In the recent BizJet Deferred Prosecution Agreement
(DPA), which detailed a litany of corrupt payments made and approved at the
highest level of the company to obtain and retain business in Mexico and
Panama, the company received a monetary fine of more than 30% under the low end
of the amount suggested by the US Sentencing Guidelines. How did the company
obtain this fine reduction? Through what the Department of Justice (DOJ) termed
"extraordinary cooperation". I have often wondered what the term "extraordinary
cooperation" meant so when I attended a panel at the recent 2012 Global Ethics
Summit, entitled "Engaging with the Government: What's Changed?" I put that
question to panelist Ty Cobb, a partner in the Washington DC office of Hogan
As a general rule, Cobb noted that 'extraordinary
cooperation' will not be the definition given by the company but by the DOJ.
This is an important discussion to have with your client very early on to set a
proper expectation. A company must be credible at all times, it cannot
selectively report facts but must report both good and bad facts to the DOJ.
Lastly, each matter is a separate negotiation and must stand on its own feet.
He said that a company does not have to completely roll over to every request
made by the DOJ as there can and should be negotiations by investigative or
other specialized counsel who interact with the DOJ throughout the process.
Cobb also provided some guidance on the specific steps
which might lead to a penalty reduction.
Did you go high enough?
First what did the company do to the persons involved in
the bribery and corruption? Was there discipline to the parties? How high up
did the company go to discharge or discipline those involved in the bribery and
corruption? Did discipline or discharge go up to the highest levels of the
company if persons at those levels were involved in the bribery or corruption?
Did your retraining go down low enough?
Here Cobb focused on retraining of employees. He said
that it was important that your post incident training go down to an
appropriate level of employees in the company. While he did not say how low
that level might be, clearly the better approach would be to over-include
rather than under-include for training. This seems to imply that full and
significant training must be provided to more than simply high risk employees.
Provide access to documents and individuals
A company's investigative team will probably have to
review thousands if not millions of pages of documents and electronic
communications. Obviously a summary of the relevant documents and electronic
communications will need to be provided to the DOJ but if the government wants
access to the full set of documents, that will also be required. Access to
employees for DOJ interviews will also be required. This can be tricky as it
may intersect with 'did you go high enough' listed above regarding termination.
Many companies desire to terminate employees determined to be involved in such
conduct immediately but if you do so, they may not cooperate with an internal
investigation. It may also make it difficult for your company to make such
terminated employees available to the DOJ for interview.
Best practices program going forward
One of the things consistently mentioned in DPAs and
Non-Prosecution Agreements (NPAs) is that a company which reaches such an
agreement with the DOJ always agrees to institute a rigorous compliance program
going forward. As the compliance programs listed in Attachment C (or Attachment
B to a NPA) are monikered as minimum best practices this would seem to
indicate that the companies involved went beyond the minimum. DPAs, such as the
Johnson and Johnson (J&J) DPA, go so far as to create and embrace "Enhanced
Compliance Obligations" which detail compliance policies and procedures which
go beyond the minimum best practices.
The BizJet DPA also includes a concept which has appeared
in several recent DPAs. BizJet agreed that it would report "at no less that
twelve-month intervals during the three year term" [of the DPA] to the DOJ on
"remediation and implementation of the compliance program and internal
controls, policies and procedures" as set forth in the DPA. The initial report
was required to be delivered one year from the date of the DPA and would also
include BizJet's proposals "reasonably designed to improve BizJet's internal
controls, policies and procedures for ensuring compliance with the FCPA and
other applicable anti-corruption laws."
Cobb's observations, together with the information that
can be gleaned from the BizJet DPA, provide some general parameters that a compliance
practitioner may use to understand more completely what the term 'extraordinary
cooperation' might be defined from the perspective of the DOJ. The DOJ
has consistently rewarded companies which provide such cooperation with
penalties below those suggested by the US Sentencing Guidelines. However, such
cooperation is not a walk in the park and as someone who has worked at a
company during a very intensive post-DPA monitorship, I can attest that such
cooperation is far beyond 'normal' cooperation and truly is 'extraordinary'.
Yet at the end of the day, the internal cost appears to be well worth it.
Visit the FCPA Compliance and Ethics Blog,
hosted by Thomas Fox, for more commentary on FCPA compliance, indemnities and
other forms of risk management for a worldwide energy practice, tax issues faced
by multi-national US companies, insurance coverage issues and protection of
This publication contains general information
only and is based on the experiences and research of the author. The author is
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© Thomas R. Fox, 2012
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