Notable Developments in FCPA Enforcement | Torres Commercial Law, PLLC

The Department of Justice really wants violators of the Foreign Corrupt Practices Act (FCPA) to come forward: following a January 2023 revision of its corporate enforcement policy that encouraged voluntary disclosure, the agency spear a DOJ whistleblower reward pilot program on March 24, 2024.

This trend toward rewarding those who disclose FCPA violations reflects the DOJ’s desire to preempt corruption through incentives. As Acting Assistant Attorney General Nicole M. Argentieri explained: “One of our goals is to demonstrate the benefits that await those who voluntarily disclose misconduct. »¹

The context

The Foreign Corrupt Practice Act (FCPA) was enacted in 1977 to prevent businesses and individuals from engaging in activities aimed at corruptly influencing foreign officials.² The anti-corruption provisions of the FCPA target the deliberate bribery of foreign public officials, which includes employees of foreign state-owned enterprises, particularly when such bribery leads to an unfair advantage in business dealings.

When the FCPA was created, the anti-corruption provisions only applied to U.S. persons and certain foreign issuers of securities. In 1998, anti-corruption provisions were expanded to include foreign companies or individuals who take actions leading directly to a corrupt payment to the United States or related to U.S. interests. This is why businesses should be fully aware of the prohibition on bribery, as it is very broad: anti-bribery provisions include money or anything of value offered to foreign public officials for the purpose of bribery.

Why is the whistleblower reward program controversial?

The DOJ’s new whistleblower reward program is controversial but aligns with the agency’s goal of cracking down on corruption. Deputy Attorney General Lisa Monaco touts the program: “The principle is simple: If an individual helps the DOJ uncover significant business or financial misconduct – otherwise unknown to us – then the individual may be eligible to receive a part of the resulting confiscation. »³

In other words, if someone helps the DOJ uncover misconduct, they may receive significant compensation, even millions of dollars. Acting AAG Argentieri expects the program to assist the DOJ in developing cases, including prosecutions for FCPA violations. She further explains that the DOJ’s goal is to create financial incentives in areas where none currently exist.

Of course, the financial reward is subject to conditions. They include:

• The victim(s) must be compensated before the whistleblower reward is granted,

• The information disclosed is not known to the government,

• The whistleblower is not involved in the criminal activity and

• There are no incentives for financial disclosure (such as the FCA qui tam provisions⁴).

The program is still in its infancy but has already sparked debate in the legal community. One of these criticisms is the lack of anonymity. This differs significantly from other DOJ programs, including the FCA. qui tam provisions (covered in more detail in a previous article): The FCA qui tam the provisions allow private parties to provide information regarding fraudulent behavior and potentially receive a share of the recovery, much like the DOJ’s whistleblower program. However, after the “recorder” in an FCA case comes forward and files a lawsuit on behalf of the United States, the action is initially filed under seal. This contrasts sharply with the DOJ’s new program, in which a whistleblower’s identity may be discovered by the defense and in which the whistleblower will likely have to appear as a witness if the action goes to court .

Other critics of the DOJ’s whistleblower program point out the potential for inaccuracy. Defense attorneys will particularly want to know whether whistleblowers are coming forward solely for monetary gain, particularly because they can earn a substantial amount of money in many cases. Additionally, prosecutors must actively corroborate the whistleblower’s accusations in order to allay credibility concerns that may arise from the potential financial reward offered by the government.

Despite these problems, Deputy AG Monaco welcomeswhistleblowers and continues to encourage voluntary disclosure. The deputy AG compares the whistleblower program to wanted posters in the Wild West that offered payment to entice people to come forward. She points to the whistleblower programs of the U.S. Securities and Exchanges Commission and Commodity Futures Trading Commission and says the DOJ program will fill gaps that the first two fail to address.

As the DOJ continues to reward disclosure, it has become increasingly clear that companies that fail to disclose will pay an increasingly high price for FCPA violations, even in plea deals.