Do you want a Declination?

Declination:

Sounds like a bad word but actually, it’s what Compliance Officers want to hear. A declination occurs when the SEC or the DOJ determines not to prosecute a company after an investigation. In 2012 the DOJ declared 6 declinations and the SEC called out 11 declinations  DOJ explicitly attributed declination decisions when the company self disclosed their internal investigations, when they cooperated with the agencies, when they took immediate action to remedy the situation and when they enhanced existing internal controls with a compliance program to prevent corruption.

Morgan Stanley:

(April 25) With the scandal of Garth Peterson, head of real estate investments in China, both the DOJ and SEC said Morgan Stanley itself would not be prosecuted because of Morgan Stanley’s strong compliance program. “Considering… Morgan Stanley constructed and maintained a system of internal controls, which provided reasonable assurances that its employees were not bribing government officials, the

[DOJ] declined to bring any enforcement action against Morgan Stanley related to Peterson’s conduct. The company self disclosed this matter and has cooperated throughout the department’s investigation.”

Academi, LLC:

(July 19) Formerly known as Blackwater Worldwide, Academi, received word from the DOJ that it would not be prosecuted for alleged bribery in Iraq. The DOJ statement read: “We have taken this step of closing our inquiry based on a number of factors, including… the internal investigation undertaken by Academi and the steps taken by the company to enhance its anti-corruption compliance program.”

Huntsman Corporation:

(August 1) An SEC filing stated the DOJ and SEC won’t take enforcement action against the Huntsman Corporation for bribes paid in India by employees of a joint venture there. Huntsman’s internal investigation showed less than $11,000 in illegal payments in 2009 and early 2010. It self disclosed the payments to the SEC and DOJ in 2010. It also made efforts to remedy the situation and fired management employees involved in the illegal payments.

Hercules Offshore, Inc:

(August 7) An oil and gas services contractor that provides drilling, barge, and boat services, Hercules said both the SEC and DOJ will take no enforcement action for possible FCPA violations. The DOJ terminated its investigation ‘based on a number of factors, including, but not limited to, the self disclosed thorough investigation undertaken by Hercules and the steps that Hercules has taken in the past and continues to take to enhance its compliance program, including efforts to ensure compliance with the FCPA.’

W.W. Grainger, Inc:

(August 14) The DOJ won’t prosecute W.W. Grainger for giving pre-paid gift cards to some customers in China. Grainger said its self disclosed internal investigation didn’t substantiate ‘significant use of gift cards for improper purposes in China.’ Grainger said, ‘the DOJ closed its inquiry into this matter.’

Nabors Industries Ltd:

(November 2) An oil and gas services company, Nabors was a customer of Panalpina but not among the seven companies that settled FCPA cases on the same historic day in November 2010. Panalpina, a Swiss logistics firm, admitted paying bribes to help customers move their drill rigs and other equipment in and out of Kazakhstan, Saudi Arabia, Algeria, and Nigeria, among others. Nabors launched a self disclosed Panalpina-related investigation in 2007 and shared the results with the feds. Nabors said the SEC won’t bring an enforcement action. The company said it hasn’t heard from the DOJ.

Wyeth LLC, Pfizer Inc:

(December 11) “In 18 months following its acquisition of Wyeth, Pfizer Inc., in consultation with the department, conducted a due diligence and investigative review of the Wyeth business operations and integrated Pfizer Inc.’s internal control system into the former Wyeth business entities. The department considered these extensive efforts and Wyeth’s SEC resolution in its determination not to pursue a criminal resolution for the pre-acquisition improper conduct of Wyeth subsidiaries.”

Send a Message:

These declinations send a message to companies around the world. If you want to prevent the DOJ or the SEC from prosecuting, then act forthright with self disclosure, take immediate action to remedy any wrongdoing and continue to execute internal controls with a strong compliance program.