The priorities will impact non-US companies who may face a US DOJ with a renewed emphasis on combating corporate crime.
In a recent speech that has garnered significant attention, the Deputy Attorney General of the United States, Lisa Monaco, highlighted several important changes regarding how the US Department of Justice (DOJ) will pursue corporate crime during the Biden Administration. Latham’s in-depth analysis of the speech and its potential impact can be found here.
In addition to reinforcing prior statements that the Biden Administration will prioritise the prosecution of corporate and white collar crime, the speech touched on several areas that may be of particular relevance to UK and other non-US companies. This blog post highlights some of those areas.
Prosecution of individuals will be prioritised
Although it has historically been DOJ policy to pursue the prosecution of individuals who are involved in corporate misconduct, the speech reflects a renewed emphasis on pursuing individual employees (as opposed to just the corporate defendant), even in difficult cases in which a conviction may not be guaranteed. Specifically, Deputy Attorney General Monaco noted that the “first priority in corporate criminal matters [is] to prosecute the individuals who commit and profit from corporate malfeasance” (emphasis added).
To that end, the DOJ will reinstate prior policies mandating that companies under investigation disclose all non-privileged information about any individual “involved in or responsible for” the conduct at issue in order to be eligible for any cooperation credit (i.e., a more favourable form of resolution or reduced financial sanction based upon proactive cooperation). In a shift from existing DOJ practice, companies can no longer rely on providing information on only those employees with “substantial involvement” in the alleged misconduct. Rather, companies must provide information on all involved employees (as defined by the DOJ) and let the prosecutors make informed charging decisions regarding which, if any, individuals to pursue.
Given the practical difficulties that often arise in providing information on individuals in cross-border investigations, this development may have particular significance for non-US companies as they continue to navigate their potentially divergent interests in cooperating with the DOJ and complying with other applicable laws (i.e., blocking statutes, data privacy, banking secrecy, employment laws, and inconsistencies in expectations from other agencies).
Corporate recidivism may cover a wider scope of conduct
Although a corporation’s prior record has long been a relevant factor in making charging decisions and/or negotiating a resolution, the DOJ has indicated that it will broaden its view of what constitutes “prior misconduct” to include any and all prior issues and not just those that are similar to the ones under investigation. This shift, subtle as it may sound, could have substantial ramifications for companies seeking to avoid charges and/or negotiate favourable resolutions. To illustrate, a company under investigation for violating the Foreign Corrupt Practices Act (FCPA) that has no prior FCPA issues will likely no longer be able to assert that it has a clean record if it has past misconduct in other areas. Notably, the speech does not clarify whether the DOJ will assess and consider prior misconduct that did not involve the US in its consideration of a corporation’s past record, or to what extent the DOJ will consider the past misconduct of predecessor entities under this new framework. In addition, Deputy Attorney General Monaco signalled that the DOJ will be aggressive in punishing companies that violate the terms of Deferred Prosecution Agreements (DPAs) or Non-Prosecution Agreements (NPAs), a development that is relevant for the non-US companies that are under such agreements, or considering entering into them.
Monitorships may be making a comeback
Insofar as guidance from the past Administration indicated that monitorships were to be used only in extraordinary cases, Deputy Attorney General Monaco made clear that she was “rescinding that guidance” and stated that the DOJ “is free to require the imposition of independent monitors wherever it is appropriate to do so in order to satisfy our prosecutors that a company is living up to its compliance and disclosure obligations under the DPA or NPA.” The imposition of a monitor can be a particularly costly aspect of any resolution, particularly for companies based outside of the United States, and raises the risk that future compliance concerns will trigger follow-on investigations by the DOJ and/or other regulators. Monitors can also make it difficult for a company to close the chapter on past misconduct by extending the impact of a resolution for years into the future.
More broadly, the speech signals a continued emphasis on corporate culture, and the DOJ’s expectation that companies will adopt and implement programs that are appropriately resourced and designed to promote compliance with applicable laws. Deputy Attorney General Monaco confirmed that the DOJ will continue to credit companies that have functioning compliance programs in place but also warned that the DOJ will “ensure the absence of such programs inevitably proves a costly omission for companies who end up the focus of [DOJ] investigations.”