Internal Investigations Update - November 2025

DOJ Declines Prosecution Following Voluntary Disclosure in M&A

Background: NSD M&A Safe Harbor Policy

The National Security Division’s Mergers and Acquisitions Safe Harbor Policy, incorporated into the NSD’s broader Voluntary Self-Disclosure framework and revised in March 2024, incentivizes acquirers to promptly report national security-related misconduct uncovered during deals. The policy targets potential criminal violations of export control, sanctions, and related national security laws discovered in pre-closing diligence or shortly after closing. When acquiring companies voluntarily disclose such violations, fully cooperate with the Department of Justice, and undertake timely remediation, the NSD presumes it will decline prosecution. Benefits include avoiding guilty pleas, forfeiture, criminal fines, and preventing the misconduct from affecting the company’s future compliance record.

Although the policy establishes 180-day and one-year benchmarks for timeliness and remediation, the NSD retains discretion to determine what is “reasonable under all circumstances.” Aggravating factors like senior management involvement or pervasive misconduct may preclude eligibility, though the NSD will consider whether such factors were adequately addressed post-acquisition.

The White Deer Declination

On June 16, 2025, the DOJ announced its first public declination under the M&A Safe Harbor Policy to White Deer Management LLC, a private equity firm. White Deer had acquired Unicat Catalyst Technologies LLC, a Texas-based manufacturer of chemical catalysts, and subsequently discovered that Unicat’s former CEO and another employee had engaged in an export violations scheme. The misconduct included selling catalysts to customers in Iran, Venezuela, Syria, and Cuba while falsifying export documents, fabricating invoices to reduce tariffs, and falsely attesting to U.S. law compliance. White Deer learned of the scheme after closing and, together with Unicat’s new CEO, initiated an internal investigation in June 2021. After confirming likely sanctions violations and before completing the investigation, White Deer voluntarily disclosed the matter to NSD.

Although the disclosure occurred approximately ten months after closing—well beyond the nominal 180-day window—DOJ determined it was “timely under all of the circumstances,” citing COVID-19 disruptions and the firm’s two-part acquisition strategy as mitigating factors. The resolution followed a split approach: Unicat entered into a non-prosecution agreement and paid a $1.6 million penalty, and its former CEO pleaded guilty to sanctions violations and money laundering, but White Deer received a declination.

The DOJ cited the lawful nature of the acquisition, the absence of a pre-existing disclosure obligation, prompt action to prevent further harm, full cooperation (including providing foreign-language and overseas records), and robust remediation, such as terminating culpable employees and installing a comprehensive compliance program. Although senior management involvement would typically count as an aggravating factor barring a declination, DOJ found it fully addressed post-acquisition, allowing Safe Harbor treatment.

Key Implications for Practitioners

The White Deer declination offers important guidance for companies navigating post-acquisition compliance issues and conducting internal investigations in the M&A context:

Timeliness is contextual, not mechanical. Despite exceeding the 180-day benchmark by four months, White Deer’s disclosure was deemed timely because the company acted quickly after uncovering misconduct and before government awareness. This flexible approach recognizes that “promptness” depends on circumstances. Companies managing complex post-closing integrations should document integration delays, investigative steps, and mitigation efforts to preserve eligibility even when formal deadlines pass.

Aggravating factors can be remediated. Senior management involvement typically precludes declination. However, DOJ treated this as a historical issue because implicated individuals had been removed, misconduct had ceased, and controls were overhauled. This demonstrates that decisive personnel changes and structural remediation can cure otherwise preclusive factors. Assistant Attorney General for National Security Matthew Olsen emphasized this point, stating the declination “reflects the National Security Division’s strong commitment to rewarding responsible corporate leadership.”

Cooperation extends beyond domestic evidence. DOJ specifically credited White Deer’s provision of foreign-language documents and overseas records. Internal investigations following cross-border acquisitions must anticipate DOJ’s expectation of access to all relevant evidence, regardless of location or language, and should address translation needs and international data privacy constraints early.

Remediation requires demonstrated effectiveness. DOJ specifically credited that White Deer’s new compliance program had already proven effective in identifying and preventing similar issues. Paper policies and aspirational controls are insufficient—acquirers must show tangible, operational results.

Looking Ahead

The White Deer declination underscores DOJ’s broader enforcement approach under both the National Security Division’s M&A Safe Harbor Policy and the Criminal Division’s Corporate Enforcement Policy. Both frameworks emphasize transparency, predictable outcomes, and meaningful incentives for voluntary self-disclosure. Companies that promptly self-report, fully cooperate, and implement effective remediation can expect clearly defined resolution paths, including declinations, reduced-term non-prosecution agreements. The takeaway is clear: DOJ rewards companies that identify problems, come forward, and demonstrate corrective action. For companies evaluating disclosure decisions in M&A contexts, White Deer confirms that the Safe Harbor framework provides tangible protection when companies act decisively to address inherited compliance issues.