WEIGHING THE RISKS OF SELF-REPORTING A
bribery violation, or hiding it, has always
been a thorny issue for companies.
And that’s the dilemma at the heart of
the U.S. Justice Department’s pilot program for violations of the Foreign Corrupt Practices Act. While the one-year
program has made companies a little
more trusting of prosecutors, the decision
to self-report a foreign bribe is no less
gut wrenching, according to FCPA lawyers. The Justice Department is mulling
whether to continue the program or to
modify it. Lawyers who have participated
in the program say it should be continued, but with more clarity for companies.
The DOJ introduced the program in
April 2016, saying it would provide prosecutors and corporations with a clearer
understanding of what the government
offers a company that voluntarily discloses its wrongdoing, fully cooperates
with an investigation and institutes remedial compliance measures. The prize is a
letter from the DOJ saying it is declining
to prosecute the crime.
To assess the program, Corporate
Counsel talked with three FCPA defense
attorneys, one prosecuting attorney and
an in-house counsel who each took part
in pilot program cases. Except for the
in-house counsel, none of the participants would discuss the specific case they
worked on. The Justice Department
declined to comment for this story.
The pilot program’s guidance “does
help to create some parameters,” says Jay
Holtmeier, who co-leads the FCPA and
anti-corruption group in the New York
office of Wilmer Cutler Pickering Hale
and Dorr. “But the biggest question—
whether the Justice Department will
decline or not—really is not defined in the
program,” he says. That means a company
could voluntarily disclose its violation,
and the DOJ could still prosecute it.
Holtmeier represented Johnson Controls Inc. (now Johnson Controls International), which was one of five companies
that received a declination letter last year.
“I think the department in good faith has
THE CASE FOR CERTAINTY
tried to articulate factors that are more
measurable and transparent,” says Holt-
meier, a former federal prosecutor in
Manhattan. But he says some factors still
need to be fine-tuned, such as knowing
how much of a discount the company will
receive off the penalty range, or how a dis-
gorgement amount is decided.
Greater transparency and more certainty
also were recommendations from Patrick
Pericak, now senior managing director
with FTI Consulting. Pericak is a former DOJ lawyer who was involved in
the first pilot program case, in which the
department declined prosecution against
Nortek Inc., a Providence company that
manufactures building products.
“I think the department is reluctant
to lock itself in too much,” Pericak says.
“Companies will never be in a position
to have 100 percent certainty. But I think
there will be greater certainty as time goes
on, if the program is continued.”
Facing Pericak in the Nortek case was
Luke Cadigan, a Cooley partner in Bos-
ton. “A lot of people are calling for more
clarity,” Cadigan says. “But I think over
time as you have more resolutions [the
DOJ] will start to make clear what cir-
cumstances will lead to what resolutions.
More cases will bring more clarity.”
“In our experience no modifications
are needed,” Ahola says. “The factors
we felt were important—self-reporting,
thoroughly investigating, fully cooperat-
ing, taking ownership of the problem—
were taken into account. So it was as
positive an experience as can be under
Ropes & Gray’s Ryan Rohlfsen was an
outside counsel on the Akamai case. He
says the DOJ is “meeting a lot of its goals
in terms of starting the discussion with
the community on what is the calculus for
self-disclosure, and adding some degree
of predictability. They will measure over
time if they are seeing a greater number
of self-disclosures. ... In short, it is a work
in progress.” —S.R.
COMPANIES SEEK MORE CLARITY IN FCPA PROGRAM