There is a sliding scale when it comes to prosecutions of corporations under the Foreign Corrupt Practices Act (FCPA).

Peter Spivack
Partner
Hogan Lovells
Washington, D.C.

It goes from guilty plea to deferred prosecution agreement to non prosecution agreement and then declination.

In recent years, the Department of Justice has been moving down the scale.

Last week, the Justice Department declined prosecution of Dun & Bradstreet, “despite the bribery committed by employees of the company’s subsidiaries in China.”

Dun & Bradstreet was represented by Peter Spivack, a partner at Hogan Lovells in Washington, D.C.

Is the Justice Department moving more and more toward declinations in FCPA cases?

“I can’t comment on the Dun & Bradstreet case specifically,” Spivack told Corporate Crime Reporter in an interview last week. “But let me tell about my experience. The Department of Justice takes a hard look at the actions of a company and its individual employees. The Department tries to make an evaluation that is consistent with the way the company has acted during the investigation. There is a real desire to encourage both voluntary disclosure and cooperation. And they do that by either declining prosecution or providing for reduced penalties. That has certainly been my experience in dealing with the Department.”

Given similar facts, is a company more likely to get a declination under the Trump administration?

“We are still in the process of figuring that out. The people at the FCPA unit are the same people who were there before the Trump administration took office. There is consistency. There has been a change in terms of the oversight. I have not seen yet and can’t discern whether there is a real change in policy.”

“The FCPA Corporate Enforcement Policy is a codification of the pilot program that was started two years earlier under the Obama administration. If one is simply looking at the policy at the Department of Justice, there is a desire to have consistency. There is a desire to have predictability and reduced uncertainty to encourage companies to make those voluntary disclosures, while at the same time preserving flexibility for the Department to act if it feels as if there has been a company that is a recidivist in their view, or a company that doesn’t convince the Department that it has a strong compliance program and won’t be able to govern itself going forward.”

Let’s say there is a police raid on a company facility in China and the company then decides to self disclose. Would the Department consider that a timely voluntary self-disclosure?

“The Department of Justice points to the Sentencing Guidelines. The guidelines say that a voluntary self-disclosure occurs when there is no imminent threat of a government investigation. There is room to debate what that actually means.

What is imminence? What is the spectrum of imminence? Is the threatened government investigation a U.S. investigation or is it a non-U.S. investigation from a different government? There is not a lot of guidance under the Sentencing Guidelines.

My experience with the Department of Justice is that there is an attempt to be consistent while also understanding that each situation is very different.”

“For example, what happens if a company discloses more than there are in public reports? Does it receive credit? Should it receive credit? Is there a partial credit? There are a number of factors that go into that discussion. There is a strong desire for the Department of Justice to maintain its flexibility in making that decision.”

There is a Justice Department declinations page. There are eight declinations listed, including most recently the Dun & Bradstreet case. Do you anticipate that we will be seeing more FCPA declinations and fewer deferred and non prosecution agreements?

“There absolutely will be more declinations. There is a desire to have a threshold – a demonstrated commitment on behalf of a company that it has done a thorough investigation, that it has reported the information on individuals, that it has implemented remedial actions, that it hasn’t sat on its laurels with respect to its compliance program, but that it has sought ways to expand and improve the compliance program. Those are all considerations. And they are all spelled out in the corporate enforcement policy. There is not a desire at the Department of Justice for having that be an impossible standard to meet. Instead, there is a strong desire to have companies meet the standard. That will simply depend on companies and their advocates being able to articulate why they fit within the standard and should get the treatment that the Department of Justice is prepared to give –  a declination.”

“There may be a swing more toward the lower end of the spectrum where companies cooperate and do what the Department thinks is the right thing.”

You mean the spectrum from guilty pleas to declinations?

“Yes.”

We are seeing that or we might see it?

“I think we are seeing it. It’s a beginning, but we are seeing it.”

Movement toward the bottom part of the scale?

“If there is a discernible trend, it is toward that way. But the Panasonic Avionics case just settled for $137 million. And I know there are other big settlements in the works. I don’t think this Department of Justice is saying – if you are a company, you get a pass. I think they are saying – we have an open mind, we’ll entertain it. We will be just as enforcement oriented as traditional Republican administrations.”

If a case comes in the door, can you eyeball the facts and pigeonhole whether it’s going to be a declination, a deferred prosecution, a non prosecution or a guilty plea?

“One has to be careful about setting a client’s expectations and making sure those expectations are realistic. It’s hard to predict these things. But there are common elements.”

“If a company is coming to me and it has been many months since the discovery of the conduct, that may be a tougher case to convince the Department of Justice there should be a declination.”

“If a company comes to me and says – our CFO was involved at our parent company – that will be more difficult to convince the Department in favor of declination. If a company had a whole series of warning flags or red flags about a subsidiary’s operations, that’s another fact that is more difficult to wrestle with.”

“Yes, I can look at a fact pattern and say –  here is where I think this case should end up and where I think it may end up. But I also have done this long enough to know that at any point in time, you don’t know all of the facts. And things can change quite rapidly. What I think and what ends up happening can be at times exactly right and at other times completely divergent.”

[For the complete q/a format Interview with Peter Spivack, see page 32 Corporate Crime Reporter 19(12), Monday May 7, 2018, print edition only.]