In recent remarks, Deputy Attorney General Rod Rosenstein announced significant revisions to the Department of Justice’s (DOJ) policies for enforcing the Foreign Corrupt Practices Act.  The policy revisions make permanent many of the aspects of the FCPA Pilot Program which began in 2016 and sought encourage voluntary self-disclosures of FCPA violations by formalizing the benefits to corporations for doing so.  The recent policy revisions even went a step farther than the Pilot Program, announcing that if company voluntarily discloses FCPA violations, fully cooperates in the government’s investigation, and makes timely and appropriate remediation, there will be a presumption that the DOJ will resolve the company’s case through a declination to prosecute.

This policy revisions reinforce that the DOJ is focused on prosecution culpable individuals.  Indeed, Deputy Attorney General Rosenstein noted that “[i]t makes sense to treat corporations differently than individuals, because corporate liability is vicarious; it is only derivative of individual liability.”

While the DOJ appears to have made it even easier for companies to insulate themselves from liability if they turn over the individual bad actors, there are still many difficult decisions to be made by companies contemplating self-disclosure. Each of the requirements for unlocking the benefits of corporate disclosure – voluntary disclosure, full cooperation, and appropriate remediation – have specific criteria and pose nuanced questions for executives and directors to consider.

First, under the revised FCPA enforcement policy, the self-disclosures must be genuinely voluntary (i.e., prior to the “imminent threat” of disclosure or government investigation) and must be made within a “reasonably prompt time” after discovery of the violation.  This creates some potential issues for directors and officers who may learn of potential violations and seek to conduct an internal investigation to gather more information.  The policy revisions do not further define an “imminent threat” or “reasonably prompt” period, but company must be aware that protected investigations may jeopardize their ability to make an effective voluntary disclosure.

Second, full cooperation may be onerous.  Although the policy revisions do not contain an exhaustive list of the types of cooperation that the DOJ will expect, it does instruct that companies should “proactively” disclose all relevant facts and evidence.  Accordingly, companies must determine the appropriate scope of their disclosures (and may need to do so even if an internal investigation is not complete because concerns regarding the timeliness of the disclosure have arisen).  Moreover, the instruction that the companies take a proactive approach to disclosures appears to add additional pressure on companies to make broad disclosure (but not data dumps which could frustrate DOJ investigations) or risk failing to meet the full cooperation criterion.

Third, remediation efforts must be genuinely aimed at and capable of correcting the source of the violation.  The DOJ acknowledges that there will be variances based on the size of the company and the nature of the underlying violation; however, companies should be prepared to commit necessary resources to develop and implement ethics and compliance programs that will demonstrably improve the company’s ability to stop future violations.

Finally, another condition that has been made permanent is the requirement that the company pay all disgorgement, forfeiture, and/or restitution in full.  Depending on the amount in question, the ability to pay in full may be a difficult practical issue for a company.  Nevertheless, as part of the gateway to non-prosecution, a company must address the issue and develop a strategy for obtaining the necessary funds as it approaches voluntary self-disclosure.

Robust compliance programs remain the critical first step for companies seeking eradicate FCPA violations from their corporate culture.  As Deputy Attorney General Rosenstein noted, criminals try to evade law enforcement, but must first evade internal controls and compliance programs, therefore, “[h]onest companies pose a meaningful deterrent to corruption.”  Fostering a culture of compliance, dedicating sufficient resources, and ensuring that compliance personnel have access to management and the board were all cited by Deputy Attorney General Rosenstein as hallmarks of effective compliance and should be at the core of any compliance program.

Almost one year ago, the Department of Justice (DOJ) announced that Norwegian Shipping company Wallenius Wilhelmsen Logistics AS (WWL) had agreed to pay a $98.9 million fine for its role in a conspiracy to control prices for roll-on, roll-off cargo (such as cars, trucks, and agricultural equipment) shipped to and from the United States.  At the time, the DOJ acknowledged that, in addition to the fine, WWL was cooperating in ongoing investigations and affirmed the Department’s commitment to holding “companies and executives” accountable.

Last week, the DOJ announced that the indictment against three current and former executives of WWL subsidiaries had been unsealed and that the prosecutions of these individuals were proceeding.  The indictment – presented to the grand jury in November 2016 – alleges that the individuals attended meetings and engaged in communications in which executives from several large shipping companies allocated customers and routes by agreeing to the amounts that each company would bid for certain contracts.

The DOJ also announced that these prosecutions represented three of eleven executives who have been charged in connection with this conspiracy. Four executives had plead guilty and were sentenced to prison terms. The rest are considered “international fugitives.”  Further, the DOJ again made clear that it remains committed to prosecuting individuals as well as corporations, stating: “WWL has pleaded guilty. Now we are working to ensure that its executives who conspired to suppress competition at the expense of American consumers will be held accountable.”

It appears that the DOJ is following through with the directives of the September 2015 Yates Memo and is no longer satisfied by large corporate fines.  The fact that four executives have been sentenced to prison, three are being actively prosecuted, and five more are considered fugitives — all almost a year after the $98.9 million fine headline — shows that the DOJ is genuinely re-focused on individual accountability.  Accordingly, compliance and whistle-blower programs must have new found importance not only to corporations, but to the individual officers, directors, and executives who may be held accountable for corporate malfeasance.

Earlier today, the Department of Justice announced that construction conglomerate Odebrecht SA and its affiliate Braskem SA have pleaded guilty to their maintenance of an elaborate bribery scheme which paid out approximately $788 million in bribes to government officials around the world since 2001.

To facilitate its massive bribery scheme, Odebrecht established its “Division of Structured Operations,” which federal prosecutors dubbed the “Department of Bribery.” The Division of Structured Operations operated on its own floor and used its own communication and computer networks. Code names and secure emails were used by those requesting bribes, bribe recipients, and financial institutions to make payments out of a ‘shadow budget.’ The shadow budget, which accounted for and tracked all bribe payments in complex spreadsheets, was comprised of funds funneled by Odebrecht into off-shore entities and then back into the Division of Structure Operations.

Under their respective plea agreements, Odebrecht and Braskem agreed to pay, at least, a combined $3.5 billion in penalties.  Odebrecht agreed with the DOJ that $4.5 billion would be an appropriate criminal fine, but has claimed that is unable to pay a fine of that amount.  Accordingly, the plea agreement states that Odebrecht will pay at least $2.6 billion, however, an ongoing review of Odebrecht’s ability to pay may result in Oberbrecht paying an amount closer to $4.5 billion. Braskem will pay approximately $957 million in criminal fines.  Brazil, where both of the companies are headquartered, will receive 80% of the fines and the United States and Switzerland will each receive 10%.  Notably, Oderbrecht was credited with 25% reduction in the fine sought based on its cooperation with investigators. Braskem was credited with a 15% reduction based on its partial cooperation.

This blockbuster plea agreement highlights the growing trend of global enforcement. While few companies will ever consider implementing a bribery scheme of the magnitude Odebrecht’s, even small acts to grease the wheels create a slippery slope and companies of all sizes must take precautions — through compliance and training programs — to make sure that a culture where bribery is condoned and supported never begins to gain momentum.

Earlier this week, the Department of Justice (DOJ) announced that Norwegian Shipping company Wallenius Wilhelmsen Logistics AS (WWL) has agreed to pay a $98.9 million fine for its role in a price-fixing scheme with other international shipping companies that lasted more than a decade.

As part of an ongoing anti-trust investigation, WWL is the fourth shipping company charged in a conspiracy to control prices for the shipment of roll-on, roll-off cargo in and out of the Port of Baltimore and other US ports. The DOJ alleges that the conspirators fixed prices, rigged bids, and allocated customers for the shipment of roll-on, roll-off cargo (which generally includes wheeled vehicles such as cars and trucks and agricultural, construction, and mining equipment) between 2000 and 2012. To date, the four settling shipping companies have agreed to pay more than $230 in fines.

In addition to the fine, WWL has agreed to cooperate in the DOJ’s ongoing anti-trust investigation. It is unclear whether the ongoing investigation will focus on other conspiring companies or, based on the DOJ’s recent pivot toward individual accountability and language from its press release that it seeks to hold “ocean shipping companies and executives” responsible for these crimes, whether the investigation will drill down on the individuals responsible for the alleged scheme. With these massive penalties already agreed to by the companies, where the DOJ focuses its investigation next (other corporations or individuals) could be a bellwether for the tide of individual liability in similar large-scale, industry-wide investigations.