In a speech delivered on Thursday, Nov. 29, 2018, Deputy Attorney General Rod Rosenstein described important changes to DOJ policies for awarding cooperation credit in corporate investigations. These changes have been incorporated into the Justice Manual, formerly known as the United States Attorneys’ Manual.
Since 2015, DOJ policy has required companies seeking to receive credit for cooperating with a criminal investigation to “identify all individuals involved in or responsible for the misconduct at issue.” The revisions announced last week add a single word to that sentence, limiting the disclosure requirement to those individuals who are “substantially involved.”
The corresponding policy on the civil side will now include a sliding scale — giving companies credit in proportion to the degree of cooperation they provide. On one end of the scale, a company can receive maximum credit for identifying “every individual who was substantially involved in or responsible for the misconduct.” At the other end, a company will not receive any cooperation credit if it fails to “identify all wrongdoing by senior officials, including members of senior management or the board of directors.” Giving prosecutors flexibility to work within these limits will, Mr. Rosenstein said, foster efficiency and prevent unnecessary delay in resolving cases.
Mr. Rosenstein told the audience that the absolutist approach he was replacing appealed to him initially, but that the experience of the past few years has demonstrated to him that such an approach “impeded resolutions and wasted resources” while providing “little or no benefit.”
The new approach will likely preserve company resources as well. Companies will no longer have to continue an investigation just to identify low-level employees who are unlikely to be prosecuted. And the change may provide companies some ability to resist what they may consider unreasonable investigation demands by the government.
Mr. Rosenstein cast the changes as both a return to earlier DOJ policy and an effort to formalize DOJ’s current on-the-ground practice. Mr. Rosenstein spoke about the need to “restore some of the discretion” that DOJ attorneys previously exercised. He also noted that the prior policies, both criminal and civil, were not being “strictly enforced.”
The government’s more practical and lenient approach to cooperation is consistent with other comments Mr. Rosenstein made in his speech when he discussed efforts to avoid “piling on” in FCPA prosecutions. Speaking at the American Conference Institute’s annual International Conference on the Foreign Corrupt Practices Act, Mr. Rosenstein began his remarks with an update on prosecutions in that area. Mr. Rosenstein noted the FCPA unit’s successes, with particular emphasis on successful coordination with foreign and domestic law enforcement agencies. One goal of cooperating, according to Mr. Rosenstein, is to “avoid duplicative penalties.” As Mr. Rosenstein said, “It is important to punish wrongdoers. But we should discourage the sort of disproportionate and inefficient enforcement that can result if multiple authorities repeatedly pursue the same violator for the same misconduct.”
As we observed earlier this year, the DOJ appears to have recommitted itself “to rewarding companies that self-report wrongdoing, fully cooperate and remediate while holding individuals accountable.” By making cooperation standards less rigid, the DOJ can avoid penalizing innocent constituencies, including employees and shareholders. We hope that these and prior policy changes mark a return to the government’s historical practice of not prosecuting corporations that fully cooperate with the government’s investigation and take appropriate remedial measures.