On May 22, 2024, the US Department of Justice’s National Security Division (“NSD”) announced its first-ever corporate declination under the NSD’s Export Control and Sanctions Enforcement Policy for Business Organizations (the “Policy”) in connection with a voluntary self-disclosure by Massachusetts biochemical company Sigma-Aldrich, Inc., doing business as MilliporeSigma. The declination related to allegations of US export control violations that occurred when a former employee and his co-conspirators submitted falsified export documentation for hundreds of shipments of MilliporeSigma products to China. The former MilliporeSigma employee and one coconspirator pleaded guilty to wire fraud conspiracy for their roles in the scheme. 

The NSD’s Export Control and Sanctions Enforcement Policy creates a presumption that a company will receive a non-prosecution agreement (“NPA”), or, where appropriate under the provisions of the Justice Manual, a full declination of any action, including through an NPA, and no fine when it voluntarily self-discloses potentially criminal violations of US export controls and sanctions laws to the NSD’s Counterintelligence and Export Control Section (“CES”), fully cooperates, and timely and appropriately remediates. The presumption of an NPA or declination does not apply where aggravating factors are present. “Potentially” aggravating factors include egregious or pervasive criminal misconduct within the company, concealment or involvement by upper management, repeated administrative and/or criminal violations of national security laws, the export of items that are particularly sensitive or to end users of heightened concern, and a significant profit to the company from the misconduct. Where such aggravating factors are present, NSD has the discretion to seek a different resolution, such as a deferred prosecution agreement or guilty plea.

While NSD has touted the MilliporeSigma declination as an example of the clear benefits companies may receive under the Policy when they commit fully to voluntary self-disclosure of export controls and sanctions violations at the earliest sign of potential criminal wrongdoing, the facts and circumstances of the case, as set forth by the Justice Department, raise significant questions for companies who may uncover similar or more serious conduct within their own operations. Such questions, and the specific facts at issue here, should prompt companies to carefully assess whether the MilliporeSigma declination is a seminal moment representing the new normal under NSD’s VSD Policy or a potential outlier with somewhat limited precedential value.