self-disclosure of fcpa violations: is it sufficient condition to get relief from punishment? - olga...

Self-disclosure of FCPA violations: is it sufficient condition to get relief from punishment?

20 July 2016

2© 2016 KPMG-Ukraine Ltd., a company incorporated under the Laws of Ukraine, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative

("KPMG International"), a Swiss entity. All rights reserved.

Document Classification: KPMG Confidential

Olga Dubanevych

Lawyer of the Corporate Compliance Group, KPMG in Ukraine

T: +380 44 490 5507E: [email protected]




Self-disclosure of FCPA violations

More than a half of enforcement actions conducted by SEC and DOJ are based on voluntary disclosures of FCPA violations

In accordance with researches, there is no evidence to support the hypothesis that voluntary disclosure correlates with reduced total monetary penalties

NYU Law and Economics Research Paper No.12-15

In 2016 DOJ launched the Pilot Program to encourage companies to self-report on FCPA violations




Assessment of self-disclosure and cooperation: DOJ and SEC approaches

SECSelf-Disclosure and Cooperation

self-policing prior to the discovery of the misconduct (including effective compliance procedures and an appropriate tone

at the top);

self-reporting of misconduct when it is discovered (including conducting an investigation of the misconduct, and promptly,

completely, and effectively disclosing the misconduct);

remediation (including modifying and improving internal controls and procedures to prevent recurrence of the misconduct,

dismissing or disciplining wrongdoers); and

cooperation with law enforcement authorities (including providing SEC staff with all information relevant to the underlying

violations and the company’s remedial efforts.

Credit for Companies

Up to taking no enforcement action




Assessment of self-disclosure and cooperation: DOJ and SEC approaches

DOJSelf-Disclosure and Cooperation

Self-disclosure

cannot be made under a requirement by law or an agreement or contract;

has to be made prior to an imminent threat of disclosure or government investigation;

has to be made within a reasonably prompt time after becoming aware of the offense; and

has to contain all relevant facts known to the disclosing company, including all relevant facts about the individuals

involved in any FCPA violations.

Full Cooperation

Identify opportunities for DOJ to obtain relevant information that is not in the company's possession and is not otherwise known to DOJ;

Preserve, collect, and disclose relevant documents, including overseas documents, and information relating to their provenance;

Make individuals available for interviews upon request, including overseas and former officers and employees, where possible;

Timely disclose all facts gathered during the company's independent investigation, with attribution, and, when requested, de-confliction of the internal investigation with a DOJ investigation; and

Provide all facts relevant to criminal conduct by third parties, including facilitating the production of third-party documents and witnesses from foreign jurisdictions.

Credit for Companies

up 50 per cent reduction off the bottom end of the Sentencing Guidelines fine range for voluntary self-disclosure;

up to 25 per cent reduction off the bottom end of the Sentencing Guidelines fine range for full cooperation.




The factors are considered in determining whether to charge a corporation:

1. the nature and seriousness of the offense;

2. the pervasiveness of wrongdoing within the corporation;

3. the corporation’s history of similar misconduct;

4. the corporation’s timely and voluntary disclosure of wrongdoing and its willingness to

cooperate in the investigation;

5. the existence and effectiveness of the corporation’s pre-existing compliance program;

6. the corporation’s remedial actions;

7. collateral consequences;

8. the adequacy of the prosecution of individuals responsible for the corporation’s malfeasance; and

9. the adequacy of remedies such as civil or regulatory enforcement actions

IS SELF-REPORTING ON FCPA VIOLATIONS SUFFICIENT TO GET A RELIEF FROM PUNISHMENT?




• hot line, whistleblowers

• internal audits, other types of internal

controls

• due diligence

• investigations

HOW CORRUPTION VIOLATIONS ARE USUALLY DETECTED?




THE VIOLATION IS DETECTED: WHAT COMPANIES ARE EXPECTED TO DO?

Investigation

Nature

Extent

Origins

Consequences

Disclosure

Promptly

Completely

Effectively

Remediation

Discipline measures

Review/ create/ update relevant policies

Update internal controls

Additional trainings

Thank you


© 2016 KPMG-Ukraine Ltd., a company incorporated under the Laws of Ukraine, a member firm of the KPMG network of independent member

firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity.

Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is

received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a

thorough examination of the particular situation.

kpmg.ua kpmg.com/app