On September 12, Deputy Assistant Attorney General Miner announced in a speech that the DOJ Criminal Division will consider issuing prosecutorial guidance on how to evaluate companies’ claims that they are unable to pay large criminal fines. If adopted, the new guidance would be the latest of several recent DOJ policy reforms and clarifications aimed at increasing certainty for companies that are the target of white collar enforcement actions. In his speech, DAAG Miner explained that because economic and corporate crimes are markedly different than other types of crimes, the Criminal Division has “worked to be increasingly transparent” about its approach to white collar criminal enforcement. He stated that the Division will “continue to examine areas where additional guidance could be warranted”—including evaluating companies’ inability to pay claims—as part of a broader effort to ensure prosecutors take a consistent approach to corporate enforcement, and encourage companies to self-disclose their misconduct to the government.1
In a speech at the 6th Annual Government Enforcement Institute on September 12, DAAG Miner explained that businesses are “different from many other organizations that get targeted for criminal investigation,” and that the Division must keep these differences in mind when engaged in white collar enforcement efforts.2 Thus, while “[d]rug cartels don’t have chief compliance officers,” “[c]hild pornography rings don’t have audit committees,” and “[t]he mafia doesn’t issue 8-Ks,” when it comes to companies, the Division’s white collar policies and enforcement approaches “can impact how . . . their boards and executives react to misconduct,” and may even encourage them to “develop systems that seek to discover misconduct.”3 Accordingly, in order to achieve the two underlying goals of white collar enforcement—“(1) to deter legally non-compliant behavior and punish it where it does occur; and (2) to encourage greater compliant behavior”—Miner cautioned that the Division must be “mindful” of how its policies and enforcement practices are viewed by the business community and members of the bar.4
Miner emphasized the Division’s strong focus on bringing prosecutions against individuals and businesses that profit from their misconduct, but noted the Division cannot merely be a “one way ratchet in always bringing more cases.”5 Rather, to accomplish white collar enforcement’s “twin goals of deterrence and compliance,” the Division should continue issuing clear guidance to ensure that prosecutors approach corporate enforcement in a consistent manner, and that companies that invest in compliance efforts and appropriately respond to misconduct are treated fairly.
One situation in which Miner advised “additional guidance could be warranted” involves claims by a company that it cannot survive a large criminal fine.6 Specifically, in some cases, a company may claim that a specified fine or penalty would cause the company to go bankrupt, lay-off workers, or even shut down certain operations. In recent years, the DOJ has taken these factors into consideration, and agreed to reduce companies’ fines and penalties in plea deals. For example, in 2016, two Brazilian entities, Odebrecht S.A. and its affiliate Braskem S.A., agreed to pay a $3.5 billion fine to settle the largest foreign bribery case at the time, down from the agreed “appropriate criminal fine” of $4.5 billion, after Odebrecht indicated it would be unable to pay such a large fine.7 But while the U.S. Sentencing Guidelines currently provide that the reduction of a criminal fine “shall not be more than necessary to avoid substantially jeopardizing the continued viability of the organization,”8 Miner acknowledged that the Guidelines “don’t provide much in the way of concrete guidance or factors to consider.”9 Accordingly, he said, the DOJ is considering issuing new guidance that would provide prosecutors with additional parameters on how to better assess a company’s claims that it is unable to pay a large criminal fine or penalty.
If issued, the new guidance on corporate fines would be the latest in a series of recent policy changes by the Criminal Division aimed at providing companies with clear guidance on the government’s expectations regarding corporate misconduct and during enforcement actions. For example, as we previously reported, in July 2019, the Division updated its FCPA Corporate Enforcement Policy to provide incentives for companies to self-report misconduct discovered after a merger or acquisition. DAAG Miner noted that change was in response to the Division’s desire to make clear that the benefits of voluntary self-disclosure apply equally to entities that uncover misconduct after a transaction.10 Additionally, just a few months prior, in April 2019, the Criminal Division issued a guidance document, “Evaluation of Corporate Compliance Programs,”11 which is perhaps the most comprehensive guidance to date on how prosecutors evaluate the design, implementation, and effectiveness of corporate compliance programs in making charging decisions and sentencing recommendations.
In addition to describing serial corporate policy changes, Miner also explained how the DOJ has focused its limited resources to carry out the twin missions of criminal deterrence and incentivizing responsible corporate action by highlighting the Department’s increased reliance on data analytics to detect fraud. Noting that companies have greater access to their own data, Miner cautioned that when corporate misconduct does occur, DOJ prosecutors will question companies on their efforts to track and analyze their own data for indications of potential fraud, expanding on DOJ’s April 2019 Guidance on how prosecutors will evaluate corporate compliance programs.
Miner did not indicate when the DOJ would release the potential new guidance on corporate fines. However, his remarks demonstrate that the Criminal Division’s approach to corporate enforcement will remain markedly different than for other types of crimes, acknowledging the need to “create incentives and clear guidance to help encourage responsible companies to invest in compliance and to trust that, if they respond appropriately to misconduct, they are going to be treated fairly by the government.”12 We will continue to monitor DOJ policy announcements and update our readership with any new developments.