DOJ’s First Declination Under New Corporate Enforcement Policy Show Importance of Early Self-Reporting

The declination shows that even serious offenses shouldn’t be an impediment to considering a voluntary self-report in the right circumstances, former federal prosecutor Mark L. Krotoski, a litigation partner at Pillsbury told Law360.

“Most people view Entity List violations as among the more serious national security offenses,” he said, referring to the list of national security risks from the U.S. Department of Commerce’s Bureau of Industry and Security. “Here, [DOJ is] signaling that you can be eligible for this new program.”

Krotoski said it will be interesting to see if there is follow-on litigation against individuals, noting the DOJ’s declination left prosecution open as to executives and others with direct involvement in the alleged misconduct.

He added Bosch’s declination offers compliance lessons for companies, including highlighting the need for an immediate mechanism to evaluate potential criminal conduct as soon as it's detected and bring it to the attention of company leadership. Firms should ensure their investigations — usually handled with external counsel under privilege — are as thorough as possible so they can quickly make a decision on self-reporting to the government.

If firms learn about a potential issue and haven’t fully investigated it, he said it’s difficult to weigh the question of self-reporting.

“It goes back to the classic, ‘Do I have the tip of the iceberg, or do I have the full iceberg?’” he said. “Is it much bigger than what I anticipated?”

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