Every compliance practitioner can learn from the Panasonic Avionics FCPA enforcement action earlier this week. There are lessons about the limits of due diligence, the lack of internal controls, management override of existing internal controls, how C-Suite involvement in illegal conduct corrupts an entire organization, and a foreign parent looking the other way when a profitable subsidiary makes a ton of money. However, from this perspective, the most significant learning can be found in the 20 percent discount afforded Panasonic Avionics off its criminal fine.
This criminal fine (which totaled $137.4 million) is based on calculations under the FCPA Corporate Enforcement Policy, which was announced by Deputy Attorney General Rod Rosenstein last November. Recall that the company did not self-disclose and there was C-Suite level involvement, meaning egregious conduct. Yet the company met the standard for a reduction by cooperating with authorities once the probe was underway.
One of the biggest messages communicated by the Justice Department in according Panasonic Avionics a 20 percent discount is that a company can make a comeback with the regulators from some very serious conduct through this cooperation and remediation prong. In Panasonic’s civil settlement ($143 million), the SEC noted that the parent company afforded cooperation to the SEC “in the later stages of the staff’s investigation.” This likely means the company was uncooperative during the early stages of the investigation. The details of the company’s remediation indicated that it met the requirements of the FCPA Corporate Enforcement Policy.
Every chief compliance officer, senior business executive and board of directors member needs to read and digest this message: It is much better to cooperative and actively remediate during the pendency of an investigation. The benefits of doing so were literally worth millions to Panasonic Aviation.