Deputy Assistant Attorney General Matthew Miner in recent remarks spoke about the Justice Department’s efforts to investigate and stamp out global corruption, particularly concerning mergers and acquisitions, and the valuable role compliance officers play.

“We at the Department fully recognize that even within otherwise good companies—ones with robust compliance programs and strong cultures of compliance—there can exist one or a few bad apples,” Miner said during a speech  at the American Conference Institute's Global Forum on Anti-Corruption Compliance in High Risk Markets. “Similarly, we understand that through acquisitions, otherwise law-abiding companies can sometimes inherit problems that are not of their own making.”

He noted that the Department, while it has made great strides in the past year relating to its approach to corporate enforcement, that it would still like to do better concerning mergers and acquisitions, “particularly when such activity relates to high-risk industries and market,” he said.

Currently, the FCPA Resource Guide provides companies some guidance in this area, offering companies examples of cases where the Justice Department and SEC declined to bring an enforcement action where a company voluntarily disclosed and remediated, and cooperated with the government.

The FCPA Resource Guide also notes that “a successor company’s voluntary disclosure, appropriate due diligence, and implementation of an effective compliance program may also decrease the likelihood of an enforcement action regarding an acquired company’s post-acquisition conduct when pre-acquisition due diligence is not possible.”

Miner addressed the key sticking point for many senior management: “I know from experience that ‘may’ decline is a significant sticking point for corporate management when deciding whether and how to proceed with a potential merger or acquisition,” he said. “There is a big difference between a theoretical outcome and one that is concrete and presumptively available.

In addressing these concerns, Miner stressed that the Justice Department intends to apply the principles contained in the FCPA Corporate Enforcement Policy to successor companies that uncover wrongdoing in connection with mergers and acquisitions and thereafter disclose that wrongdoing and provide cooperation, consistent with the terms of the policy. “We believe this approach provides companies and their advisors greater certainty when deciding whether to go forward with a foreign acquisition or merger, as well as in determining how to approach wrongdoing discovered subsequent to a deal,” he said.

“We are fully cognizant that in some instances an acquiring company has limited access to a target company’s data and records, perhaps even more so when the target company is in a high-risk jurisdiction,” Miner added. “In those instances, if an acquiring company unearths wrongdoing subsequent to the acquisition, we want to encourage its leadership to take the steps outlined in the FCPA Policy, and when they do, we want to reward them, accordingly for stepping up, being transparent, and reporting and remediating the problems they inherited.”

Similarly, when an acquiring company encounters corruption issues during the due diligence process, the Department would encourage it to look to guidance through its FCPA Opinion Procedures before moving forward with an acquisition. “Although it may take a little more time—and we can, to a degree, expedite our analysis based on timing needs—it sometimes makes sense to slow down to assess risks,” Miner said.

Opinion Procedures Lacking

The Fraud Section’s FCPA website currently posts Opinion Procedure Releases going back to 1993, “but not enough companies are taking advantage of this process,” Miner said. “I’ve recently reviewed the list, and the most recent incident of use is from 2014.”

Nonetheless, even that old release, Miner said, is “illustrative of the value of engaging in the opinion process. In that case, a multinational company headquartered in the United States sought an opinion on whether the Department would bring an enforcement action against it if it acquired a foreign consumer products company. The acquiring company conducted pre-acquisition due diligence on the target and uncovered evidence of apparent improper payments. The acquirer took pre-closing steps to remediate the target’s anti-corruption issues and anticipated fully integrating the target into its compliance and reporting structure within one year of closing.”

“While the opinion recognized that there was no U.S. nexus to the conduct, which would have precluded prosecution, in any event, the opinion also pointed to the fact that no contracts or assets acquired through bribery would remain in operation post-acquisition, and that no financial benefit would be derived from such contracts. Based on these facts, the opinion concluded that the Department would not take any action against the acquiring company.”

Miner spoke to the value of the opinion process, which he called “a tremendous resource" and urged companies to make greater use of. Moreover, when a company relies on this procedure on the front end, but later uncovers wrongdoing post-acquisition, we want management and the company’s advisors to feel comfortable disclosing it to the Department, knowing that they will be treated fairly under the principles of the FCPA Corporate Enforcement Policy.

Miner also stressed the critical role that compliance professionals play in the mergers and acquisitions process: “As advisors and compliance professionals, you are on the front lines of detecting and preventing corruption and other misconduct. You are at tasked with advising your companies and your clients to ensure that businesses operate in compliance with the law. As such, you are often put in the position of evaluating risk in time-sensitive transactions.”

“In that role, one thing I hope you will take away from my comments and those of my colleagues is that the Department of Justice should be viewed as a partner, not just an adversary,” he added. “When business and industry work with the Department, rather than against it, our public institutions and our country are stronger for it.”

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