On November 2, 2015, the U.S. Department of Justice (DOJ) announced the appointment of Hui Chen as its first Compliance Counsel within the Criminal Division. Ms. Chen brings an impressive resume in both federal law enforcement and the private sector. Most recently, she served as the head of anti-bribery and corruption compliance at Standard Chartered Bank. In the 1990s, Ms. Chen also served as an Assistant United States Attorney in Brooklyn and as a DOJ trial lawyer.
Chen will lead DOJ’s efforts to more rigorously assess the corporate compliance programs of companies who are under investigation, with an emphasis on the Foreign Corrupt Practices Act. The Compliance Counsel’s recommendations will be important in deciding whether a company will face charges, and in determining the appropriate level of oversight to require when companies seek to enter non-prosecution agreements. The selection of Ms. Chen suggests that DOJ is prepared to substantively challenge companies on the effectiveness of their compliance regimes, rather than accepting assurances that whatever was in place is “good enough.”
The announcement of DOJ’s new Compliance Counsel follows on the heels of other DOJ initiatives aimed at more aggressively prosecuting corporate crime and holding individual officers and employees criminally responsible. In September 2015, Deputy Attorney General Sally Yates issued a memorandum entitledIndividual Accountability for Corporate Wrongdoing, setting forth new and aggressive enforcement policies for corporate and individual prosecution. In that “Yates Memo,” DOJ emphasizes that corporations will not be credited as cooperating unless they take significant and specific actions to assist law enforcement, including providing DOJ with all information relating to wrongdoing, including naming all high-level and low-level individuals responsible. According to the Yates memo, a company “cannot pick and choose what facts to disclose. That is, to be eligible for any credit for cooperation, the company must identify all individuals involved or responsible for the misconduct.”
When viewed together, the Yates Memo and the announcement of the new Compliance Counsel portend a more aggressive government approach to assigning criminal responsibility for corporate violations of law and a more adversarial approach to evaluating corporate compliance programs. This development has important implications for Boards of Directors. DOJ is sending a clear signal that compliance programs cannot be static procedures or window dressing. Rather, the Board of Directors and senior management must confirm that compliance policies and processes keep up to date with evolving risks. Companies—as well as Board members who sit on compliance committees—should take this opportunity to critically review their compliance practices, test weaknesses, and proactively implement best practices rather than waiting for DOJ.