When Tyson Foods Inc. and Wal-Mart Stores Inc. received internal reports that employees may have paid bribes in Mexico, each faced the same vexing question: should they turn themselves in to U.S. authorities?
Tyson, the biggest U.S. food processor, admitted bribing government-employed inspectors and paid $5.2 million to avoid prosecution. Wal-Mart, the world’s largest retailer, began an internal probe in 2005, shut it down and didn’t disclose the matter to regulators and prosecutors until late last year, after learning the New York Times was investigating, the paper said.
Lawyers typically urge self-disclosure for bribery allegations that involve senior management, an important contract, a whistle-blower, external auditors or a foreign regulator, said Claudius Sokenu, a former SEC attorney. Some industries also require self-reporting to the government.
Prosecutors follow a nine-step guide on business prosecutions in deciding how to resolve cases. The criteria include the seriousness of the crimes, a company’s history of wrongdoing, its willingness to cooperate, and the extent of compliance programs. The government may decide to charge a company or its subsidiaries, enter into deferred-prosecution or non-prosecution agreements or bring no charges at all.
BizJet International Sales and Support Inc., a Tulsa, Oklahoma-based provider of aircraft maintenance, paid $11.8 million in March to resolve a bribery case. It got a 30 percent reduction on its criminal penalty for its voluntary disclosure, “extraordinary cooperation” and extensive remediation.
“The big game changer has been the Dodd-Frank bill,” Dickinson said. “If a company is doing an internal audit and came across something 10 years ago it might have said, ‘We have a problem, and we’d better fix that.’ Today, one of the first things a company has to ask is, ‘Should we self-report?”’
“The costs are apparent, and quantifiable, while the benefits seem very intangible,” Bruch said.
“They say, ‘We’ll fully investigate the issue, fix the problem and make sure we’re fully compliant with the law, discipline or fire employees, and enhance our compliance system,”’ he said. “They say, ‘We’ll do everything the government would have told us to do had we gone in, but we won’t have a sanction.”’