On September 15, 2022, Deputy Attorney General of the Department of Justice (DOJ) Lisa Monaco announced pivotal new guidance about the DOJ’s corporate criminal enforcement efforts. Her speech, accompanied by a more detailed memo sent to federal prosecutors on the same day, provides valuable clarifications and takeaways for companies of all industries, sizes, and maturities. In this client alert, we highlight what companies and their employees need to know about the DOJ’s heightened emphasis on corporate criminal enforcement.
The new guidance is based on the recommendations of the Corporate Crime Advisory Group, which was established in October 2021 to review the DOJ’s corporate enforcement efforts. At that time, Deputy AG Monaco announced that the DOJ would start prosecuting corporate crime with renewed vigor. In particular, she highlighted three significant changes to the DOJ’s policies on corporate criminal enforcement going forward:
The guidance released last week clarifies and builds on these principles of corporate criminal enforcement.
Priority on Individual Accountability
In announcing the DOJ’s latest policy guidance, Deputy AG Monaco reiterated that the DOJ’s top priority is prosecuting individuals who commit and profit from corporate crime. Although these changes are not a dramatic shift in DOJ policy, they illustrate that the DOJ’s continued focus on individuals will affect how the DOJ assesses companies’ internal investigations. This priority is reflected in several new policies announced by Deputy AG Monaco.
Companies can ensure that they obtain full cooperation credit—and possibly a declination—by establishing investigation policies and following them while conducting investigations.
Effect of a Company’s Past Misconduct
After Deputy AG Monaco’s October 2021 announcement, many commentators expressed concern with the DOJ’s indication that it would start considering a company’s full criminal, civil, and regulatory record—both domestic and international—when deciding the appropriate resolution. In last week’s announcement, Deputy AG Monaco provided helpful clarifications about how a company’s history of misconduct will be taken into account.
This guidance provides much needed clarity around the October 2021 announcement and emphasizes the importance of remediation. Companies with prior enforcement actions will be able to argue that the DOJ should not punish them if they have engaged in adequate remediation, potentially including conducting an effective root cause analysis to ensure that they mitigate the risk of additional misconduct and disciplining relevant employees responsible for the past misconduct.
Benefits of Voluntary Self-Disclosure
For the first time, the DOJ has adopted a department-wide policy to incentivize corporate voluntary self-disclosures. Previously, only certain DOJ components had voluntary self-disclosure programs in place. For example, the Antitrust Division has long had a successful Leniency Program that has encouraged companies to self-report antitrust violations in return for immunity from prosecution, and the Criminal Division’s Corporate Enforcement Policy in Foreign Corrupt Practices Act (FCPA) cases has been applied officially and unofficially in other types of cases. Deputy AG Monaco also cited the National Security Division’s successful voluntary self-disclosure program for export control and sanctions violations. (For more information on the U.S. government’s approach to sanctions and export controls enforcement, see our recentclient alert.) In expanding these policies department-wide, Deputy AG Monaco highlighted the potential benefits to corporate wrongdoers of making voluntary self-disclosures:
Whether this new policy will result in more self-disclosures will depend on how different DOJ components implement this directive. Companies that self-disclose antitrust or FCPA violations are essentially guaranteed declinations if they meet certain conditions, but it is unclear whether other DOJ components will take the same approach for voluntary self-disclosures in other cases. If the DOJ components are not aligned, then this may result in fewer companies electing to make self-disclosures, especially when multiple components have jurisdiction over the misconduct.
Fostering “the Right” Corporate Culture
When the DOJ considers how to resolve an investigation or enforcement action against a company, it will continue to consider the effectiveness of the company’s compliance program. But Deputy AG Monaco also stressed that a compliance program itself will mean little if it is not backed by a strong culture of compliance throughout the company. To encourage corporate policies that will foster the right culture, particularly among company leadership, Deputy AG Monaco identified new areas of focus for prosecutors evaluating compliance programs.
The DOJ has increased its focus on corporate compliance over the past several years, and the latest guidance shows that the DOJ will continue to focus on these issues. Companies can take advantage of the new guidance by applying it when reviewing and updating their compliance programs.
Conclusion
While it is too soon to tell how these policy changes will affect the DOJ’s prosecution of corporations in practice, they provide further guidance on how companies may qualify for leniency or cooperation credit. This guidance also makes clear that it is not sufficient for a company to have a paper compliance program; company leadership must foster a corporate culture that promotes compliance and rejects wrongdoing. Companies also would be well-served to understand the DOJ’s new policies regarding corporate criminal enforcement so that they can make informed decisions when developing their internal compliance programs and deciding whether to voluntarily self-disclose violations to the DOJ. For more information, please contact Moe Fodeman, Tarek Helou, Mark Rosman, Brent Snyder, Mike Casey, or another member of the firm’s white collar crime or antitrust and competition practice.