Boston Consulting Group (“BCG”) has been spared prosecution by the U.S. Department of Justice (“DOJ”) for self-reported bribery violations, in part due to the disciplinary actions it took against the wrongdoers in the company.

Upon discovering that some of its Lisbon office may have violated the FCPA in 2014, BCG took advantage of DOJ’s self-disclosure program and alerted the U.S. government to the scheme. The DOJ ultimately found that BCG’s Lisbon office paid $4.3 million in bribes to an Angolan agent to help obtain business with Angola’s national bank and economic ministry.

The Case for Leniency

In a letter drafted to BCG’s counsel on August 27, 2024, the DOJ outlined its decision to decline to prosecute BCG for the bribery scheme. Leniency was available partially because the scheme did not include aggravating circumstances, such as the involvement of executive management, criminal recidivism, or the gain of significant profits. The letter also highlighted several of BCG’s actions that swayed the government towards leniency:

1. BCG voluntarily self-disclosed the bribery scheme in a timely manner;
2. BCG cooperated fully and proactively in the investigation;
3. BCG engaged in timely and appropriate remediation;
4. BCG made significant improvements to its compliance program and internal controls; and
5. BCG agreed to disgorge any ill-gotten gains.

Self-Disclosure and Proactive Cooperation

BCG voluntarily disclosed to the DOJ upon uncovering an email in 2014 that alerted them to potential misconduct. It proceeded to cooperate fully, providing all known relevant facts about the misconduct and the individuals involved. It also agreed to cooperate fully with ongoing and future investigations and prosecutions resulting from the conduct.

Timely and Appropriate Remediation

BCG took swift and harsh remedial measures against the individuals involved in perpetrating the bribery scheme. It terminated the personnel involved and imposed compensation-based penalties, including requiring implicated partners in Portugal to give up their equity in the company, denying them severance, and withholding bonuses.

Improvements to Compliance Program

BCG formalized its employee training and vendor screening protocols, established local and global risk committees with regular meetings, and developed robust new guidelines for opening offices in new and emerging markets.

Key Policy Takeaways

Punish the Bad Apples

Notably, the DOJ letter highlight’s BCG’s remediation efforts, including “requiring impacted BCG partners in Portugal to give up their equity in the Company, denying access to financial transition . . . and withholding bonuses.” Forcing implicated partners to surrender their equity presents a significant punitive measure that likely stood out to the DOJ. This falls in line with the DOJ’s push to shift the burden of corporate misconduct to those most responsible and incentivizing the use of compensation systems that reward compliance-promoting behavior, as noted in its 2023 Compensation Incentives and Clawbacks pilot program, launched in 2023.

The BCG declination underscores again the importance the DOJ puts on companies establishing a compensation clawback policy. Accordingly, companies and compliance officers should engage in proactive coordination with senior management and HR to make disciplinary measures like equity surrendering possible, which may prove to be an emerging best practice for both private and publicly traded companies.