The evolution of FCPA enforcement

In 2015, then-Assistant Attorney General Leslie Caldwell gave further definition to the Justice Department’s views on what constituted a best practices compliance program in remarks at New York University Law School’s Program on Corporate Compliance and Enforcement. In this talk, Caldwell laid out for the first time the key metrics the Justice Department would review to ascertain if a company was actually doing compliance rather than simply having a paper program.

While the greater compliance community did not know it at the time, the Justice Department was developing the FCPA Pilot Program, unveiled in April 2016. The Pilot Program modified enforcement and provided more information on the specifics of a best practices compliance program. In the area of enforcement, it created two new categories of credit companies could receive: First, up to a 25 percent reduction off the bottom guideline of the U.S. Sentencing Guidelines fine range if the firm cooperated and engaged in appropriate remediation; second, up to a 50 percent reduction off the bottom end of the Sentencing Guidelines through self-disclosure, cooperation, and full remediation.

In the area of compliance programs, the Pilot Program emphasized the importance of the compliance function in a company and the growing need for professionalism among compliance practitioners, mandating a company demonstrate both “quality and experience” of its compliance personnel. This meant utilizing real compliance skills, not simply legal training, and so pushed toward even more separation of a corporate compliance function from the legal function. The Pilot Program provided solid, tangible benefits for the CCO around the issue of whether or not to self-disclose, coupled with greater information about the DOJ expectations for a best practices compliance program.

In the area of compliance programs, the Pilot Program emphasized the importance of the compliance function in a company and the growing need for professionalism among compliance practitioners, mandating a company demonstrate both “quality and experience” of its compliance personnel.

In 2017, there were two significant additions to both FCPA enforcement and compliance programs. February saw the release of the Evaluation of Corporate Compliance Programs, which introduced the concept of operationalization of compliance programs into the lexicon. In November came the new FCPA Corporate Enforcement Policy, which formalized parts of and also extended the Pilot Program by providing a presumption of a declination for FCPA enforcement actions when four criteria were met: (1) self-disclosure, (2) extensive remediation, (3) thorough investigation, and (4) profit disgorgement. From the compliance program perspective, the FCPA Corporate Enforcement Policy formalized the mandate for professionalism in corporate compliance personnel and adequate resources to be made available in the compliance function.

In 2018 came the Benczkowski Memo, which detailed what actions a firm under investigation could do to increase the chances of a declination being issued. It also laid out the government’s mandates for the appointment of a monitor in an FCPA enforcement action. This was bookended in April 2019 by an updated Evaluation of Corporate Compliance Programs.

The 2019 guidance detailed three fundamental questions prosecutors should ask; all other questions are divided into these categories: (1) “Is the corporation’s compliance program well designed”; (2) “Is the program being applied earnestly and in good faith?” (In other words, is the program being implemented effectively? Is it real?); and (3) “Does the corporation’s compliance program work” in practice? From the compliance program perspective, the key aspect was the use of the word “culture” throughout, embracing culture as a key component of a compliance program.

The one constant during my tenure as columnist at Compliance Week has been the evolution of FCPA enforcement and, as I move on to other adventures, I hope CW readers will keep this in mind.