Announcement of New FCPA Policy for Mergers and Acquisitions
In an attempt to provide greater clarity to companies on how to approach wrongdoing discovered in the M&A context, Miner announced that the DOJ will apply the Policy to mergers and acquisitions. The Policy was implemented by the DOJ last November to incentivize companies to self-disclose potential FCPA violations, fully cooperate with the DOJ and remediate potential violations in exchange for a strong presumption in favor of declining to bring charges under the FCPA. To read the November 30, 2018 Sidley Update on the Policy, click here.
Miner, who was recently appointed and was speaking on behalf of the DOJ for the first time, noted that the DOJ recognizes that “there are many benefits when law-abiding companies with robust compliance programs are the ones to enter high-risk markets or, in appropriate cases, take over otherwise problematic companies.” He emphasized that the DOJ “want[s] to encourage this sort of activity” and “want[s] to encourage [a company’s] leadership to take the steps outlined in the FCPA Policy, and when they do, [the DOJ wants] to reward them, accordingly for stepping up, being transparent and reporting and remediating the problems they inherited.”
Use of FCPA Opinion Procedures During M&A Due Diligence
Miner also encouraged acquiring companies to seek guidance from the DOJ through its FCPA Opinion Procedures before finalizing a deal when they discover possible corruption concerns in the due diligence process. While this process has been available in the past, it is not one that has been used frequently or recently, with the last use occurring in 2014. It is yet to be seen how helpful this process will be in the fast-paced M&A environment. In that regard, however, Miner also stated that “[a]lthough it may take a little more time – and we can, to a degree, expedite our analysis based on timing needs – it sometimes makes sense to slow down to assess risks.”
Despite Miner’s attempt to provide certainty and not discourage M&A transactions, companies should consult with legal counsel about the implications (including potential disclosure) of both potential FCPA risks identified during due diligence and wrongdoing discovered subsequent to the closing of a deal.
