Implementation of Department of Justice’s Voluntary Self-Disclosure Policy
As noted in a previous AT Advisory, in February 2023, the United States Department of Justice (DOJ) announced a new voluntary self-disclosure (VSD) policy intended to incentivize corporations to voluntarily report misconduct. At a speech during the New York City Bar Association’s White Collar Crime Institute in May, Assistant Attorney General Kenneth Polite noted an increase in the number of companies making VSDs. This increase was likely driven, in part, by the fact that resolutions of cases announced shortly before and after the VSD policy was announced provide concrete proof that VSDs have significant benefits.
For example, in December 2022, the DOJ declined to prosecute aircraft carrier Safran S.A. (Safran) for violations of the Foreign Corrupt Practices Act (FCPA) based on alleged bribes to Chinese government officials, citing Safran’s VSD, cooperation, remediation (including termination of an employee involved in the alleged misconduct), and agreement to disgorge the full amount of ill-gotten gains received by its U.S.-based subsidiary.
More recently, in March 2023, the DOJ declined to prosecute Corsa Coal Corporation (Corsa) for violations of the FCPA, citing Corsa’s VSD, cooperation, remediation (including termination of an employee involved in the bribery and improving its compliance program and internal controls), and disgorgement of some of its ill-gotten gains. Although the government calculated Corsa’s total profits from the scheme as $32.7 million, the government accepted Corsa’s agreement to pay $1.2 million, which was the amount the government determined it could pay without threatening its viability.
These examples plainly demonstrate that fully cooperating with the government by promptly making a VSD, taking concrete and definitive actions to remediate alleged misconduct, and disgorging ill-gotten gains can significantly reduce the criminal liabilities that companies face for wrongdoing. There will undoubtedly be more to learn from cases still to come. Days before announcing the resolution involving Corsa, Polite announced that the DOJ had revised its Evaluation of Corporate Compliance Programs to focus on corporate policies governing messaging apps and the manner in which companies’ compliance programs alter the compensation of employees involved in misconduct. Polite also announced a pilot program to require corporate compliance programs to include compensation-related criteria and offer fine reductions for companies that claw back compensation in appropriate cases.
Our White-Collar Criminal Defense and Government Investigations team will continue to monitor developments regarding the DOJ’s VSD policy and its implementation. Please contact your regular AT lawyer or the authors of this advisory with any questions.