DOJ Updated Corporate Criminal Enforcement Policies | Snell & Wilmer

In a highly anticipated speech, Deputy Attorney General Lisa O. Monaco delivered remarks outlining updates to the U.S. Department of Justice (“DOJ”) perspective on the Corporate Crime Enforcement policy. These updates are the result of a top-to-bottom review conducted by various DOJ experts and advisors dubbed the “Corporate Crime Advisory Group”. The mandate of this group was not only to revamp this policy but to send a clear message that “business as usual” in the enforcement of corporate criminal statutes is not the norm and significant revisions to the expected processes will be ongoing.

Although a mainstay of new presidential administrations, the announcement puts companies on notice that enforcing compliant corporate behavior is now (or again) a top priority for the DOJ. Through a combination of incentives and deterrence changes, the DOJ seeks to provide companies the basis to make a business case for implementing a robust compliance program. Overall, the revamped policy aims to expedite investigations against individuals (which is traditionally a precursor to the resolution for a corporation), address the fact that between 10 percent and 20 percent of large corporate criminal resolutions involve repeat offenders, incentivize voluntary self-disclosures, and promote a corporate culture of compliance.

Chiefly among the updated policies, the DOJ announced a practice of targeting individuals who commit and profit from corporate crime. Under this revised policy, corporate investigations will not trump investigations of individuals. Instead, these investigations will occur in tandem. Prosecutors are instructed to conduct investigations of individuals and pursue criminal charges “prior to or at the same time” of seeking a resolution against corporate defendants. This appears to be a change, because under previous administrations the resolution of individual liability was secondary to addressing corporate liability. The practical result of this change is punishing companies for delays in production of information or documents evidencing individual culpability. Companies engaged in this practice will be subject to a reduction and even denial of cooperation credit.

Moving forward, when assessing the appropriate resolution against a company, its entire criminal, civil, and regulatory record will be evaluated. Prior misconduct in the United States will be particularly weighted in favor of a more severe punishment. Similarly, prior misconduct originating from repeated personnel and management will have a negative impact on the ultimate resolution. This change aims to disfavor the current practice of multiple and successive non-prosecution (“NPA”) or deferred prosecution agreements (“DPA”) with the same company.

Nevertheless, the updated guidance establishes limits to this policy. While criminal misconduct resolved more than 10 years prior to a current investigation will still be considered, its impact on the ultimate resolution will be limited. Likewise, the weight given to prior civil or regulatory misconduct resolved five years prior will be limited. Moreover, companies with a proven track record of compliance will be rewarded in cases of acquisitions. Namely, prior misconduct or the history of recidivism of an acquired company will not be considered when the acquiring entity has demonstrated a proven track record of compliance.

Arguably, the most impactful change resulting from the updated policy is the expansion of the Voluntary Self-Disclosure (“VSD”) Program. Historically, companies were encouraged to voluntary report violations to the DOJ in exchange for a reduced penalty. However, VSDs were only available for certain types of violations. According to the announcement, for the first time ever, every component of the DOJ involved in investigating corporate crime will develop a program incentivizing VSDs.

The DOJ’s commitment and tangible incentives for companies to conduct internal investigations and submit VSDs is unmistakable in the updated polices. First, a VSD is a clear path to avoid a guilty plea and potentially even an indictment. Under the revamped policy, the DOJ will generally not pursue a guilty plea when a company “voluntarily self-disclosed, cooperated, and remediated misconduct” without any aggravating factors. Second, the DOJ will not require the appointment of a compliance monitor as a condition for resolution when there is a robust and proven compliance program in place. Accordingly, a VSD can result in concrete monetary savings from penalties and associated costs such as a compliance monitor.

Ultimately, the DOJ seeks to persuade companies to embed a culture of compliance within their organizations beyond a robust compliance program. To that end, when evaluating a company’s compliance program, prosecutors will assess whether compensation packages (1) reward compliance and (2) punish employees with direct or supervisorial roles in misconduct.

Although, the guidance on compensation as it relates to the strength of a compliance program is not yet finalized, the announcement offered a preview of what the DOJ will expect. On the incentive side, companies should include “affirmative metrics and benchmarks” that reward compliance-oriented employees. On the deterrence side, companies may want to consider including claw back and escrow provisions in compensation packages subject to compliance violations. According to the announcement, specific guidance on tangible incentives for companies adhering to these practices is forthcoming by the end of 2022.

Companies and individuals operating in industries covered by the DOJ’s Corporate Crime Enforcement policy should be aware of this updates to ensure their activities are compliant. Specifically, the expansion of the VSD program provides incentive for companies with a history of recidivism to implement or revamp compliance programs and invest resources to purse internal investigations of suspected violations. Further, companies should regularly revise their internal policies and procedures to ensure adherence to the DOJ’s best-practices guidance including the structure of compensation packages.