Less Perilous Harbor: What DOJ's M&A Safe Harbor Portends

Successor liability under the Foreign Corrupt Practices Act has been a risk for companies since the statute was first enacted. But until recently, the DOJ and SEC have been deliberately vague in terms of the guidance offered and their expectations about FCPA due diligence and the time imperatives surrounding post-merger integration as it relates to combining compliance programs. That all changed in October of 2023 when Deputy Attorney General Lisa O. Monaco announced the implementation of DOJ’s Safe Harbor Policy for voluntary self-disclosures made in connection with Mergers and Acquisitions.   Put succinctly, DAG Monaco said “we want to incentivize the acquiring company to timely disclose misconduct uncovered during the M&A process.” She further announced: “Going forward, acquiring companies that promptly and voluntarily disclose criminal misconduct within the Safe Harbor period, and that cooperate with the ensuing investigation, and engage in requisite, timely and appropriate remediation, restitution, and disgorgement – they will receive the presumption of a declination. Of particular note is that in order to qualify for the Safe Harbor, companies must disclose misconduct discovered at the acquired entity within six months from the date of closing. That applies whether the misconduct was discovered pre- or post-acquisition.