Since 2010, approximately 86% of corporate Foreign Corrupt Practices Act (FCPA) enforcement actions have been resolved with the use of non-prosecution agreements (NPAs) and deferred prosecution agreements (DPAs) (Koehler, 2015). What are these types of agreements and how do they differ?
As outlined in A Resource Guide to the U.S. Foreign Corrupt Practices Act (2012), non-prosecution agreements and deferred prosecution agreements are forms of negotiated resolutions between the US Department of Justice (DOJ) or the Securities and Exchange Commission (SEC) and companies that have been charged with violating the FCPA.
Under a DOJ-generated NPA, according to the Resource Guide, the DOJ will refrain from filing charges against the company under investigation, although it retains the right to do so. This allows the company to demonstrate good conduct during the terms of the agreement and to avoid criminal charges. Typically the company will be expected to pay a monetary penalty, waive the statute of limitations, cooperate with the government, admit the relevant facts, and enter into compliance and remediation commitments. If the company complies with the agreement throughout its term, DOJ does not file criminal charges.
Under an SEC-generated NPA, the SEC will not pursue an enforcement action against the company if it agrees to cooperate truthfully and fully in SEC’s investigation and related enforcement actions. The company may be required to comply with other specific requirements. If the agreement is violated, SEC staff retains its ability to recommend an enforcement action to the Commission.
A DOJ-generated DPA differs from an NPA in that the Department of Justice does file charges in court but will simultaneously request that prosecution be deferred (postponed) to allow the charged company to demonstrate good conduct. As explained in the Resource Guide, the requirements are essentially the same—pay a monetary penalty, waive the statute of limitations, cooperate with the government, admit the relevant facts, and enter into certain compliance and remediation commitments, potentially including a corporate compliance monitor. If the term of the agreement is successfully completed, the DOJ will move to dismiss the charges and the completed DPA will not be treated as a criminal conviction.
It’s a little bit different with the SEC. The Resource Guide tells us that under a deferred prosecution agreement, the SEC will forego an enforcement action if the company agrees to cooperate truthfully and fully in SEC’s investigation and related enforcement actions. It must also enter into a long-term tolling agreement (voluntary extension of the limitations period) and comply with “express prohibitions or undertakings,” among other possibilities. If the agreement is violated, the SEC can still take an enforcement action.
If a company is found to have violated the FCPA, there is no guarantee that it will be offered a non-prosecution or deferred prosecution agreement. And if one is offered and accepted, then the company will be granting the DOJ and/or the SEC the right to monitor its affairs for some period of time. It will also be agreeing to a number of other conditions, as outlined above. For these reasons, many observers, though not all, consider these tools to be strong and effective tools against corruption. The DOJ and the SEC would seem to agree.
Ethical Advocate provides comprehensive ethics and compliance solutions, including ethics and compliance training and confidential and anonymous hotlines. It also delivers training on-line and in person with content covering business ethics, harassment and discrimination, the Foreign Corrupt Practices Act (FCPA), fraud awareness, and more. Please contact us for more information.
U.S. Department of Justice and U.S. Securities and Exchange Commission. A Resource Guide to the U.S. Foreign Corrupt Practices Act, November 2012. http://www.sec.gov/spotlight/fcpa/fcpa-resource-guide.pdf
Koehler, Mike. “Assessing DOJ Transparency,” FCPA Law Blog, April 29, 2015. http://www.lexisnexis.com/legalnewsroom/corporate/b/fcpa-compliance/archive/2015/04/29/assessing-doj-transparency.aspx