The Liberty Mutual Declination: The Same, Only Different?

Earlier this month, the U.S. Department of Justice agreed not to prosecute Liberty Mutual Insurance Company despite evidence that its subsidiary paid nearly $1.5 million in bribes to officers of six state-owned banks in India. As part of the declination agreement, Liberty Mutual enhanced its compliance program, and agreed to disgorge profits.

The bribes, made between 2017 and 2022, were connected to insurance business that resulted in $9.2 million in revenue and $4.7 million in profits.

This is the first public corporate resolution involving the Foreign Corrupt Practices Act under President Donald Trump’s second administration, and comes shortly after the DOJ issued guidance that arguably narrowed the focus of such investigations. Among other factors, the guidance calls on prosecutors to consider whether the bribes put “law-abiding competitors, including U.S. companies, at a serious economic disadvantage.”

However, the resolution largely resembles declination agreements made under prior DOJ guidance, such as with Boston Consulting Group, and does not allege facts that align with the priorities spelled out in the more recent memorandum.

As one commentator pointed out, “While declinations are coveted by defense lawyers for eliminating a company’s criminal exposure, the department managed stricter terms for Liberty Mutual than had it outright closed the investigation.”

The DOJ could have simply closed its investigation into Liberty Mutual

Given that American companies are still minor players in the Indian insurance market, where bribes and kickbacks are seen as “routine business practices,” it’s not clear if or how the bribes harmed an already degraded competitive environment.

Moreover, the Indian entity is arguably not, in fact, a subsidiary of Liberty Mutual, and its employees may not be agents of the U.S. insurer. This is because, during most of the period that the bribes were paid, Indian law required insurance companies to be “Indian owned and controlled.” Foreign companies could not own more than 49 percent of an insurance company, and were limited in the number and type of board appointments they could make. Liberty Mutual still only owns a minority stake in the Indian entity, which began as a joint venture with a local majority owner (who later sold its stake to two other companies).

Coupled with the fact that the payments were spread out over multiple recipients and years, and that insurance distribution in India is heavily reliant on third parties (Liberty Mutual’s India entity currently uses nearly 20,000 brokers and agents), Liberty Mutual might have been able to make a strong argument that it neither authorized nor reasonably could have known about the corrupt payments.

But time may have been a factor

Accepting a declination, however, may have been a strategic move that favored certainty and time over a Pyrrhic victory that costs more to shepherd than to settle. While the DOJ and SEC have dropped certain FCPA reviews in recent months, those cases involve long-running investigations, including with substantial prosecutorial burdens.

For instance, in May of 2025, the SEC and DOJ closed their investigation of potential FCPA violations in China by GE HealthCare. But the review had been going on for seven years. Recently dropped cases against two former Cognizant Technology Solutions executives had similarly been ongoing since 2019, and included considerable roadblocks to obtaining evidence. For regulators, the decisions to close these cases may have been influenced by the desire to “cut loss” – which is less of a factor with the Liberty Mutual investigation.

Indeed, where the Liberty Mutual declination truly does stand out is in its timeline – Liberty Mutual self-reported the potential FCPA violation in March 2024, meaning the investigation was resolved in about 17 months. The BCG investigation, by contrast, appears to have gone on for nearly five years.

A well-scoped internal investigation might have saved the day

The DOJ’s declination letter indicates that the payments were “identified during an internal investigation that was still ongoing at the time of the disclosure.” Prompt self-disclosure is a critical component in receiving a declination.

Of course, what triggered the investigation is not publicly known. There may have been a broader sweep of third parties following the corruption conviction of an agent connected to its Singapore business in 2021, or it could have been a more targeted review following the 2022 arrest of its former joint venture partner. Whatever the push, Liberty Mutual’s compliance program could not have boiled the proverbial ocean by reviewing every payment by every affiliate over every year.

Here, the investigation was scoped broadly enough to capture these payments, but was likewise narrow enough to yield timely insights.

Bottom line

Despite fears to the contrary, there is no indication that regulators are only enforcing anticorruption laws along narrow lines. But there are signs that they are continuing to make progress in encouraging corporate cooperation.

As discussed in TRACE International’s white paper Voluntary Disclosure Under the Foreign Corrupt Practices Act, two of the biggest deterrents to self-reporting a potential FCPA violation are the long investigation period, and the prospect of “scope creep,” i.e., the regulator “look[ing] across to other areas for potential control failures.” The Liberty Mutual declination signals a promising development in this regard, given its unusually speedy resolution.

For risk and compliance professionals, this is all the more reason to maintain a well-tuned monitoring and investigation function.

Dave Lee

FCPA Compliance Consultant