On April 17, 2015, Assistant Attorney General Leslie Caldwell provided helpful guidance regarding the Justice Department’s approach to corporate charging decisions in remarks that she delivered at New York University Law School’s Program on Corporate Compliance and Enforcement. Ms. Caldwell explained that her remarks furthered the Criminal Division’s efforts to increase transparency regarding corporate prosecutions, which she assured was one of her top priorities as head of the division. According to Ms. Caldwell, greater transparency “benefits everyone,” as a greater understanding of the potential benefits of self-reporting and cooperation likely will lead to more corporations self-disclosing potential wrongdoing to the government.
A comprehensive, credible but properly tailored investigation is crucial to receiving credit
Ms. Caldwell confirmed that if companies hope to receive cooperation credit, a comprehensive and credible internal investigation is essential: “Put simply, if a company wants cooperation credit, we expect that company to conduct a thorough internal investigation and to turn over evidence of wrongdoing to our prosecutors in a timely and complete way.” She proceeded to identify several key features of such an investigation:
- Investigations must identify culpable individuals. “Perhaps most critically,” Justice expects cooperating companies to identify culpable individuals and to provide all facts related to their conduct. Individual prosecutions remain a top Justice priority.
- Investigations must be independent and credible. Caldwell emphasized that investigations must be “designed to uncover the facts, not to spread company talking points or whitewash the truth.”
- Investigations should be appropriately tailored. Seeking to respond to criticism that internal investigations may cost enormous sums of time and money, Ms. Caldwell explained that the company, and not Justice, can determine the extent of the investigation. Justice does “not expect companies to aimlessly boil the ocean.” By way of example, she noted that if a company identifies an FCPA investigation in one country but “has no basis to suspect that violations are occurring elsewhere, we would not necessarily expect it to extend its investigation beyond the conduct in that country.”
The internal investigation does not occur in a vacuum, but rather takes place in conjunction with the Criminal Division’s investigation. Ms. Caldwell confirmed that Justice will proceed with its own investigation and will “pressure test” the company’s internal investigation. On the flip side, she stressed that Justice should engage in an “open dialogue” with cooperating corporations and help them by sharing the areas of interest identified by Justice: “I tell my prosecutors that where possible, if it would not compromise our own investigation, we should share information about our investigation with a cooperating company to help focus the company’s internal inquiry.”
Choosing not to cooperate in a timely fashion or at all will have negative consequences
While acknowledging a company’s right not to cooperate, Ms. Caldwell stressed that the failure to cooperate – either in a timely fashion or at all – will have negative consequences when it comes to making a charging decision. For example, she advised that the lack of cooperation was a “tipping point” in recent investigations that led to significant charges and guilty pleas. She further cautioned that while the failure to cooperate may delay Justice’s investigation, it will not “thwart” their investigation.
The Filip Memo and other resources on charging decisions and corporate compliance
Although recognizing the desire for a matrix for charging decisions, Ms. Caldwell explained that a “rote formula” would be detrimental to the individualized determination of justice in a given case. That said, she reiterated that Justice has for years publicly disclosed the factors that prosecutors must evaluate during corporate charging considerations. These considerations are reflected in the nine Principles of Prosecution of Business Organizations, which are set forth in the Filip Memo (available here in PDF). These factors help determine whether the corporation will be charged or will receive a deferred prosecution agreement (DPA), non-prosecution agreement (NPA) or a declination of prosecution. These factors provide companies an opportunity to advocate. According to Ms. Caldwell, in “virtually every instance, we invite company counsel to make a presentation regarding the application of the Filip factors in the case at hand before making a charging decision.” Moreover, after making a charging decision, Justice will provide an explanation of the key factors that led to its decision. Ms. Caldwell advised that the department’s resolutions should be providing even more information in this regard in the future.
Ms. Caldwell closed by offering suggestions about where companies and their counsel should look for guidance on charging decisions and on compliance programs. First, she assured that DPAs and NPAs in actual cases provide excellent guidance, noting that “[c]ompanies seeking to measure their own compliance programs need look no further than many of the resolutions we have made publicly available.” Second, she referred the audience to the Foreign Corrupt Practices Act (FCPA) Resource Guide published by the Justice Department and the Securities and Exchange Commission (which is available here in PDF). In particular, she noted the FCPA Resource Guide’s section on declinations. Finally, she pointed to Justice’s own FCPA website, which posts relevant enforcement actions as well as opinion letters.
As readers of Subject to Inquiry are well aware, even the suggestion of corporate prosecution can be devastating. That is why transparency and guidance such as that provided by Ms. Caldwell and the FCPA Resource Guide are crucial to helping corporations understand the risks faced by companies who have identified potential wrongdoing as well as the potential and significant benefits of active cooperation. Of course, even more importantly, companies should draw upon this guidance to make sure they have implemented robust compliance programs to help ensure they do everything possible to minimize the potential for wrongdoing in the first instance.