New DOJ Policies Could Affect FCPA Penalties, Self-Reporting, Lawyers Say

“We expect things to ramp up and for the new administration to really take an aggressive approach,” Jonathan Kolodner, a white-collar enforcement lawyer with Cleary Gottlieb, said during a Nov. 9 webinar hosted by the firm. “The bottom line is that we certainly expect more anti-corruption enforcement going forward.”

Earlier this year, DOJ officials said the agency is shifting toward more proactively targeting FCPA and other corporate violations -- including through advanced technologies and data mining -- instead of waiting for voluntary disclosures. “More and more the DOJ is going to be initiating and really opening these investigations on its own,” said Lisa Vicens, an anti-bribery and anti-corruption lawyer with Cleary Gottlieb.

If the Justice Department discovers more violations on its own, companies may see a drop in mitigated penalties due to less frequent self-reporting, which could lead to a rise in penalty amounts, Kolodner said. But he also said penalty amounts will depend on the “extent of the wrongdoing” and a range of other factors, and it’s difficult to determine how they will change.

“It's going to be hard to really know the answer to that question,” said Kolodner, who oversaw FCPA investigations as the former chief of the DOJ’s Complex Frauds and Cybercrime Unit. “But look, if there's less self-reporting, then you'll see less of a discount, which means penalties will go up, of course.”

The new data mining effort could also dissuade companies from self-reporting, he said. If a company that committed an FCPA violation knows the DOJ is already aware of its wrongdoing, Kolodner said, voluntarily disclosing the violations may have little benefit. Without a voluntary disclosure, he said, companies are eligible for only a 25% penalty deduction, even if they cooperate with a DOJ FCPA investigation.

“So it might be in your interest, if you have any reason to think that the DOJ already knows about the conduct, to not self-report. Wait and see what happens. See if you get contacted first by DOJ and whether they're actually pursuing the investigation,” Kolodner said. “And there may be some instances where they don't, and they may not follow through.”

But Kolodner said it’s too soon to tell how much the DOJ’s new policies will affect FCPA investigations. “We're going to have to see how aggressive DOJ really is, how effective their data mining really is,” he said.

Companies should also not rush to a conclusion about the agency’s other policy initiatives announced last month, Kolodner said. In an October speech, Deputy Attorney General Lisa Monaco said the agency planned to repeal previous DOJ enforcement policies surrounding cooperation credit, monitorships and prior misconduct to more aggressively target trade violations and other corporate crime (see 2110280051). “I think the policies themselves that were repealed are not hugely significant,” Kolodner said. “I think really the biggest issue is that this is just the initial wave of more aggressive policies that we expect to come.”

Some increased enforcement could come from more cooperation with allies, Vicens said. She said the Biden administration is advancing the U.S.’s anti-piling-on policy, which seeks to minimize duplicative penalties from multiple agencies or governments through closer collaboration with foreign governments. “This new administration seems to be wanting to not only continue that prior policy, but to increase it,” Vicens said.

Enforcement may also speed up because many of the “key players” at DOJ are finally settling into their roles, Kolodner said. He specifically pointed to the new leaders at the criminal divisions for both the DOJ and the Securities and Exchange Commission and to an increase in the number of federal FCPA prosecutors. “There's probably a new energy there to do additional investigative work,” Kolodner said. “It's been clear that the Biden administration places a high priority on anti-corruption work.”