In January, the Department of Justice announced new revisions to its corporate enforcement policy related to voluntary self-disclosure, cooperation, and remediation. The goal of these revisions is to incentivize companies that discover misconduct within their ranks to engage proactively with law enforcement and reinforce their compliance programs.
According to these policy revisions, prosecutors now have more discretion to offer reduced penalties or decline to prosecute if a company is swift in reporting and resolving criminal misconduct by its employees. Notably, to qualify for this offer, disclosures must be “reasonably prompt” after the realization of misconduct. The burden of proof for the timely disclosure is on the company seeking the benefits of this self-disclosure.
The recent Foreign Corrupt Practices Act (FCPA) violation settlement by one corporation showcases these policy revisions and highlights their limitations. On September 29, it was announced that Albemarle Corporation, a chemical manufacturer based in North Carolina, had agreed to pay over $218 million to resolve charges related to FCPA violations.
Albemarle confessed to bribing government officials in three Asian countries to secure business deals with state-owned oil refineries. The misconduct involved employees of Albemarle’s subsidiaries, as well as third-party sales agents. The activities occurred in Vietnam, Indonesia, and India from 2009 to 2017, resulting in approximately $98.5 million in profits for the corporation.
Before the commencement of DOJ and SEC investigations, Albemarle reported this misconduct and took corrective actions such as terminating 11 employees implicated in the misconduct and suspending bonuses worth $763,453 from 16 other employees.
These actions reflect a 3-year DOJ pilot program that asserts that corporate defendants who reclaim compensation from guilty employees can receive penalty reductions. Additionally, Albemarle was required to continue cooperation and commissioned to introduce new compliance measures under a three-year non-prosecution agreement. By complying, the corporation evaded the appointment of a DOJ compliance monitor.
The Acting Assistant Attorney General Nicole Argentieri commented on October 10 that this settlement reveals the “business case” for the immediate disclosure of misconduct. The case sheds light on the continually risky situations posed by third-party intermediaries in FCPA cases and an ongoing pattern of FCPA cases involving elements of bribery and anti-competitive conduct.
Some of the key takeaways are:
- Reasonable Promptness in Self-Disclosure: Despite a 45% reduction from the bottom range of the applicable US Sentencing Guidelines, the $218 million penalty indicates that Albemarle’s self-disclosure was not reasonably prompt within the policy guidelines description.
- Third-Party Intermediaries: The case’s focal point was the misconduct of third-party intermediaries in Vietnam and Indonesia, demonstrating the ongoing risk that these parties pose in FCPA cases.
- Bid-Rigging: This Albemarle case joins several FCPA cases involving bid-rigging misconduct, highlighting potential overlap between anti-competitive conduct and bribery.
Finally, Albemarle’s settlement underscores the pressing need for organizations to learn from the lessons presented, given the consequences of delayed disclosure and potential benefits of prompt self-reporting. The decision to self-report is a complex one necessitating close consideration and consultation with counsel.