Introduction
Cooperation credit to require broader disclosure
Resolutions to take into account similar and dissimilar prior infractions
Corporate monitors not disfavoured
Additional developments
Comment
On 28 October 2021, Lisa O Monaco, deputy attorney general (DAG), gave the keynote address at the American Bar Association's (ABA's) 36th National Institute on White Collar Crime and announced a series of changes to the Department of Justice's (DOJ) corporate criminal enforcement policies.(1) The overarching theme in DAG Monaco's speech was accountability. She stated that it was "unambiguously" the DOJ's "first priority in corporate criminal matters to prosecute the individuals who commit and profit from corporate malfeasance". She recognised that cases against corporate executives are among the most difficult that the government brings. She urged prosecutors to be bold and commence cases undeterred by the fear of losing. The DOJ is already taking steps to channel resources to bolster support for such cases, including assigning a new squad of FBI agents that will be embedded in the department's criminal fraud section.
DAG Monaco went on to announce three policy changes with respect to corporate criminal enforcement, each of which raise multiple additional questions.
Cooperation credit to require broader disclosure
The DOJ will be restoring prior guidance regarding eligibility for cooperation credit. To be eligible for cooperation credit, companies must provide the DOJ with all non-privileged information about individuals involved in or responsible for the misconduct at issue, regardless of their position, status or seniority. This is a shift from prior policies that gave companies more leeway regarding disclosures, limiting it to individuals who were determined to be "substantially involved" in misconduct. DAG Monaco explained that such a distinction is usually confusing in practice and gives companies too much discretion in deciding who should or should not be disclosed to the government. DAG Monaco stated that "[t]he department's investigative team is often better situated than company counsel to determine the relevance and culpability of individuals involved in misconduct". Practically, the DOJ contends that individuals with peripheral involvement in misconduct may have important information for the government's investigation. The DOJ's message seems to be formed by the assumption that company counsel withhold potentially important information when cooperating with the DOJ.
Resolutions to take into account similar and dissimilar prior infractions
Going forward, prosecutors will be directed to consider the full criminal, civil and regulatory record of any company when deciding what resolution is appropriate for a company that is the subject or target of a criminal investigation, "whether or not that misconduct is similar to the conduct at issue in a particular investigation". Prosecutors will assess actions beyond the DOJ, including cases in other jurisdictions, domestic and foreign, and cases involving state enforcement authorities. This change will be reflected in an amendment to the DOJ's Principles of Federal Prosecution of Business Organizations. DAG Monaco stated that a record of misconduct speaks directly to a company's overall commitment to compliance and fostering a culture that disincentivises criminal activity, although her remarks did not make clear how a wide range of conduct involving potentially disparate parts of a company will be evaluated.
Corporate monitors not disfavoured
The DOJ will be given more freedom to require the imposition of independent monitors whenever appropriate or necessary to satisfy prosecutors that a company will meet its compliance and disclosure obligations under deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs).
Decisions about monitors will be made based on the facts and circumstances of each case. DAG Monaco stated: "To the extent that prior Justice Department guidance suggested that monitorships are disfavored or are the exception, I am rescinding that guidance." She added that the DOJ will study how it selects corporate monitors and will consider whether to standardise their selection process across divisions and offices. What remains to be seen is whether these monitors will be given expanded mandates and authority to accomplish their objectives.
In addition to setting out the above policy changes, DAG Monaco announced the formation of the corporate crime advisory group and identified other issues the department plans to review. She noted that the DOJ will study how to account for companies that are repeat offenders and consider whether pretrial diversion (NPAs and DPAs) is appropriate for recidivist companies. The department will also assess whether companies under the terms of an NPA or DPA take their obligations seriously. These issues will be reviewed by the corporate crime advisory group, which will develop recommendations and propose revisions to the DOJ's policies on corporate criminal enforcement. This work reflects similar advisory groups or task forces set up by previous administrations as they placed their imprimatur on the DOJ's white collar enforcement policies.
As anticipated, the DOJ under the Biden administration is toughening its stance on corporate crime. Companies must regularly review their compliance programs and bolster them where necessary. Companies must also actively monitor and remediate misconduct. DAG Monaco warned: "[The DOJ] will ensure the absence of such programs inevitably proves a costly omission for companies who end up the focus of department investigations." She concluded by noting that these policies are just the start of the administration's efforts to better combat corporate crime.
For further information on this topic please contact Gejaa Gobena, Jonathan Diesenhaus or Peter S Spivack at Hogan Lovells US LLP's Washington DC office by telephone (+1 202 637 5600) or email ([email protected], jonathan[email protected]​hoganlovells.com or [email protected]). Alternatively, contact Stephanie Yonekura at Hogan Lovells US LLP's Los Angeles office by telephone (+1 310 785 4600) or email ([email protected]). The Hogan Lovells US LLP website can be accessed at www.hoganlovells.com.
Endnotes
(1) "Deputy Attorney General Lisa O. Monaco Gives Keynote Address at ABA's 36th National Institute on White Collar Crime", DOJ, 28 October 2021.