DOJ Continues Focus on Individual Accountability with FCPA Self-Disclosure Pilot

By Kelly A. Briganti, Editorial Director, G2 Intelligence

If the Foreign Corrupt Practices Act (FCPA) sounds like it shouldn’t be of concern to laboratories and the diagnostics industry, think again. Alere, a point-of-care diagnostic test maker, recently disclosed in a Securities and Exchange Commission Form 8-K filing that the company received a grand jury subpoena in March from the United States Department of Justice requesting documents relating to activities in “Africa, Asia and Latin America and other matters related to the U.S. Foreign Corrupt Practices Act.” There could be more such investigation in the future for the diagnostics industry. Laboratory Industry Report recently highlighted the globalization of the U.S. diagnostics industry, with foreign countries seeking to gain a foothold in the U.S. market and U.S. companies taking note of foreign opportunities. (See “Inside the Lab Industry,” Laboratory Industry Report, 3/17/16, p. 4).

Laboratories and diagnostics companies looking at global opportunities should be mindful of recent developments relating to enforcement of the FCPA. The FCPA prevents payments to foreign government officials to obtain or retain business, or direct business to any person—i.e., bribes. The anti-bribery provision applies not just to U.S. persons but also to foreign entities who “cause, directly or through agents, an act in furtherance of such a corrupt payment to take place within the territory of the United States.” The Department of Justice (DOJ) is ramping up its enforcement of this law, issuing a memorandum April 5, 2016, titled “The Fraud Section’s Foreign Corrupt Practices Act Enforcement Plan and Guidance”—outlining three steps of “enhanced FCPA enforcement strategy.” Those steps include adding new resources such as more prosecutors for the FCPA Unit (a 50 per cent increase in that unit), and three new squads of agents focused on FCPA investigations and prosecutions; more coordination with foreign law enforcement agencies; and a one-year pilot program promoting self-disclosure and cooperation with investigations.

Assistant Attorney General Leslie R. Caldwell, with the DOJ Criminal Division, explained in a statement that the pilot program promotes transparency by letting companies know what they can expect in FCPA enforcement, and what penalties will result from certain conduct, and it “enable[s] companies to make more rational decisions when they learn of foreign corrupt activity by their agents and employees.” The April memo makes clear that the government isn’t requiring organizations to self-disclose or cooperate: “Companies remain free to reject these options and forego the credit available under the pilot program.” However, Caldwell cautioned that “[i]f a company opts not to self-disclose, it should do so understanding that in any eventual investigation that decision will result in a significantly different outcome than if the company had voluntarily disclosed the conduct to us and cooperated in our investigation.” Cooperation under the pilot program includes identifying information regarding individuals involved in any misconduct—in keeping with the Yates memo’s directives about individual accountability.

For more explanation about the FCPA pilot program and its focus on holding accountable individuals involved in misconduct, see G2 Compliance Advisor, May 2016, p. 1.