Chapter Five: 
FCPA Privilege Update

Conducting privileged internal investigations has tremendous benefits, including in Foreign Corrupt Practices Act matters, when a fulsome investigation will inform the company about whether to cooperate with the federal government. But there is a tension between maintaining privilege over those investigations and deciding to cooperate.

When potential misconduct comes to light, companies have many incentives to conduct a timely and robust internal investigation to uncover all relevant facts. A prompt, fulsome investigation gives companies a fuller sense of the potential financial exposure or legal risk. More detailed facts also enable companies to make more informed decisions about enacting potential employment consequences for those involved in misconduct, implementing additional controls or compliance measures to mitigate the risk of such conduct recurring, or pursuing other remedial measures. Critically, for companies facing potential US federal criminal exposure, such as under the FCPA, a speedy and thorough investigation affords companies the option of potentially securing favorable treatment in a resolution by promptly and fully disclosing to the US Department of Justice under the factors set forth in its Corporate Enforcement Policy and the Principles of Federal Prosecution of Business Organizations.[1]

While offering significant potential benefits, cooperating with the government carries with it significant risk—in particular, the risk of privilege waiver over some or all of the company’s internal investigation and related work product. The contours of these risks were illuminated in 2022 and 2023 through a series of rulings out of the US District Court for the District of New Jersey. Although many of the principles that the court discussed are well established, the opinion serves as the most recent warning of the potential risks of privilege waiver when sharing information from internal investigations with the government.

Case Background

In February 2019, the US Attorney’s Office for the District of New Jersey indicted Gordon Coburn and Steven Schwartz, former President and Chief Legal Officer of Cognizant Technology Solutions Corporation, in connection with a bribery scheme under the FCPA. The indictment alleged that Coburn and Schwartz engaged in a scheme to bribe government officials in India for a construction permit for a new office that would become one of Cognizant’s largest facilities in India.[2] Days before the indictment was publicly announced, DOJ issued a declination letter to Cognizant under its CEP, citing, among other factors, Cognizant’s voluntary self-disclosure within two weeks of the board learning of the criminal conduct, its “thorough and comprehensive investigation” and “full and proactive cooperation in this matter (including its provision of all known relevant facts about the misconduct[)],” along with its lack of prior criminal history and full remediation, as well as its agreement to pay a civil penalty and disgorgement.[3]

As Coburn and Schwartz prepared their defense,[4] they subpoenaed documents and communications related to Cognizant’s internal investigation, including interview memoranda and related documents. Among other things, Coburn and Schwartz requested witness interview summaries prepared by Cognizant’s counsel, which Cognizant withheld based on attorney-client privilege and the work product doctrine. Following Cognizant’s assertion of privilege, Coburn and Schwartz moved to compel production, arguing that Cognizant “waived any privilege regarding the entire subject of Cognizant’s internal investigation” through its cooperation with DOJ.[5]

District Judge Kevin McNulty held that Cognizant’s disclosures to third parties—as relevant here, DOJ—amounted to a “significant” waiver, finding that Cognizant disclosed “detailed accounts of 42 interviews of 19 Cognizant employees, including Defendants” by “hand[ing] these materials to a potential adversary” in the government.[6] In so doing, Cognizant had “destroyed any confidentiality they may have had, undermining the purpose of both attorney-client and work-product privileges.”[7] Finding waiver, the court then evaluated the breadth of that wavier, finding that the “voluntary turnover of materials or revelation of the fruits of its investigation to the DOJ also entailed a waiver of the privilege as to communications that ‘concern the same subject matter’ and ‘ought in fairness to be considered together’ with the actual disclosures to DOJ.”[8] The court determined that the waiver meant that the company needed to turn over the following:

• “[A]ll memoranda, notes, summaries, or other records of the [internal investigation] interviews themselves;”

• The “underlying documents or communications” conveyed within those memoranda, notes, and summaries; and

• “[D]ocuments and communications that were reviewed and formed any part of the basis of any presentation, oral or written to the DOJ in connection with [Cognizant’s] investigation.”[9]

In an order “clarifying” the scope of the waiver order, the court went so far as to say that the waiver covered material in Cognizant’s interview memoranda in their entirety, as well the notes used to prepare for government meetings that were not shared with the government, because the waiver was so expansive to govern “documents actually disclosed and certain related documents pertaining to the same subject matter,” such that the court would not view sections of its work product in isolation.[10]

The privilege waiver was not entirely without limits, however. In another decision, the court held that notes and summaries of meetings between Cognizant and the government did not fall within the scope of the privilege waiver because “the records themselves were not conveyed to the [g]overnment.”[11] This decision instructs that it is the provision of otherwise privileged communications to DOJ that creates the waiver.[12]

In so doing, the court reminded Cognizant of both the significant consequences and the advantages that Cognizant earned from cooperating with the government and furnishing information gleaned through its investigation.[13] The court highlighted that Cognizant had “dodged a bullet” by receiving a declination letter from DOJ, citing the letter’s reference to Cognizant’s “thorough and comprehensive investigation” and its “full and proactive cooperation” with the government.[14] The court also noted that with that letter, Cognizant “could not have anticipated, at least vis-à-vis the Government, that it could shield anything.[15]”

What Does This Mean for FCPA Investigations?

The court’s orders in Coburn highlight the significant risks for companies cooperating with DOJ investigations. But it is not an anomaly. Courts in the Southern District of Florida and the Southern District of New York have illuminated this risk in recent years.[16] While it is DOJ’s policy to forbid prosecutors from seeking privileged material or requiring it as a condition of cooperation, prosecutors still expect “timely disclosure of all facts relevant to the wrongdoing at issue,” including “facts gathered during a corporation’s internal investigation” and “attribution of facts to specific sources, rather than a general narrative of the facts.”[17] Such disclosures, even without explicit requests for privileged material, will necessarily create tensions with a company seeking to maintain privilege over its internal investigation.

To best protect the privilege and avoid future findings of waiver, companies and their counsel should be aware of the fine line of cooperating with investigating governmental entities to work toward obtaining cooperation credit, while limiting the exposure to a subject-matter waiver. Prudent measures to mitigate the risk of privilege waiver include the following:

1. Developing your own investigative plan, separate and apart from that of the government’s, with your client’s purpose in conducting the investigation clearly set forth;

2. Following your plan and documenting deviations from it;

3. Proffering facts to the government thematically rather than in response to specific questions or as detailed, immediate downloads of individual interviews by witnesses;

4. Avoiding disclosure of any attorney work-product, including opinions, thoughts, strategies, and mental impressions; and

5. Documenting interviews, meetings, and presentation preparation notes mindful of the potential for a finding of future waiver over the entire document if the substance in whole or part is shared with DOJ.