In a speech before the American Conference Institute’s International Conference on the Foreign Corrupt Practices Act, Deputy Attorney General Rod Rosenstein announced a relaxation of prior Department of Justice (DOJ) policy on dealing with individuals involved in corporate wrongdoing, both criminally and civilly. The policy previously in place and set forth in what is commonly known as the “Yates Memo,” maintained an “all or nothing” approach to the investigation and resolution of corporate corruption cases. Companies had to produce ALL relevant information on persons involved in misconduct, from the highest to the lowest, in order to receive ANY credit for cooperation with DOJ investigators. The new policy presents a meaningful walk-back of the “all or nothing” approach—providing some much needed flexibility to federal attorneys and companies alike. Moving forward, DOJ attorneys will be looking at persons “substantially involved” in corrupt activities.
The rationale behind the change was, according to Rosenstein, based on the experience of DOJ lawyers over the last three years and since the implementation of the requirements of the Yates Memo. DOJ found the “all or nothing” approach counterproductive in civil cases. Requiring companies to admit the civil liability of every employee as well as the company proved, in Rosenstein’s words “inefficient,” as the time spent pursuing every individual employee who may have been liable for misconduct, no matter how minor, delayed resolution of matters and pulled attorneys away from more important investigations. In addition, awarding companies no credit for cooperation, even when voluntary disclosures and valuable assistance was being provided, delayed the resolution of some cases while providing little or no benefit in the ultimate result.
DOJ attorneys will now have greater discretion to resolve individual cases “consistent with relevant facts and circumstances.” That discretion will include the ability to negotiate civil releases for individuals who do not warrant additional investigation in corporate civil settlement investigations and to consider an individual’s ability to pay in deciding whether or not to pursue a civil judgment.
Despite the announced changes, Rosenstein made clear that individual accountability for corruption is still an important target for prosecutors.
“I want to emphasize that our policy does not allow corporations to conceal wrongdoing by senior officials. To the contrary, it prohibits our attorneys from awarding any credit whatsoever to any corporation that conceals misconduct by members of senior management or the board of directors, or otherwise demonstrates a lack of good faith in its representations. Companies caught hiding misconduct by senior leaders or failing to act in good faith will not be eligible for any credit.”
Rosenstein further remarked, “Returning discretion to Department attorneys is consistent with our commitment to hold individuals accountable in every appropriate case, using both our civil and criminal enforcement authorities. The department will vigorously and diligently pursue enforcement actions against individuals in every case where it is justified by the facts. If it is not justified, we will move on.”
While it is always best to implement effective compliance programs and avoid involvement with DOJ altogether, the new rules appear set to encourage, and reward, increased cooperation from companies that do become embroiled in corruption investigations. Such cooperation will no longer present an “all or nothing” scenario and should lead to a more expeditious resolution for all involved.