On November 29, Deputy Attorney General Rod Rosenstein announced revisions to the Department of Justice’s policy on corporate cooperation in government investigations, which may make it easier for companies under investigation to receive cooperation credit. The announcement, made during Rosenstein’s remarks at the American Conference Institute’s 35th International Conference on the Foreign Corrupt Practices Act, stems from the DOJ’s review of its policy concerning individual accountability in corporate investigations. The announcement also reflects the Department’s emphasis on holding individuals responsible for corporate wrongdoing, with Rosenstein reiterating the Department’s position that “pursuing individuals responsible for wrongdoing will be a top priority in every corporate investigation.”
While the DOJ’s focus on holding individuals responsible for corporate wrongdoing is not new, the Department’s revised policy takes a step back from its prior position that a company seeking to cooperate must identify all individuals involved with criminal conduct. Going forward, a company only needs to disclose the identities of those “substantially involved in or responsible for the criminal conduct.” This is designed to ensure that investigations are not slowed down by a company’s need to identify every single employee who may bear some level of criminal culpability in order to gain cooperation credit. Simply put, the governments wants to know (1) who authorized the misconduct and (2) what they knew about it.
'Reward Effective Compliance Programs'
Rosenstein noted that corporate resolutions allow the government to “reward effective compliance programs” and “penalize companies that condone or ignore wrongdoing.” This is a significant statement because it may foreshadow the emphasis the government places on fully functioning compliance programs in determining criminal liability. The best argument to mitigate corporate misconduct is a strong compliance program, and Rosenstein’s statement suggests the government may be willing to give greater credit to those companies that have the right systems in place to deter and detect wrongdoing (even if those systems are imperfect).
'Civil Cases Are Different'
Perhaps most notably, the revised policy eliminates the “all or nothing” approach to cooperation credit in civil cases, and allows a company to earn partial credit for cooperation that does not extend to identifying every lower-level individual substantially involved in the wrongdoing. Rosenstein stated that, unlike criminal cases, the primary goal of corporate civil investigations is to “recover money,” and the government must “use the resources entrusted to us efficiently.” Therefore, the DOJ is “restoring discretion” to civil attorneys to accept settlements that remedy harm and deter future violations, even if the company has not admitted civil liability for all employees involved in the alleged misconduct.
For a company to earn maximum credit, it must still meaningfully assist the government’s investigation and identify all individuals substantially involved in or responsible for the misconduct. The revised policy, however, allows a civil attorney to offer partial credit to a company that identifies senior officials substantially involved in the misconduct but that does not identify every single non-managerial employee who may be culpable. This revision stems from the practical desire to move civil investigations forward to resolution and not waste resources pursuing civil cases against lower-level individuals.
Finally, the DOJ is once again allowing civil attorneys to consider an individual’s ability to pay in deciding whether to seek a civil judgment. This is in line with the Department’s goal of utilizing resources efficiently and not pursuing fruitless cases.
So what does this mean for a company facing a criminal or civil investigation going forward?
First, the government is laser-focused on holding corporate executives responsible for criminal and civil wrongdoing and, as a base line, expects that a company seeking any level of cooperation credit will identify those executives substantially involved in or responsible for the misconduct. Indeed, Rosenstein made clear that a company cannot conceal misconduct by a senior executive or manager, and that those caught doing so (or failing to act in good faith) will not receive any cooperation credit whatsoever.
Second, the government’s desire to move a case efficiently towards resolution can benefit a cooperating company to the extent that the company no longer needs to spend the time or resources to identify every single individual involved in the alleged misconduct.
Third, the Department appears to want to incentivize good corporate compliance. Rosenstein emphasized that “companies that self-report, cooperate and remediate the harm they caused will be rewarded.” To that end, a company with a robust compliance program is in a good position to argue for declination of criminal charges or additional cooperation credit.
Finally, a company is no longer required to admit civil liability for every single employee involved in corporate wrongdoing in order to receive cooperation credit. Although this does not eliminate a company’s obligation to identify senior executives, including board members, involved in the alleged misconduct, it frees a company from having to identify and admit liability for every other individual who could theoretically face civil liability. This has the potential to bring about more efficient resolutions of civil investigations and save a company the time and money involved in identifying all other individuals with potential liability.
The actual impact of these revisions remains to be seen, but one thing is clear: The DOJ is unwaveringly focused on holding senior individuals responsible for corporate wrongdoing, and is seeking to bring about more efficient resolutions in criminal and civil investigations.