U.S. Department of Justice announces more rigorous enforcement

The DOJ is putting emphasis on robust compliance programs and genuine cultural change – if necessary, with the help of corporate monitors.

Background

Speaking at the American Bar Association’s (ABA) 36th National Institute on White Collar Crime on October 28, 2021, Deputy Attorney General Lisa O. Monaco announced that the US Department of Justice (DOJ) plans to increase its efforts and resources to further strengthen its corporate criminal enforcement. The speech was perceived as a reversion to Obama-era enforcement standards, including the unambiguous call for corporate transparency and cooperation.

In more detail, Deputy Attorney General Monaco talked about three major aspects of DOJ enforcement, i.e.,

corporate cooperation credit,
consideration of pervious misconduct, and
the utilization of compliance monitors.

In addition, she noted that further changes and reinforcements should be expected, not least in connection with the establishment of a specific Corporate Crime Advisory Group within the DOJ meant to focus on these and other key issues.

Individual Topics

Corporate Cooperation Credit

Deputy Attorney General Monaco emphasized the DOJ’s focus on establishing and pursuing individuals’ accountability for corporate criminal conduct. To serve this priority, the DOJ would revert to the corporate cooperation standards as set forth in the “Yates Memorandum”, requiring companies to identify and provide all non-privileged information on “all individuals involved” in or responsible for the misconduct to be eligible for corporation credit. The recent softening of this standard to only inform on those individuals “substantially involved” was confusing and impractical. However, she emphasized that only the disclosure of non-privileged information is required; under no circumstances would the DOJ call for cooperation require a corporation to waive valid assertion of attorney-client privilege.

Consideration of Previous Misconduct

Moreover, the Deputy Attorney General’s announcements about repeat offenders were very clear: In its corporate resolutions going forward, the DOJ would not only consider prior misconduct like the conduct under investigation but rather take account of the corporation’s full criminal, civil and regulatory record, even if dissimilar from the matter at hand. Corporations shouldn’t be under the misapprehension that non- or deferred prosecution agreements (NPAs/DPAs) constitute broadly available allowances at bearable cost of doing business. Instead, they should more clearly be called for full and honest commitment to robust and effective compliance programs and a general sustainable corporate culture of ethics and integrity.

Usage of Compliance Monitors

The final part of the Deputy Attorney General’s speech focused on corporate compliance monitors and the DOJ’s proven practice of having them being imposed on corporations as part of any negotiated resolutions. Under the last administration, the DOJ’s appointment of compliance monitors has declined notably. The so-called “Benczkowski Memorandum” issued in October 2018 (see our blog post from October 17, 2021) had referred to the high costs and business disruptions typically linked to monitorships and this way “suggested that monitorships are disfavored or are the exception”, as Monaco noted. While acknowledging the costs of enforcement actions, she clearly countered this perception by again stressing DOJ’s unambiguous aim to “incentivize responsible corporate citizenship, a culture of compliance and a sense of accountability”. To serve exactly this purpose, prosecutors should be free to require the imposition of a corporate monitor if they deem it to be appropriate to do so.

Next to this general positioning, the Deputy Attorney General acknowledged that the selection of the right corporate monitor in an appropriate process of course would be of utmost relevance. She announced that the DOJ will study the monitor selection process in more detail and based on its analysis may come back with a standardized selection process that would address long-standing criticism and eliminate the frequent perception of favoritism.

Major Takeaways for the Future

The Deputy Attorney General keynote is very clear: The DOJ enforcement is getting stricter (again). Corporations negotiating resolutions must be open, transparent, and absolute forthcoming, including about information they have on all company executives and other individuals involved in the misconduct at hand.

They also need to be self-critical and fully committed when it comes to prevention and remediation. Corporations must regularly review their compliance programs and devote adequate resources to ensure that it effectively prevents, detects, and remediates potential misconduct. This includes establishing a sustainable corporate culture of ethical and integer behavior in a broad sense.

At the latest when misconduct has become apparent and corresponding negotiations with the DOJ are imminent, corporations must scrutinize themselves and their compliance programs relentlessly open and self-critically and take the necessary measures to improve it. A voluntary independent compliance monitorship, accompanying the ongoing investigations, can be of great foresight and assistance in this regard. If, until the time of the resolution, the DOJ did not gain the necessary confidence and trust in the sustainability of the corporation’s ethical culture and compliance program, as per the Deputy Attorney General’s speech, it will not have any default presumptions against imposing a mandatory monitorship to be get the save side.

Do not hesitate to get in contact with us if you should have any question U.S. corporate enforcement matters or the need to monitor and/or further develop your corporation’s compliance program. We have a notable track record as (voluntary or mandatory) corporate compliance monitors and are happy to share our thoughts and experiences on what DOJ and other enforcement agencies, in the U.S. and elsewhere, except from you.