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  • Writer's pictureJohn E. Davis

Self-Reporting of FCPA Issues – Some Thoughts on Current Incentives and Expectations

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Self-disclosure. Cooperation. Remediation. Anyone who has planned for an FCPA-related investigation by U.S. agencies knows this mantra well. Current expectations on these issues are addressed in the DOJ’s updated Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP). The CEP establishes incentives for companies that the DOJ determines meet these expectations. However, companies weighing self-disclosure still face questions regarding timing and quantum of benefits, including the following.   

 

Are Aggravated Circumstances Present? 

CEP incentives depend on whether “aggravating circumstances” are present. In such cases, disclosure must happen “immediately” upon awareness of alleged misconduct. Unfortunately, uncovering such circumstances often requires significant investigation that occurs too late to inform disclosure decisions.   

 

How Long Does a Company Have? 

The CEP encourages self-disclosure “at the earliest possible time, even when a company has not yet completed an internal investigation” and places the burden on companies to “demonstrate timeliness” under specific circumstances. Recent cases and public DOJ commentary provide some parameters.  

 

DOJ personnel have suggested that “immediately” can be within “a matter of weeks.” The recent Lifecore declination states that disclosure occurred within three months from when the company first discovered potential misconduct "and hours after [the] internal investigation confirmed that misconduct had occurred.” The DOJ’s recent M&A Safe Harbor policy defines “timely” disclosure as 180 days after transaction closing.  

 

A key consideration is whether a disclosure allows for preservation of key evidence. With this in mind, DOJ officials have stated that “while early reporting is best, self-reporting late is always better than never,” citing “concrete benefits” for a company that disclosed late but effectively.  

 

Disclosures Transcend Borders

Most corruption cases today also involve authorities outside the U.S. That can lead to challenges not seen in U.S. investigations, such as dawn raids and data privacy restrictions on access to employee data, as well as different legal rules and expectations. Any disclosure decision should account for these issues.   

 

Other Recent Factors

Recent developments such as the DOJ’s proposed whistleblower reward program, the agencies’ increasing use of data analytics to develop potential investigation leads, and self-reporting by competitors driving new industry sweeps will affect the disclosure calculus going forward.



Member, FCPA and International Anti-Corruption Practice Lead, Miller & Chevalier, Washington, DC

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