DOJ Launches Pilot Program to Increase Compliance

April 18, 2016

Assistant Attorney General (AAG) Leslie R. Caldwell of the U.S. Department of Justice (DOJ) recently announced the launch of a pilot program to encourage voluntary self-reporting for Foreign Corrupt Practices Act (FCPA) violations. The pilot program, which is effective for only one year from its start date of April 5, 2016, lays out conditions under which companies that self-report violations of the FCPA can obtain considerable mitigation of penalties and, potentially, total avoidance of prosecution.

According to AAG Caldwell, companies that self-report under the pilot program’s terms can obtain reductions of up to 50 percent on fines and “should not require” a monitor to ensure their compliance with the FCPA. To earn the benefit of the pilot program, a company must:

  1. Make a self-disclosure about its violations of the FCPA;
  2. That is timely and voluntary;
  3. Disclose all relevant facts and wrongdoers; and
  4. Remediate the violation appropriately.

Companies that satisfy all four conditions will be eligible for the full 50 percent reduction, while those that cooperate but do not make voluntary self-disclosures will be eligible for up to 25 percent reduction. The guidance provides that “if a company chooses not to voluntarily disclose its FCPA misconduct, it may receive limited credit if it later fully cooperates and timely and appropriately remediates—but any such credit will be markedly less than that afforded to companies that do self-disclose wrongdoing.” In either case, all profits from the violation must be disgorged.

The pilot program for FCPA cases marks the next step in the DOJ’s campaign to encourage self-reporting among companies following last year’s Yates Memo. This new pilot program continues to shift the DOJ’s emphasis from recovering the greatest amount of money lost to prosecuting the most culpable persons. As announced by the Yates Memo in September 2015, corporations must provide all relevant facts to the government once a violation is discovered.

Although the pilot program aims to strike a conciliatory note to companies, it will work in concert with, not in lieu of, extant FCPA programs and provisions. That the DOJ has doubled the number of prosecutors in its FCPA Unit and added three squads of FBI agents devoted to FCPA violations should serve as a sobering reminder that the DOJ has taken and continues to take an adversarial approach to FCPA compliance. As the end of the Obama Administration draws closer, the DOJ is encouraging companies to self-disclose as well as fortifying its own resources to uncover violations that may have previously gone unnoticed, a point which Caldwell’s announcement hammers home with its emphasis on “transparency.”

The pilot program presents new opportunities for companies to mitigate penalties through self-disclosure, but it remains to be seen how it will comport with the DOJ’s established practice of “holding individuals accountable” as announced in last year’s Yates memo. Though there has been a renewed emphasis on self-reporting practices in the past year, the basic tenets of corporate cooperation and individual culpability have long been the guiding principles for the DOJ. No matter what the DOJ cooperation policy, the indisputable lesson is that companies need robust and comprehensive FCPA compliance programs to protect themselves and their employees.

For more information, please contact Jonathan S. Feld at 312-627-5680 or, Zafreen Husain at 202-906-8622 or, Kevin Connor at 312-627-2261 or, or your Dykema relationship attorney.

As part of our service to you, we regularly compile short reports on new and interesting developments and the issues the developments raise. Please recognize that these reports do not constitute legal advice and that we do not attempt to cover all such developments. Rules of certain state supreme courts may consider this advertising and require us to advise you of such designation. Your comments are always welcome. © 2021 Dykema Gossett PLLC.