The Justice Department has brought three corporate FCPA enforcement actions in 2023 (if you include the Ericsson DPA breach settlement).  With its recent announcement of a declination under the Corporate Enforcement Policy, DOJ has declined two FCPA cases and one healthcare fraud case in 2023.

DOJ publicizes the declination letters issued in accordance with the Corporate Enforcement Policy.  DOJ officials have made numerous public statements and speeches encouraging companies to voluntarily disclose instances of misconduct to earn applicable benefits under the Corporate Enforcement Program.

In its most recent declination, DOJ declined to prosecute Lifecore Biomedical, Inc. (formerly known as Landec Corporation), a U.S.-based biotech firm, for violations of the FCPA.  DOJ specifically recounted that, between May 2018 and August 2019, Lifecore’s former subsidiary, Yucatan Foods (“Yucatan”) and an associated maquiladora, Procesadora Tanok S. de R.L. de C.V. (“Tanok”), paid bribes, through a third-party, to Mexican officials to secure a wastewater discharge permit.

Specifically, Yucatan and Tanok individuals paid approximately $14,000 in bribes to a Mexican official to secure the permit.  In addition, these individuals paid $310,000 to a third-party service provider, who in turn paid a Mexican official, to sign fraudulent manifests describing wastewater deliveries to a municipal water company for disposal.

Lifecore earned a financial benefit of approximately $1.286 million from the illegal scheme.  DOJ insisted on Lifecore disgorging $406,505 because it already incurred $879,555 in expenses by constructing a wastewater treatment plant and paying applicable duties to the Mexican government. 

The bribery scheme began and continued after Lifecore acquired Yucatan and Tanok.  During Lifecore’s pre-acquisition due diligence, a Yucatan officer involved in teh misconduct concealed the misconduct from Lifecore and its auditor.  Lifecore discovered the misconduct in its post-closing integration audit, Lifecore began an internal investigation and then voluntarily disclosed the matter to DOJ.

DOJ’s declination was based on the following factors under the Corporate Enforcement Policy:

• Lifecore’s timely and voluntary self-disclosure of the misconduct within three months of first learning about the misconduct;
• Lifecore’s full and proactive cooperation in this matter and its ongoing cooperation;
• the nature and seriousness of the offense;
• Lifecore’s timely and appropriate remediation, including the termination of the Yucatan employee who engaged in the bribery scheme, withholding the individual’s bonus and other compensation and substantially improving its compliance program and internal controls; and
• Lifecore’s disgorgement of $406,505.

Lifecore divested itself of both Yucatan and Tanok, and made a specific condition of the sale that both companies would continue to cooperate with the government as a material condition of the sale to Lifecore’s successor-in-interest.