During the June 14th House FCPA hearing (see here for the prior post) Representative Sandy Adams (R-FL) asked Greg Andres (DOJ) about the DOJ’s FCPA declination decisions and requested that the DOJ provide more detail as to its declination decisions, including the DOJ’s reasons and rationale for why enforcement actions did not result. [A declination decision in the FCPA context is generally viewed to mean that the DOJ learns of conduct that likely violates the FCPA, typically through a corporate voluntary disclosure, but in the exercise of its prosecutorial discretion the DOJ declines to prosecute or bring an enforcement action.]
Soon after the hearing, Representative Adams and Representative James Sensenbrenner (R-WI) sent Andres a letter and requested as follows. “Please provide to us information on cases that been brought to the attention of DOJ, but your agency decided, for one reason or another, not to investigate or pursue prosecution within in the last year along with the rationale for those decisions.”
In this August 3rd letter, Assistant Attorney General Ronald Welch begins with references to the DOJ’s Principles of Federal Prosecution of Business Organizations. Welch then responds as follows. “Pursuant to these guidelines, the Department has declined to prosecute corporate entities in several cases based on particular facts and circumstances presented in those matters, and taking into account the available evidence. For example, during the previous two years, the Department of Justice declined matters in which some or all of the following circumstances existed: a corporation voluntarily and fully self-disclosed potential misconduct; corporate principles voluntarily engaged in interviews with the Department and provided truthful and complete information about their conduct; a parent corporation voluntarily and fully self-disclosed information to the Department regarding alleged conduct by subsidiaries;a parent company conducted extensive pre-acquisition due diligence of potentially liable subsidiaries, and engaged in significant remediation efforts in acquiring the relevant subsidiaries; a company provided information to the Department about the parent’s extensive compliance policies, procedures, and internal controls, which the parent had implemented at the relevant subsidiaries; a company agreed to a civil resolution with the Securities and Exchange Commission, while also demonstrating that a declination was appropriate for additional reasons; a single employee, and no other employee, was involved in the provision of improper payments; and the improper payments involved minimal funds compared to the overall business revenues.”
Welch concluded the letter by stating that the DOJ “cannot comment more specifically about FCPA matters where prosecution was declined” to “protect the privacy rights and other interests of the uncharged and other potentially interested parties.” Given that many declination decisions are assumed to be made after corporate voluntary disclosures, it is difficult to understand what privacy rights would be implicated by more specific answers.
I highlight above four of the circumstances DOJ identified because they undermine the DOJ’s staunch opposition to a potential FCPA compliance defense – a defense Andres (testifying on behalf of the DOJ at the June hearing) called “novel” and “risky.”
How is an FCPA compliance defense “novel” and “risky” when it would include factors the DOJ already considers in declining to bring FCPA enforcement actions? Would it not serve the public interest for such factors to be removed from the shadowy world of opaque DOJ decision making and codified in an open and transparent manner in an FCPA compliance defense?
Many have called for more transparency in DOJ declination decisions. In this guest post, Homer Moyer, a dean of the FCPA bar, called for “internal DOJ guidance that voluntarily disclosed matters must normally be resolved by the Department within 90 days after completion of an internal investigation; that agencies should make public their calculations of credit for voluntary disclosure and coordination; and that the Department will publish sanitized summaries of its declinations.” In this previous post, I proposed that the DOJ should publish its declination decisions in a manner similar to its FCPA Opinion Procedure releases. In a 2010 Q&A with Corporate Counsel Billy Jacobson (a former high-ranking DOJ FCPA official) stated: “The Justice Department could publicize cases anonymously that it has not brought because of the company’s actions.” Even William Stuckwisch (current DOJ-FCPA) wondered aloud in this video (at the six minute mark) whether DOJ declination decisions should be made public.
Given the opportunity to demonstrate to Congress, the business community, the FCPA bar, and others that it runs a consistent, principles-based, transparent FCPA enforcement program, the DOJ in its responses once again “circled the wagons.”
For additional analysis of DOJ declination decisions, see this prior post.