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Promises of Leniency: Whether Companies Should Self-Disclose Violations of the Foreign Corrupt Practices Act
PDF · Sarah Marberg · Jun-8-2012 · 45 VAND. J. TRANSNAT'L L. 557 (2012)
Over the last ten years, the Department of Justice (DOJ) has prosecuted an increasing number of Foreign Corrupt Practices Act (FCPA) violations, imposing larger and larger penalties. In fiscal year 2010, the Criminal Division of the DOJ imposed $1 billion in penalties as a result of violations of the FCPA, the largest in FCPA enforcement history.
Most FCPA enforcement actions are brought against corporations for conduct that American law enforcement agencies have difficulty detecting because it occurs outside of the United States. As a result, the DOJ encourages companies to voluntarily disclose FCPA violations, claiming that it will take a more lenient approach to FCPA prosecutions that are self-reported and reward “disclosure and genuine cooperation.”
Despite these promises, practitioners and academics have questioned whether a company that voluntarily discloses a potential FCPA violation actually receives a lesser fine than a company whose illegal conduct is discovered by a government investigation. With the likelihood of detection by the DOJ very low and the costs of disclosure very high, these questions have led to suggestions that companies are better off keeping mum. This Note argues that the available evidence about previous FCPA settlements suggests that companies are likely rewarded for their candor and cooperation.