Earlier this month, DOJ announced additional revisions to the Department’s existing policies and practices governing corporate criminal enforcement. Each of these revisions will soon find its way into DOJ’s Justice Manual. Here are the most important takeaways:
Guidance on Individual Accountability.
DOJ’s top priority in prosecuting corporate criminal matters is to deter future bad acts by holding accountable those who commit and profit from corporate crime. Timely disclosure of relevant facts and documents is key here, and companies will no longer be eligible for cooperation credit if they do not timely produce relevant information in response to an investigation; waiting for statutes of limitation to expire or delays for strategic purposes will be held against a company. When reviewing information and documents and triaging production, priority must be given to evidence related to culpable individual actors and their communications. In future investigations, DOJ prosecutors will aim to complete any investigations into individual actors (and bring charges where warranted) prior to entering a resolution with a company. Resolutions against a company will not be allowed where individual investigations remain open unless the supervising AUSA or Assistant Attorney General approves the resolution and a memorandum is provided which both lays out the details of any open individual investigations and includes an investigative plan on how to resolve individual claims prior to any statutes of limitation expiring.
Where culpable individuals are subject to investigation or prosecution in foreign countries, DOJ will no longer decline to prosecute unless a case-specific determination is made that the culpable individual will be meaningfully prosecuted by another jurisdiction. DOJ will consider the strength of the foreign country’s interest in the prosecution, the foreign country’s ability and willingness to effectively prosecute the case, and the probable sentence or consequences the culpable individual will face if convicted by the foreign country.
Guidance on Corporate Accountability.
As first explained in late 2021, DOJ now considers a company’s historical misconduct when resolving investigations. Prosecutors will consider prior corporate actions or resolutions and any sanctions or penalties previously assessed against a company; recent U.S. prosecutions and prior misconduct involving the same personnel or management are most relevant to DOJ. Though DOJ will give less weight to years-old infractions, any relevance determination will be made on a case-by-case basis. Companies that commit violations similar to those of the past will face the most scrutiny. Companies subject to investigation will also be compared to their peers, as DOJ recognizes that certain highly-regulated industries make it difficult for companies to operate in good faith without committing the occasional technical legal violation. Prosecutors will also analyze whether a violation resulted from isolated bad actors or was the result of a weak compliance program; the latter cases will be prosecuted more harshly. Remedial efforts undertaken by the company – if timely – will also factor into DOJ’s decision-making procDOJ now may not enter into multiple non-prosecution agreements or deferred prosecution agreements without securing written approval from the AUSA or Assistant Attorney General and providing written notice to the Office of the Deputy Attorney General.
A critical change in DOJ policy involves voluntary self-disclosure policies. Every DOJ component prosecuting corporate crime must now draft and publicly share such a policy, defining what qualifies as self-disclosure, what timing elements are considered, and what document preservation efforts must accompany any disclosure. All policies must adhere to the following principles: absent aggravating factors (which must be defined in the forthcoming policies), DOJ will not seek a guilty plea against companies that self-disclose and fully cooperate; and companies that self-disclose and have an effective compliance program will not be subjected to an independent compliance monitor.
Regarding compliance programs – a topic of much DOJ discussion in the past two years – prosecutors are instructed to evaluate programs both at the time of the subject offense and at the time a charging decision is made. A corporation’s commitment to fostering a strong culture of compliance throughout its ranks is one of the most important factors DOJ will consider when analyzing appropriate consequences for criminal acts. DOJ previously stated it will review how companies measure and identify compliance risks, how they monitor payment and vendor systems for suspicious transactions, how disciplinary decisions are made, and how senior company leadership encourages or discourages compliance. DOJ has now identified additional criteria. First, DOJ wants to see compensation systems that encourage and incentivize compliance, and that such systems are actually used and award those who should qualify. Ideally, a company will use financial incentives to align the C-suite’s interests with those of the compliance department. DOJ will also analyze whether companies utilize NDAs or non-disparagement provisions in employment or severance agreements to prevent or penalize public disclosure of wrongdoing. Second, DOJ will analyze whether companies permit or require employees to use personal electronic devices and/or third-party messaging applications in a manner that prevents the preservation of corporate communications. “As a general rule, all corporations with robust compliance programs should have effective policies governing the use of personal devices and third-party messaging platforms for corporate communications, should provide clear training to employees about such policies, and should enforce such policies when violations are identified.”
Independent Compliance Monitorships.
In 2021 DOJ announced that there would be no presumption against requiring independent monitors as part of corporate criminal resolutions; monitor usage will be based upon a case-by-case review that takes 10 factors into consideration. DOJ components that do not currently have a public monitor selection process must adopt or develop one prior to 2023. Any selection process must promote consistency, predictability, and transparency. Currently, monitors are selected by an ad hoc committee within each DOJ component; moving forward, every committee must include an ethics official who will ensure no committee members have a conflict of interest. Monitor selection must also take DOJ’s commitment to diversity and inclusion into account.
Commitment to Transparency in Corporate Criminal Enforcement.
DOJ believes that transparency in how it investigates and prosecutes corporate crime will encourage voluntary self-disclosure, compliance, and the adoption of effective compliance programs. Most importantly, transparency instills public confidence in the DOJ’s work. Accordingly, any corporate resolution must include an agreed-upon statement of facts explaining the criminal conduct at issue and the basis for the resolution, and a statement of considerations that resulted in DOJ agreeing to the resolution. In all but the most extraordinary circumstances, resolutions containing this information will be posted for public viewing.