a company’s cooperation and how much to credit a company’s voluntary disclosure or remediation in a particular case.”

This Fried Frank memo states:

“While the DOJ’s new “pilot program” provides companies with an additional incentive to self-report FCPA violations, it may ultimately prove difficult for many companies to fully comply with the program’s stringent requirements. It may be difficult to determine absent more robust disclosures by the DOJ whether the “pilot program” actually encourages companies (that otherwise would not have self-reported) to self-report and what benefits, if any, those companies receive.”

This Akerman update states:

“[B]ecause of the strict conditions outlined in the pilot program, the caveats to any mitigation of sanctions, and the fact that the program is simply a “guideline” that the DOJ may interpret to its liking, a corporation should discuss with legal counsel any potential FCPA matters before making any disclosure to the DOJ and/or providing the DOJ unfettered access to corporate records.”

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