Department of Justice Unveils Tougher Approach to Corporate Enforcement

Deputy Attorney General Lisa Monaco of the U.S. Department of Justice (“DOJ”) recently announced key changes in the DOJ’s approach to corporate crime, putting companies on notice of the Biden Administration’s stricter attitude to enforcing criminal laws.  In a keynote address given at the American Bar Association’s 36th National Institute on White Collar Crime held on October 28, Monaco announced three changes aimed at producing fuller cooperation and thorough analysis of past misdeeds, including (1) restoring prior requirements to gain cooperation credit; (2) consideration of a company’s full civil, criminal, and regulatory record; and (3) greater use of independent corporate monitors.

Return to Full Cooperation

Monaco’s first initiative involves a return to prior DOJ policy—announced in what came to be known as the Yates Memo during the Obama Administration—requiring full cooperation by companies during investigations to receive credit.  The initiative is designed, according to Monaco, to ensure greater individual accountability by requiring companies to provide “all non-privileged information about individuals involved in or responsible for the misconduct at issue.”  This includes a requirement that companies identify all individuals involved in alleged misconduct “regardless of their position, status, or seniority,” rather than the current practice of identify only individuals “substantially involved” in misconduct.

Evaluation of Past Corporate Misconduct

Second, Monaco announced that, in evaluating appropriate resolutions, the DOJ will now consider a broad range of historical misconduct, including a company’s full criminal, civil, and regulatory record.  As an example, Monaco has instructed federal prosecutors that they can now branch out from like-conduct considerations, so that “[a] prosecutor in the FCPA unit needs to take a department-wide view of misconduct,” including whether a company has also “run afoul of the Tax Division, the Environment and Natural Resources Division, the money laundering sections, the U.S. Attorney’s Offices, and so on.”

Recommitment to Corporate Monitors

Corporate monitors are independent individuals or teams appointed to oversee corporate operations and compliance as part of a resolution with a company.  While the utilization of independent monitors declined during the Trump Administration, Monaco announced a recommitment to monitorship to ensure good corporate governance.  She stated that while “[i]n recent years, some have suggested that monitors would be the exception and not the rule,” that position (if it has been suggested by prior DOJ guidance) is no longer the case.  Instead, “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.”

More to Come

Along with these three initiatives, Monaco promised to “surge resources to the Department’s prosecutors” to spur criminal corporate enforcement priorities.  Her first three initiatives, she assured, “are just a first step” with more to come.  She foreshadowed certain areas in which the DOJ is considering changes, including examining issues relating to repeat corporate offenders.  Monaco announced that she has ordered a review of corporate resolutions data to determine “whether and how to differently account for companies that become the focus of repeated DOJ investigations.”

Monaco also signalled that changes may be coming to the DOJ’s approach to Non-Prosecution and Deferred Prosecution Agreements (“NPAs” and “DPAs”).  These pretrial agreements are often used by prosecutors as a tool to secure corporate compliance without the time and energy of trial or full settlement negotiations, and traditionally do not require companies to admit wrongdoing, though companies must promise to clean up their act.  Again, the policy of entering into NPAs and DPAs with “recidivist companies” and the decision of how vigorously to enforce those agreements, Monaco suggested, may change. 

Along these lines, Monaco announced the creation of a Corporate Crime Advisory Group, “which will be made up of representatives from every part of the department involved in corporate criminal enforcement.”  The Group will have broad discretion to advise on topics such as monitorships, recidivism, and NPA/DPA policy, signalling that more extensive policy changes are likely on the way.

Take-Aways

While in the past substantial cooperation might gain a company leniency, the DOJ is now signalling that it will require total and complete cooperation and remedial measures for a company to obtain full cooperation credit.  Simply put, the DOJ is returning to a hard-nosed stance against corporate misconduct.

Repeat offenders, especially those with long histories of past violations, should take particular note, but all companies are on notice of DOJ’s intentions.  Going forward, corporate criminal investigations may quickly increase in size and scope, and even simple enquiries may turn into major investigations.  Those not accustomed to full cooperation will want to consider Monaco’s announcements early during any interactions with the DOJ, if they want to earn the benefits and goodwill that cooperation credit can provide.