Earlier today, Rod Rosenstein, Deputy Attorney General of the U.S. Department of Justice, announced a new policy, in the form of a new addition to the United States Attorneys’ Manual (“USAM”), concerning the coordination of corporate resolution penalties in cases involving penalties imposed by more than one regulator or law enforcement authority. Although it remains to be seen how the policy will be implemented in practice, the new provisions of the USAM will allow corporations faced with multiple overlapping investigations to make arguments about duplicative fines based on an explicit DOJ policy.
In a speech announcing the new policy, DAG Rosenstein referred to the “piling on” of fines and penalties by multiple regulators and law enforcement agencies “in relation to investigations of the same misconduct.” In doing so, DAG Rosenstein noted that the “aim” of the new policy “is to enhance relationships with our law enforcement partners in the United States and abroad, while avoiding unfair duplicative penalties.” Specifically, the new policy requires DOJ attorneys to “coordinate with one another to avoid the unnecessary imposition of duplicative fines, penalties and/or forfeiture against [a] company,” and further instructs DOJ personnel to “endeavor, as appropriate, to . . . consider the amount of fines, penalties and/or forfeiture paid to federal, state, local or foreign law enforcement authorities that are seeking to resolve a case with a company for the same misconduct.”  In the FCPA context, this new policy is consistent with, and arguably goes further than, Article 4 of the OECD Convention requirement that signatories with shared jurisdiction over a foreign bribery case consult with one another.
The Four Key Components of the Policy
In his speech today, DAG Rosenstein identified four key components of the new policy:
- The reaffirmation of the principle that “the federal government’s criminal enforcement authority should not be used against . . . company[ies] for purposes unrelated to the investigation and prosecution of a possible crime,” including using “the threat of criminal prosecution solely to persuade a company to pay a larger settlement in a civil case.”
- An explicit direction to different components of the Department of Justice to coordinate with one another when seeking to resolve cases involving the same misconduct in order to achieve an “equitable” result;
- An invitation to DOJ attorneys that, when possible, they coordinate with other federal, state, local, and foreign enforcement authorities in resolving cases involving the same misconduct; and
- The identification of relevant factors (including the egregiousness of a company’s misconduct; statutory mandates regarding penalties, fines, and/or forfeitures; the risk of unwarranted delay in achieving a final resolution; and the adequacy and timeliness of a company’s disclosures and cooperation) for DOJ attorneys to consider when evaluating whether multiple penalties serve the interests of justice.
Implications for Corporations
As is often the case with new policies, the ultimate effect of this latest amendment to the USAM will depend in large part on how it is applied. By its terms, the new policy requires only that DOJ attorneys coordinate with each other and with other regulators, and “consider” certain factors. The new policy does not provide concrete steps or even suggestions as to how the policy might be implemented in practice, or discuss the degree or extent to which corporations should be given “credit” for fines paid to other regulators in other proceedings. And the guidance created by the policy allows for consideration of subjective criteria, such as the “egregiousness of a company’s misconduct.”
Although the new policy applies to corporate enforcement generally, and although the Department has historically credited the fines, penalties, and forfeiture imposed by other law agencies and regulators, recent FCPA resolutions in which the DOJ has provided offsets for fines paid to foreign regulators may provide some insight into how the DOJ will implement the new policy going forward. For example, in 2016, when reaching a settlement with Odebrecht S.A. and Braskem S.A. over allegations of bribery, the DOJ agreed to credit the amount that Odebrecht is required to pay to Brazil and Switzerland over the full term of their respective agreements, with the United States and Switzerland receiving 10 percent each of the principal of the total criminal fine and Brazil receiving the remaining 80 percent. Similarly, according to the terms of the deferred prosecution agreement which VimpelCom entered into in 2016, the DOJ agreed to offset the total criminal penalty of over $460 million by up to $230 million for any criminal penalties paid to the Dutch Prosecution Service. Additionally, in 2017, the DOJ credited penalties paid to the Brazilian and Dutch authorities when calculating the fine to be paid by SBM, a Netherlands-based oil services company, to resolve charges of bribery. Likewise, in its settlement with Keppel Offshore Marine last December, the DOJ credited the company with $211 million paid to Brazil and $105.6 million paid to Singapore.
The new policy provides corporations and their attorneys a new tool in negotiating corporate resolutions in cases involving multiple regulators. For years, corporations have been arguing—with varying degrees of success—that fines and penalties imposed in related proceedings, whether foreign or domestic, should be considered in establishing an appropriate penalty. Sometimes these arguments were couched in terms of the availability of alternatives remedies, other times as arguments about the unfairness and arbitrariness of multiple penalties imposed by different regulators (or indeed different components within the DOJ) based on the same underlying conduct. The introduction of the new policy will allow corporations to tie these arguments to specific provisions of the United States Attorneys’ Manual. It is important to note, however, that this is only a new tool for negotiating with the DOJ and not any other authorities. While it is certainly a step in the right direction for many companies with cases involving multiple regulators, there is no clear indication that state attorney generals, state regulators, or other federal agencies are prepared to apply the same principles.
Associates Chand Edwards-Balfour and Jonathan Silberstein-Loeb contributed to this Client Memorandum.