Over the past year, the Department of Justice (DOJ) has made announcements of new policies to “strengthen the way [it] responds to corporate crime” and has left hints regarding future plans to “invigorate the department’s efforts to combat corporate crime.” Deputy Attorney General Lisa Monaco, in her October 2021 remarks to the American Bar Association's 36th National Institute on White Collar Crime, stated that the DOJ is analyzing “whether companies under the terms of an Non-Prosecution Agreement or Deferred Prosecution Agreement take those obligations seriously enough.” She announced the formation of the Corporate Crime Advisory Group and charged it with looking into this question and others. Following this, in late May 2022, the DOJ announced two new tools to be considered by prosecutors as a matter of course in future corporate resolutions—CEO and CCO compliance certifications and the imposition of corporates monitors.
Fast-forward to September 15, 2022, and the DOJ has announced new sweeping changes. In a department-wide memo (the “September Memo”), Monaco detailed additions to DOJ’s corporate criminal enforcement policies and practices, including new guidance for prosecutors when evaluating 1) both individual and corporate accountability; and 2) whether to impose a monitor in any future corporate criminal resolutions.
Deputy AG’s Corporate Crime Advisory Group recommended the following:
DOJ previously required that corporations disclose all relevant facts and information regarding individual misconduct to DOJ to be considered for cooperation credit. The September Memo adds an additional component, stating that corporations will now need to disclose relevant documents in a timely manner and that prosecutors must consider the timeliness of any disclosures in their cooperation credit analysis. In addition, the memo states that prosecutors should complete any investigations of individual misconduct prior to, or at the same time as, entering into a corporate resolution.1
The September Memo also highlights the importance for prosecutors to evaluate a corporation’s prior misconduct when considering a corporate resolution. As stated, the “seriousness and pervasiveness” of the current misconduct in relation to previous resolutions is a key factor prosecutors must consider. One example cited in the September Memo is considering if the recent misconduct was done under the same leadership team as the prior misconduct.
Next, the September Memo outlines two additional considerations prosecutors should include in their evaluation of a corporation’s compliance program2:
DOJ recognizes that compensation is a powerful tool corporations can use to effectively promote a culture of compliance by penalizing misconduct and rewarding compliance. Therefore, the September Memo states that prosecutors should include an evaluation of the corporation’s compensation practices when considering a corporate resolution. Additionally, prosecutors should consider the corporation’s use of non-disclosure or non-disparagement agreements, which, in its view, do not promote a culture of compliance.
Finally, the September Memo directs prosecutors to evaluate the corporation’s policies around the use of personal devices and third-party platforms. DOJ is concerned with both the corporation’s ability to monitor for misconduct and preserve potential evidence. Prosecutors should also evaluate the implementation and enforcement of these policies.
As made clear by Monaco in October of 2021, “[T]he department is free to require the imposition of independent monitors whenever it is appropriate to do so.” Included in the September Memo is a non-exhaustive list of factors that prosecutors should consider when evaluating whether to impose a monitor. These factors include whether the misconduct was helped along by the inadequacy of the corporation’s compliance program and whether the misconduct was at least in part successful because of the failure of compliance personnel to recognize and escalate red flags, among others.
In light of the DOJ’s unambiguous focus on corporate compliance programs in the context of combating corporate crime, corporations should consider a wholesale review of their compliance programs. As AAG Polite stated, “Our message is clear—companies that make a serious investment in improving their compliance programs and internal controls will be viewed in a better light by the department. Support your compliance team now or pay later.” Assessing a compliance program signals a commitment to the culture of compliance by leadership.
Guidehouse can help corporations assess their compliance programs, including reviewing and identifying gaps in the existing program, and making recommendations for enhancements. Guidehouse understands that each corporation is unique and faces different challenges. Guidehouse can recommend tailored approaches to meet regulatory requirements and enact effective compliance solutions for the individual corporation.
Special thanks to Katherine Rhee for co-authoring this article.
Ellen Zimiles quoted in Bloomberg Law article WhatsApp, Signal Chats Targeted in DOJ Crackdown on Executives.
1 Memorandum from Sally Quillian Yates, Deputy Attorney General, US Dept. of Justice, Individual Accountability for Corporate Wrongdoing, §III. (Sept. 9, 2015).
2 These are updates to DOJ’s “Evaluation of Corporate Compliance Programs,” which outlines the key considerations for an effective compliance program. US Dept. of Justice, Criminal Division, Evaluation of Corporate Compliance Programs (updated June 2020) available here.