DOJ Issues First-Ever Declination Under Corporate Disclosure M&A Policy

On June 16, 2025, the Department of Justice (DOJ) National Security Division (NSD) announced that it declined to charge private equity firm White Deer Management LLC (“White Deer”) and its affiliates after the company voluntarily disclosed potential export-related violations involving the former executive of a company it acquired, Texas-based Unicat Catalyst Technologies LLC (“Unicat”).

The announcement marks the first-ever public declination under the voluntary self-disclosure (VSD) safe harbor provision of DOJ’s Mergers and Acquisitions Policy (“NSD M&A Policy”). The declination demonstrates DOJ’s intent to recognize the VSD policy’s potential safe harbor for acquirers who notify DOJ of national security concerns or violations in a timely manner. Along with two previous public declinations in May 2024 and April 2025, the action demonstrates the Department’s efforts to encourage corporate disclosures in the national security context.

NSD’s Safe Harbor Provision for Acquiring Companies

Revised in March 2024, NSD’s Enforcement Policy for Business Organizations (“NSD VSD Policy”) includes a provision for voluntary disclosures in connection with acquisitions. The NSD M&A Policy provides that, absent aggravating circumstances, an acquirer may receive benefits if it voluntarily discloses to NSD potential criminal violations discovered during diligence conducted shortly before or shortly after the close of the transaction. Such a disclosure should be timely, which the NSD VSD Policy defines as being made within 180 days of the transaction, although DOJ will consider what is “reasonable under all of the circumstances” when determining timeliness. Benefits of the M&A provisions of the NSD VSD Policy include that the acquiror will generally not have to plead guilty, and it is presumed that NSD will decline to prosecute the acquiror. In addition, the acquiror will not be required to forfeit assets or pay a criminal fine and the misconduct at issue will not affect the acquiror’s history of recidivism if future matters arise.

White Deer Investigation

According to the release and associated documents, the investigation concerned a scheme whereby a former chief executive officer (CEO) and co-founder of Unicat, Mani Efran, and at least one other Unicat employee facilitated the sale of chemical catalysts to customers in Iran, Venezuela, Syria, and Cuba in violation of economic sanctions. Under the scheme, the conspirators “made false statements in export documents and financial records,” “falsified invoices to reduce tariffs” on catalysts being imported from China, and falsely attested to White Deer that they complied with U.S. laws. In June 2021, after becoming aware of the scheme post-acquisition, White Deer and Unicat’s new CEO began an investigation into the possible sanctions violations. Once White Deer determined that Unicat employees had potentially violated U.S. sanctions laws, but before the investigation was complete, White Deer and Unicat voluntarily disclosed the conduct to NSD.

NSD and the U.S. Attorney’s Office for the Southern District of Texas ultimately entered into a non-prosecution agreement with Unicat, and Efran pleaded guilty to violating U.S. sanctions in August 2024 with a monetary judgment of $1,600,000.

In its declination letter to White Deer, DOJ explained that after consideration of factors outlined in the NSD VSD M&A Policy, White Deer’s self-disclosure and full cooperation merited a declination. First, DOJ determined that White Deer’s acquisition of Unicat was a “lawful bonafide acquisition.” Second, there was no pre-existing disclosure requirement. Third, White Deer’s self-disclosure was “timely under all of the circumstances.” DOJ took into consideration factors such as the impact of COVID-19 and prompt steps taken by the acquirors to minimize the “imminent threat of any further national security harm.” Fourth, the company fully cooperated with DOJ’s investigation, including by providing information about all the individuals involved in the misconduct and providing records located abroad. Fifth, DOJ found the company’s remediation efforts, which included “terminating culpable employees” and “designing and implementing a . . . robust internal controls and compliance program,” to be timely and appropriate. Finally, DOJ noted that even though there were aggravating factors, such as upper management involvement in misconduct, those aggravating factors are no longer present at Unicat or White Deer.

History of NSD Declinations

In DOJ’s previous declinations of MilliporeSigma and USRA, in May 2024 and April 2025, respectively, DOJ declined to charge the companies after they voluntarily disclosed export-related violations committed by employees who were separately charged. As with these first two declinations, DOJ continued to emphasize in its recent declination letter the importance of timely and voluntary self-disclosure before an internal investigation is completed. DOJ’s most recent declination also suggests that companies’ remediation efforts are central to receiving the benefits of the NSD enforcement policy.

As the first declination under the NSD M&A Policy, NSD showed a willingness to take into consideration the totality of the circumstances to provide acquiring companies with these benefits. Under the NSD M&A Policy, NSD has discretion to provide companies with greater leniency in the timeliness of disclosure, usually required to be within 180 days after the transaction is completed, and remediation, usually required to be within one year. NSD exercised this discretion in White Deer’s disclosure, which took place 10 months after the acquisition closed, citing the COVID-19 pandemic and White Deer’s two-part acquisition strategy of Unicat and another company as mitigating factors for the delay.

 Key Takeaways

• Thorough diligence and timely disclosure can put acquirers in a strong position to resolve national security-related issues discovered during the deal process. For the first time, we have seen the NSD M&A Policy in action, and acquirers should take heed. This path offers companies a way to hedge against risks related to past behavior by the acquiree. This resolution also demonstrates that although the policy suggests that a reasonable time to uncover such issues is within 180 days, in certain circumstances the Department may still grant the benefits to companies that disclose on a longer time frame. Specifically, the Department cited White Deer’s prompt disclosure even “before obtaining a complete understanding of the nature and full extent of the misconduct” as a basis for using its discretion to consider whether White Deer’s report is timely.
• Improving compliance programs and internal controls can help make the case to receive a declination. As previewed in our prior client alert, DOJ will consider enhancements that companies make to compliance programs in response to disclosed matters. NSD specifically noted that White Deer “design[ed] and implement[ed] a comprehensive and robust internal controls and compliance program that has proven effective in practice at identifying and preventing similar potential misconduct” as a factor in its declination decision.
• DOJ continues to see ensuring individual accountability as a favorable factor for companies to receive a declination. In White Deer, USRA, and MilliporeSigma, the individuals responsible for the conduct at issue pleaded guilty to crimes associated with the reported conduct. In the White Deer matter, the former Unicat CEO pleaded guilty to conspiring to violate U.S. sanctions as well as concealment and international promotional money laundering and paid a money judgment of $1.6 million. Assistant Attorney General for National Security John A. Eisenberg emphasized the importance of corporate reporting in the declination decision, stating “[o]ur decision to decline prosecution of the acquiror . . . reflects the National Security Division’s strong commitment to rewarding responsible corporate leadership.”

Summer Associate Haylee Levin in the Washington, D.C. office also contributed to this article.