LawFlash

DOJ: Companies Need Not Expend Exorbitant Fees to Get Full Cooperation Credit

May 18, 2015

During an FCPA panel event, the Chief of the US Department of Justice’s Fraud Section advised companies to conduct “targeted” FCPA investigations, dismissing the suggestion that companies must spend hundreds of millions of dollars to receive full cooperation credit, and previewed a new transparency initiative.

On May 14, a panel titled “Foreign Corrupt Practices Act: Recent Trends in Enforcement and Compliance” featured panelists Chief of the US Department of Justice’s (DOJ’s) Fraud Section Andrew Weissmann; Revlon’s Executive Vice President, General Counsel, and Chief Compliance Officer Mitra Hormozi; and Morgan Lewis partner Martha Stolley and was moderated by Morgan Lewis partner Kelly Moore. The panel was part of Global Law Week 2015, a biennial event organized by the New York State Bar Association’s International Section. Highlights from the panel event—including Mr. Weissmann’s reflections on cooperation credit and the announcement of increased transparency—are summarized below.

Earning Cooperation Credit: Conducting Tailored Investigations, Identifying Culpable Actors, and Making Detailed Disclosures

When asked about the rising costs of Foreign Corrupt Practices Act (FCPA) investigations, Mr. Weissmann dismissed the suggestion that high investigative and defense expenses—which have cost some companies nearly half a billion dollars—are a predicate to receiving full cooperation credit. Noting some of the staggering legal fees in the hundreds of millions of dollars, Mr. Weissmann advised the audience that companies do not need to “boil the ocean” when investigating corporate misconduct. Although there may be “historical evidence” of DOJ asking companies to engage in “widespread investigations,” he assured the audience that this “is not the current Department of Justice view.”

Mr. Weissmann described a “real life example” of a multinational company that voluntarily disclosed FCPA misconduct in an unnamed foreign country by a team of individuals who also had responsibilities in three other countries. Because “there was very good reason to think that they would have engaged in the same conduct in those other countries,” Mr. Weissmann said, DOJ expected the company to investigate those countries in order to receive full cooperation credit, and the company complied. Mr. Weissmann noted that the company was neither asked nor expected to expand its investigation to the “Antarctic,” for instance, or high-risk countries (as determined by Transparency International’s Corruption Perceptions Index) where the company operated. As explained by Mr. Weissmann, “If there is an issue in one country and just speculation that the same issues could be happening elsewhere, then we should deal with the issue that is before us and come to a very quick resolution.” Investigations should be “appropriately tailored to the facts at issue,” he said, because both DOJ and the companies it investigates share the same interest in “prompt resolutions.”

Reemphasizing DOJ’s priority of prosecuting individuals, Mr. Weissmann said that companies interested in receiving cooperation credit under the US Sentencing Guidelines and “Filip Factors”[1] must identify culpable actors and provide specific details about their misconduct. Mr. Weissmann stated that DOJ is less interested in the “old school style of cooperation,” which he characterized as “passive voice” admissions that “mistakes were made,” and instead expects companies to include “a subject and a verb” when disclosing misconduct.

Increased Transparency

Mr. Weissmann confirmed DOJ’s commitment to providing more transparency regarding cooperation credit and declinations by including greater factual details in non-prosecution agreements (NPAs) and deferred prosecution agreements (DPAs) and providing "general statistics" about declinations in a series of "anonymized examples." Currently, because declinations are rarely, if ever, publicly announced, companies and their counsel have limited insight into how and why such determinations are made.[2] That will change, Mr. Weissmann said, with DOJ providing the public with greater transparency about the declinations process and what companies can do to increase their chances of receiving declinations. Likewise, although DOJ’s website already contains some information about DPAs and NPAs, Mr. Weissmann assured the audience that they can expect to see more detail in the future about what exactly happened that resulted in specific dispositions to help companies assess the benefits of full cooperation.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Chicago
Tinos Diamantatos
Merri Jo Gillette

Dubai
Rebecca L. Kelly

London
Nicholas Greenwood
Kevin Robinson
David Waldron
Iain Wright

Miami
Alison Tanchyk

Moscow
Vasilisa Strizh
Nane Oganesyan

New York
David I. Miller
Kelly A. Moore
Martha B. Stolley

Philadelphia
Nathan J. Andrisani
Meredith S. Auten
John C. Dodds
Eric Kraeutler
Eric W. Sitarchuk

San Francisco
Susan D. Resley

Santa Monica
Nathan J. Hochman
Daniel A. Saunders

Singapore
Timothy Cooke
Daniel Chia

Washington, DC
Marynell DeVaughn
Fred F. Fielding
Margaret M. Gatti
James Hamilton
Rebecca S. Hartley
Matthew S. Miner
Louis Rothberg
Carl A. Valenstein

Wilmington
Colm F. Connolly



[1]. See U.S. Dep’t of Justice, Memorandum from Former Deputy Attorney General Mark Filip to the Heads of Department Components of the United States Attorneys, Aug. 28, 2008, available here.

[2]. DOJ has “a long-standing policy not to provide, without the party’s consent, non-public information on matters it has declined to prosecute” in order “[t]o protect the privacy rights and other interests of the uncharged and other potentially interested parties.” See Crim. Div. of the US Dep't of Justice & Enforcement Div. of the US Sec. & Exch. Comm’n, A Resource Guide to the U.S. Foreign Corrupt Practices Act at 75, Nov. 14, 2012 (hereinafter, FCPA Resource Guide), available here. The FCPA Resource Guide notes, however, that the “DOJ has declined several dozen cases against companies where potential FCPA violations were alleged” from 2010 to 2012 and presents six anonymized examples of declinations involving companies. Id. at 75, 77–79.