The Department of Justice really wants violators of the Foreign Corrupt Practices Act (FCPA) to come forward: following a January 2023 revision of its Corporate Enforcement Policy that incentivized voluntary self-disclosure, the agency launched a DOJ whistleblower reward pilot program on March 24, 2024.
This trend of rewarding those who disclose FCPA violations reflects the DOJ's desire to get ahead of corruption through incentives. As Acting Assistant Attorney General Nicole M. Argentieri explained, "One of our goals is to demonstrate the benefits that await those that voluntarily disclose misconduct."1
The Background
The Foreign Corrupt Practice Act (FCPA) was enacted in 1977 to prevent businesses and individuals from engaging in activity intended to corruptly influence foreign officials.2 The anti-bribery provisions of the FCPA target willful bribery of foreign officials, which includes employees of foreign state-owned enterprises, particularly where such bribery leads to an unfair advantage in business dealings.
At the FCPA's inception, the anti-bribery provisions only applied to U.S. persons and certain foreign issuers of securities. In 1998, the anti-bribery provisions were expanded to include foreign companies or people who take actions that directly lead to or advance a corrupt payment within the U.S. or connected to U.S. interests. As such, businesses must be acutely aware of the bribery prohibition because it is so broad-reaching: the anti-bribery provisions encompass money or anything of value offered to foreign officials with corrupt intent.
Why is the whistleblower reward program controversial?
The DOJ's new whistleblower reward program is controversial but aligns with the agency's goal of cracking down on corruption. Deputy Attorney General Lisa Monaco touts the program, "The premise is simple: if an individual helps DOJ discover significant corporate or financial misconduct — otherwise unknown to us — then the individual could qualify to receive a portion of the resulting forfeiture."3
In other words, if someone helps the DOJ discover misconduct, they may receive significant compensation, possibly even millions of dollars. Acting AAG Argentieri anticipates the program will assist the DOJ in developing cases, including prosecution of FCPA violations. She further explains that the DOJ's goal is to create financial incentives in areas where there are currently none.
Naturally, there are conditions to the financial reward. They include:
- The victim(s) must receive compensation before the whistleblower award is granted,
- The disclosed information is not known to the government,
- The whistleblower is not involved in the criminal activity, and
- There is no existing financial disclosure incentive (such as the FCA's qui tam provisions4).
The program is still in its infancy but has already led to debate in the legal community. One such critique is the lack of anonymity. This differs considerably from other DOJ programs, including, for example, the FCA's qui tam provisions (covered in greater detail in a previous article): The FCA qui tam provisions allow private parties to come forward with information regarding fraudulent behavior and possibly receive a share of the recovery, not unlike the DOJ's whistleblower program. After the "relator" in an FCA case comes forward and initiates a lawsuit on behalf of the United States, however, the action is initially filed under seal. This contrasts sharply with the DOJ's new program, where a whistleblower's identity is discoverable by the defense and where the whistleblower will likely have to appear as a witness if the action goes to trial.
Other critics of the DOJ's whistleblower program raise the potential for inaccuracy. Defense attorneys in particular will want to know if whistleblowers are coming forward purely for monetary gain, especially because they stand to make a substantial sum in many cases. Furthermore, prosecutors must actively corroborate the whistleblower's accusations to offset the credibility concerns that may arise from the potential reward money offered by the government.
Despite these issues, Deputy AG Monaco welcomes whistleblowers and continues to encourage voluntary self-disclosure. The Deputy AG likens the whistleblower program to "Wanted" posters in the Old West that offered payment as an incentive to come forward. She references the U.S. Securities and Exchanges Commission and Commodity Futures Trading Commission whistleblower programs and claims the DOJ's program will fill gaps the former two fail to fill.
As the DOJ continues to reward disclosure, it has become ever more clear that companies that do not disclose will pay an increasingly hefty price for FCPA violations, even through plea deal resolutions.
Footnotes
1 "Acting Assistant Attorney General Nicole M. Argentieri Delivers Keynote Speech at the American Bar Association's 39th National Institute on White Collar Crime," Justice.gov, (Mar. 8, 2024), https://www.justice.gov/opa/speech/acting-assistant-attorney-general-nicole-m-argentieri-delivers-keynote-speech-american.
2 Foreign Corrupt Practices Act: An Overview, Justice.gov, https://www.justice.gov/criminal/criminal-fraud/foreign-corrupt-practices-act.
3 "Deputy Attorney General Lisa Monaco Delivers Keynote Remarks at the American Bar Association's 39th National Institute on White Collar Crime," Justice.gov, (Mar. 7, 2024), https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-monaco-delivers-keynote-remarks-american-bar-associations.
4 The DOJ continues to hold businesses accountable for fraudulent or exploitive behavior through the False Claims Act (FCA), which targets those who fraudulently claim money from or knowingly avoid payment to the U.S. government. Notably, the FCA includes a provision for actions initiated by private parties similar to the DOJ whistleblower reward pilot program.
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