Analysis
18 October 2022

The U.S. Department of Justice announces new guidelines in the fight against corporate crime

Changes announced by the U.S. Department of Justice ("DoJ") in the fight against corporate crime.

 

On September 15, 2022, Lisa Monaco, Deputy Attorney General of the U.S. Department of Justice (“DoJ”), announced several changes to its corporate criminal prosecution policy. She presented the content of a new memorandum supplementing the provisions already made on this topic in October 2021. The purpose of the memorandum is to provide guidance on how U.S. prosecutors should ensure that individuals and companies are held accountable for their actions in fighting corporate crime.

The key elements of this memorandum can be summarized in 6 major points.

 

I. The liability of individuals and companies’ cooperation

Prosecuting individuals who commit wrongdoings is announced as a priority for the DoJ[1]. The commitment to effective prosecution of individuals is reaffirmed.

Therefore, if an individual is subject to an investigation by a foreign jurisdiction for the same conduct that U.S. authorities are investigating, U.S. prosecutors must determine whether there is a significant likelihood that the individual will be effectively prosecuted in the other jurisdiction before waiving prosecution.[2]

Because many companies delay producing information or documents when they implicate an individual, companies will be required to disclose to the DoJ all relevant, non-privileged facts about individual misconduct in due time, meaning shortly after the company has discovered the facts, to be eligible for cooperation credit. Conversely, companies that would voluntarily delay disclosure could be denied cooperation credit.[3]

 

II. Taking into account companies’ history of misconduct

In the context of their investigations, U.S. prosecutors must consider all previous misconduct attributable to the company, including past domestic and foreign[4] criminal, civil and regulatory resolutions.[5]

The memorandum states that emphasis should be placed on recent U.S. criminal resolutions and prior conduct involving the same personnel or management as those involved in the current prosecution. Contrarily, less emphasis should be placed on prior criminal resolutions entered into more than ten years prior to the conduct under investigation, and civil and regulatory resolutions entered into more than five years prior to the conduct under investigation, although these should not be completely excluded from the prosecutors’ analysis.[6]

In addition, prosecutors will need to consider the circumstances in which the conduct that led to a previous resolution occurred, which may be indicative of the company’s lack of commitment to compliance, as well as any subsequent remedial action taken. Non-prosecution or deferred prosecution agreements should generally be avoided for conduct involving the same type of misconduct, the same personnel, officers, executives, or entities as those involved in a previous resolution.[7]

 

III. Voluntary self-disclosure and companies’ cooperation

DoJ policies and procedures must ensure that a company benefits from its decision to voluntarily disclose wrongdoing to authorities. In this regard, the memorandum calls on all DoJ components to adopt clear and public policies setting forth their expectations for voluntary disclosure, and to outline the benefits that companies can expect to receive if they cooperate.[8]

Furthermore, in the absence of aggravating factors, the DoJ should not seek a guilty plea with a company that has voluntarily brought wrongdoing to its attention if the company has timely and appropriately remedied the wrongdoing.[9] In addition, the DoJ should not require an independent compliance review if the company voluntarily disclosed the wrongdoing and implemented an effective compliance program.[10]

 

IV. The strength of the company’s existing compliance program

While the existence of a compliance program and an ethical corporate culture are not a barrier to criminal prosecution, they may have a significant impact on the terms of any agreement reached with the DoJ.[11]

Prosecutors should assess the adequacy and effectiveness of the company’s compliance program regarding, among other factors, the following criteria: the structure of the compliance program, the adequacy of the resources allocated to it, its ability to function effectively, and its operation in practice.[12]

In addition to these criteria, two new factors must be considered:

  • The first relates to the existence of a system for promoting an ethical corporate culture, aimed at rewarding employees for compliant behavior and penalizing them for misconduct. This system should be assessed in terms of its implementation, not in terms of what it says in theory.[13]
  • The second is for the company to have policies and procedures in place governing the use of personal electronic communication devices and third-party messaging platforms. The company must ensure that electronic communications related to its business are preserved and that it will be able to collect and provide them to the government in the event of an investigation.[14]

 

V. The need for an independent compliance monitorship

As stated in the October 2021 memorandum, an independent compliance monitor will be appointed as necessary, depending on the facts and circumstances of the case.[15]

The 15 September 2022 Memorandum sets forth a non-exhaustive list of factors to be considered in assessing whether a monitor should be appointed, such as whether the company voluntarily disclosed the wrongdoing, whether an appropriate compliance program existed at the time of the voluntary disclosure, and whether members of the compliance function were involved in the wrongdoing.[16]

Furthermore, the selection of a monitor must be done in a transparent manner and following a public procedure.[17]

If a monitor is imposed as part of a resolution with the DoJ, prosecutors will need to ensure that the monitor’s responsibilities and scope of authority are defined and set forth in writing. The purpose of the new guidance is to provide for DoJ control over the monitor, as the monitor must establish a regular report of its mission.[18]

 

VI. Transparency regarding the DoJ’s corporate criminal policy

In order to encourage companies to behave appropriately, the memorandum imposes transparency requirements on agreements concluded with the DoJ following an investigation. Accordingly, each agreement must set out the facts of the case and the reasons why the DoJ chose to enter into an agreement, such as the company’s cooperation, its criminal record, and the state of its compliance program at the time of the alleged misconduct.[19]

 

* * *

Deputy Attorney General Lisa Monaco’s memorandum can be found here.

 

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