News from Pohlmann & Company


Benczkowski clarifies DOJ’s view on monitorships

On March 8, 2019, Assistant Attorney General Brian A. Benczkowski, head of the DOJ’s Criminal Division, held a speech at the Annual ABA National Institute on White Collar Crime Conference in New Orleans.

In his speech, Benczkowski at first emphasized the DOJ’s approach for transparency in its corporate enforcement practices which he made a priority since rejoining the DOJ last year. Since then, the DOJ sought to promote transparency in both its case-specific resolutions and general policies, such as the publication all of their case declinations to date under the FCPA Corporate Enforcement Policy or the issuance of new guidance regarding the selection criteria for corporate monitors in October 2018 (Memorandum “Selection of Monitors in Criminal Division Matters”), emphasizing the importance of having an effective compliance program to avoid imposition of a monitor.

With regard to the latter, Benczkowski made it clear that the update of the guidance memorandum on the selection of monitors does not imply a departure from the DOJ’s previous practice in relation to monitorships. He rejected speculations that the DOJ’s new approach would lead to fewer monitorships. The memorandum was rather updated in order to “provide more guidance about the factors that will prompt the appointment of a monitor in the first place, including how to weigh the benefits and costs of a potential monitorship, and to clarify details about the selection process and scope of monitorships“, said Benczkowski. In this regard he emphasized that just last week Mobile TeleSystems PJSC (“MTS”), the largest mobile telecommunications company in Russia, entered into a deferred prosecution agreement with the DOJ in connection with FCPA violations in Uzbekistan. As part of the agreement, MTS agreed to pay a combined penalty of USD 850 million and agreed to a three-year monitorship.

Notably, Benczkowski highlighted that companies “that voluntarily self-disclose, take steps to prevent misconduct through robust compliance programs, and take appropriate remedial steps when misconduct is detected” should know that they will receive a “fair shake” from the department. In this respect, Benczkowski referred to two recent settlements with Cognizant Technology Solutions Corp. and the Insurance Corporation of Barbados. In both cases the DOJ declined to bring charges against the companies and instead charged high-level individuals, alleging that they violated the FCPA by authorizing bribe payments to government officials. Benczkowski stressed that companies can avoid criminal charges even when “aggravating factors like high-level executive involvement in the misconduct will not necessarily preclude a declination when the company’s actions are otherwise exemplary“.

In his speech, Benczkowski also addressed the following matters:

Announcement of “Anti-Piling on” of penalties: According to Benczkowski, the DOJ wants to avoid penalties imposed for a penalties’ sake: “If a company faces other civil or foreign penalties for the same misconduct, we will apply our ‘anti-piling on’ policy to reduce or apportion financial fines, forfeitures, and restitution between authorities to ensure that the overall outcome is equitable and just. We also will avoid penalties that disproportionately punish innocent employees, shareholders, customers, and other stakeholders.”

Commitment to extend the FCPA Corporate Enforcement Policy to mergers & acquisition: Benczkowski also affirmed that the DOJ’s approach to crediting self-disclosures would extend to misconduct uncovered through due diligence in the context of a merger or acquisition, or, in appropriate instances, through post-acquisition audits or compliance integration efforts: “Applying the policy to the M&A context avoids chilling acquisition activity by law-abiding companies, who might otherwise walk away from worthwhile investments due to the risk of FCPA enforcement. After all, we want law-abiding companies with strong compliance cultures to be willing to make these kinds of acquisitions. Put another way, we don’t want the good corporate actors to cede the field to higher-risk entities that may only perpetuate illegal conduct.”

Evaluating the effectiveness of compliance programs: According to Benczkowski, the Criminal Division of the DOJ will soon provide training “with a focus on how we, as prosecutors, will evaluate the effectiveness of corporate compliance programs” for white-collar prosecutors which he envisioned to evolve into an annual program. “Training is, of course, step one in any effort to promote consistency in the exercise of prosecutorial discretion,” he added.

The remarks delivered by Brian A. Benczkowski at the 33rd Annual ABA National Institute on White Collar Crime Conference can be found here.

In line with the statements of Benczkowski, other US agencies also appear to strengthen their enforcement activities rather than winding them down. For example, the Federal Bureau of Investigation (FBI) recently announced the establishment of a dedicated anti-corruption team in Miami as a result of the significant role that South America has played in recent FCPA enforcement activities. According to press reports, the team will be focusing on FCPA cases in South America and Miami.

In Germany, further developments with respect to the enactment of a corporate sanctions law are still eagerly awaited, where in particular the so-called “Cologne draft” also suggests the imposition of monitors (cf. Section 5 para. 4). The proposal of the new “corporate sanctions law” can be found here.