On January 17, 2023, the U.S. Department of Justice (DOJ) announced changes to its corporate enforcement policy, starting with applying it to all corporate matters handled by the DOJ's Criminal Division, not just Foreign Corrupt Practices Act (FCPA) cases.
Under the new policy, even companies with aggravating circumstances may still be able to qualify for the benefit of the voluntary self-disclosure program, a declination. It won't be easy, though, as the new policy requires companies to meet three factors to qualify. First, the company must voluntarily self-disclose "immediately" upon becoming aware of the allegation of misconduct. Second, the company must have an effective compliance program and internal accounting controls already in place that helped identify the potential wrongdoing and led to the company's voluntary self-disclosure. Third, companies must then engage in "extraordinary" cooperation with the DOJ's investigation and undertake "extraordinary" remediation.
The new policy doesn't define what constitutes "immediate" disclosure. Nor does it define "extraordinary" cooperation, although Criminal Division Assistant Attorney General Kenneth Polite has stated, "We know 'extraordinary cooperation' when we see it, and the differences between 'full' and 'extraordinary' cooperation are perhaps more in degree than kind." Companies must go above and beyond even gold-standard cooperation.
In addition to providing for the potential for companies with aggravating circumstances to qualify, the revised policy increases the discounts from the U.S. Sentencing Guidelines fine range where a criminal resolution is still warranted but a company has self-disclosed, fully cooperated, and timely and appropriately remediated. Previously, the maximum reduction in penalties and fines that a company could hope to achieve was 50 percent off the low end of the Guidelines range. Now, under the revised policy, a company may be able to receive up to 75 percent off the low end of the Guidelines range. In these circumstances, the DOJ will generally not require a guilty plea, even for recidivists, unless there are particularly egregious or multiple aggravating circumstances.
Even for companies that don't voluntarily self-disclose but still fully cooperate and remediate, the DOJ will recommend up to a 50-percent reduction off the low end of the Guidelines fine range. Previously, the most the DOJ would recommend in these circumstances was 25 percent.
Despite these seemingly welcome changes, the DOJ emphasized that "each and every company starts at zero cooperation credit and must credit based on the parameters and factors outlined in the [Corporate Enforcement Policy]." Companies must "truly distinguish" themselves.
In light of these changes, it is even more important that companies continue to ensure that their compliance programs and internal controls are robust and up-to-date. In the event companies do discover potential wrongdoing, it will be essential to evaluate whether voluntary self-disclosure is warranted.
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