DOJ Determined to “Better Combat Corporate Crime”

The Department of Justice under the Biden Administration signaled yesterday that it will be putting more resources towards investigating corporate crime – and expecting more from companies who come under investigation.  On October 28, 2021, at ABA’s Conference on White Collar Crime, Deputy Attorney General Lisa Monaco announced a series of policy changes and the formation of a department-wide Corporate Crime Advisory Group to strengthen the enforcement of corporate crime and coordination across enforcement units.

The policy changes announced yesterday include (1) an enhanced focus on corporate cooperation and individual accountability—including those at the highest levels, (2) the role historical misconduct will play in corporate resolutions going forward, and (3) the use of corporate monitors. 

First, the Department expects that in connection with an investigation, companies will provide all non-privileged information about all individuals involved in or responsible for the misconduct at issue regardless of their rank. Monaco noted this is a significant departure from previous policy that expected information regarding individuals “substantially involved in the misconduct.”  If companies do not provide information regarding all individuals involved, they will not receive cooperation credit in connection with sentencing. This policy change is consistent with the Department’s determination to ensure individual accountability.

Second, Monaco made clear that a company’s historical misconduct matters, even when unrelated to the misconduct at issue. She explained this is so because prior “misconduct speaks directly to a company’s overall commitment to compliance programs and the appropriate culture to disincentivize criminal activity.”  Accordingly, going forward, prosecutors will consider “the full range of prior misconduct.”  For example, an FCPA prosecutor should consider if the company has “run afoul of the Tax Division, the Environment and Natural Resources Division, the money laundering sections, the U.S. Attorney’s Offices,” and even state or international laws.  

Third, the Deputy Attorney General emphasized the role of independent compliance monitors. Monaco rescinded all prior guidance suggesting that monitorships were “the exception.” Going forward, “the department is free to require the imposition of independent monitors whenever it is appropriate to do so in order to satisfy our prosecutors that a company is living up to its compliance and disclosure obligations” under deferred prosecution (DPAs) or non-prosecution agreements (NPAs).

As significant as these changes are, they appear to be just the beginning. Among other things, “in the coming months,” the Department will be exploring whether NPAs and DPAs are appropriate for recidivist companies or whether they send the wrong message that “these resolutions and the attendant fines are just the cost of doing business.” Additionally, the Department will be looking into whether companies under NPAs and DPAs take their obligations seriously. The goal here is to identify and hold accountable companies that continue to engage in wrongdoing, despite and while subject to these pretrial diversion agreements. In the Department’s view, there is hardly any “more outrageous behavior” than that.

While announcing these changes, Deputy Attorney General made sure they did not overshadow other considerations that will remain true going forward. For example, while individual accountability is a priority, the Department “will not hesitate to hold companies accountable.” When it comes to monitors, Monaco assured their selection “will continue to be accomplished in a fashion that eliminates even the perception of favoritism,” and their work will be governed by clear standards.

Acknowledging the challenges of managing and being accountable for compliance in complex organizations, Deputy Attorney General put special emphasis on the importance of corporate culture of compliance. Put simply, a “culture that fails to hold individuals accountable, or fails to invest in compliance — or worse, that thumbs its nose at compliance — leads to bad results.” The Department will ensure that the absence of an effective compliance program “inevitably proves a costly omission for companies who end up the focus of department investigations.”

To implement these changes and to identify additional ones to ensure “rigorous enforcement,” the Department will be looking for ways to grow its resources. For example, the Department’s Criminal Fraud Section will be getting a new squad of FBI agents, who will work shoulder to shoulder with the prosecutors. The Department will also be creating the Corporate Crime Advisory Group, composed of representatives from various parts of the Department in corporate criminal enforcement. “This group will have a broad mandate and will consult broadly,” on the implementation of the policy changes announced yesterday and other enforcement issues, such as benchmarks for a successful corporate cooperation.

At the end of her address, Deputy Attorney General provided five key takeaways for companies:

• All companies need to continuously review their compliance programs to ensure they adequately monitor for, detect, and remediate misconduct — “or else it’s going to cost them down the line.”
• Companies facing investigations should know that the Department will review their entire criminal, civil, and regulatory record — “not just a sliver of that record.”
• Companies cooperating with the government must identify all individuals involved in the misconduct — not just those substantially involved — and produce all non-privileged information about their involvement.
• Companies negotiating resolutions should understand that there is no presumption against corporate monitors. Monitorship decisions will be made based on the facts and circumstances of each case.
• “Looking to the future, this is a start — and not the end — of this administration’s actions to better combat corporate crime.”

No doubt, the changes announced yesterday will have an immediate and long-standing effect on corporate compliance enforcement. In the next few weeks, we will examine each of the changes more in depth. Among other things, we will examine individual accountability, recidivism, monitorships, collaboration between different sections at the Department, and the role of data analytics in corporate criminal and civil investigations.