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The Voluntary Disclosure Process and the Lack of Transparency

DOJ’s Voluntary Disclosure Process

For those who are tired of hearing me complain about the Justice Department’s voluntary disclosure process and the FCPA, I can understand if you want to change the TV channel and watch Tom Fox or Dick Cassin or Professor Koehler. With all of the complaints circling DOJ and its enforcement of the FCPA, one of my pet peeves continues to be the lack of transparency or guidelines for handling voluntary disclosures.

I continue to be baffled by the Justice Department’s failure to respond to critics and try and develop some good policy guidance on this issue and others relating to FCPA enforcement such as the definition of “foreign official.” Lets just start, however, with voluntary disclosure process.

FCPA practitioners know the drill when they begin the process. Clients lose all leverage when they enter the voluntary disclosure process.

The Justice Department urges – and even tries to command – companies to disclose violations, promising leniency and discounts in penalties. Unfortunately, the Justice Department fails to provide transparency to the process which would ensure that all parties are treated consistently and fairly. The model is not working.

So long as the Justice Department continues to ignore this issue, companies will gain more and more traction in Congress. If the Justice Department is not careful, they will have to deal with a lot more than just some of the basic amendments that the Chamber of Commerce is now proposing.

A new model is not hard to design. The Justice Departments needs to outline benefits to companies who seek to cooperate based on several factors:

1. The timing of the cooperation in relation to the government’s awareness of the violation or the initiation of an investigation.

2. The pervasiveness of the violation(s) and the involvement of high-level management.

3. The nature and extent of the company’s cooperation and the prosecution of other officials or companies.

4. The acceptance of responsibility by the corporation and its senior offices.

5. The existence of a compliance program, modifications of the compliance program and assurances with regard to enhancements to the existing anti-corruption compliance program.

Based on a weighing and assessment of factors 1-5 above, a company would be entitled to a discount of a certain percentage of any potential fine or disgorgement; and/or a plea to a lesser charge by a subsidiary or other related company.

The Department of Justice would retain discretion to require a compliance monitor in certain specified situations, the standards for which should be articulated in advance, and/or to award an additional discount or benefit for extraordinary situations.

Within the Justice Department, a committee should be created like in many US Attorneys Offices which would be required to review each proposed settlement to ensure consistent standards and results. These reviews would be regularly monitored by senior management to ensure consistency, and of course subject to Congressional oversight (or even review by the DOJ Inspector General).

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