Justice memo calls for absolute cooperation.

• Author: Bradel, Ryan
• Position: Ethics Corner

* The Foreign Corrupt Practices Act is a wide-ranging statute primarily aimed at eliminating corporate bribery of foreign government officials by companies with some nexus with the United States. Any defense contractor doing work overseas must be familiar with its tenets and stay abreast of developments in the enforcement of the law.

A newly issued Department of Justice memorandum changes policy for providing "cooperation credit," that is, a reduction in penalty for cooperating with Justice's investigation of corporate wrongdoing. Contractors facing an investigation must know this new policy and its potential consequences.

The memorandum, "Individual Accountability for Corporate Wrongdoing," signed by Deputy Attorney General Sally Quillian Yates (found at http://www.justice.gov/dag/file/769036/download), prescribed six key steps for U.S. attorneys to take when investigating corporate civil or criminal wrongdoing. Of these six steps, the first--relating to cooperation credit--seems most likely to have immediate and significant effects on the risks faced by stability operations contractors.

This first step states that "in order to qualify for any cooperation credit, corporations must provide to the department all relevant facts relating to the individuals responsible for the misconduct." This new policy likely will decrease the odds that businesses will benefit from disclosing misconduct.

Prior to the Yates memo, corporations received sentence credit based on how cooperative they were with the government's investigation and enforcement actions. The new policy replaces this sliding scale with an all-or-nothing proposition whereby some as yet unspecified individual at an unspecified juncture in the investigation will decide whether the corporation provided all relevant facts, the prerequisite for any sentencing credit.

It remains to be seen how this new policy will be applied. However, the cooperation with an investigation--or lack thereof--is a key factor in the severity of the corporate penalty for FCPA violations. A review of some recent cases is illustrative.

On Dec. 22, Justice announced that a French power and transportation company had pleaded guilty to a two-count criminal indictment for falsifying books and records and failing to maintain adequate internal controls as the FCPA requires. The announcement outlined an extensive campaign of bribing officials in several countries over several years and repeatedly noted the company's lack of...