DOJ Policy Changes and Updates
FCPA enforcement in 2022 was characterized by the addition, expansion, and implementation of Biden administration policies related to anti-corruption investigation and enforcement, an area announced by President Biden and key DOJ officials in 2021 as a focus of the new administration. The first part of this chapter will review these changes, including the publication of revised policies on corporate criminal enforcement and issuance of an advisory opinion regarding liability for an extortion payment under the FCPA. The second part of this chapter will focus on the ways DOJ has negotiated resolutions of corporate corruption-related investigations and DOJ’s use of declinations in the anti-corruption enforcement arena. Part three of this chapter will explain the actions DOJ has taken in an attempt to demonstrate its intention to take an aggressive approach to anti-corruption investigations and to corporate criminal enforcement more broadly.
New Administration Changes and Focus
In its second year, the Biden administration announced and implemented several new anti-corruption policies and initiatives. Some these were new policies or enhancement of prior initiatives; others marked a change of course from prior efforts. These policies and initiatives include a revision of the FCPA Corporate Enforcement Policy, a new FCPA advisory opinion, increasing sanctions enforcement, creation of a Klepto-capture task force, and retiring the Trump-era “China Initiative.” Each is discussed in more detail below.
1. Revised Corporate Criminal Enforcement and Monitorship Guidelines
As Jenner & Block previously reported, on September 15, 2022, Deputy Attorney General Lisa Monaco issued new guidance related to DOJ’s corporate criminal enforcement efforts. In a memo titled “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group,” DAG Monaco announced changes to the FCPA Corporate Enforcement policy and other initiatives that she said were designed to promote corporate FCPA investigations and individual accountability for violations.[1]
The September 2022 guidance reiterated that DOJ’s first priority is prosecuting individuals who commit and profit from corporate crimes. While DOJ has emphasized the importance of individual accountability in corporate wrongdoing since the 2015 Yates Memorandum, DAG Monaco’s new memo introduces two new policies designed to provide greater incentive for corporations to disclose misconduct by individuals. First, the policy emphasized that to receive cooperation credit, companies must disclose information pertaining to individual misconduct on a timely basis.[2] Second, the guidance instructs cooperating companies to prioritize producing evidence that is most relevant for evaluating individual liability and instructs prosecutors to complete individual investigations before or in parallel with resolving corporate investigations.[3] When that timing is impracticable, prosecutors must write a detailed plan—to be approved by DOJ leadership—for completing remaining work on the individual cases.[4]
Additionally, as described further below, DAG Monaco’s memo provides guidance for prosecutors related to evaluating the need for an independent compliance monitor, selecting one equitably and transparently, and overseeing the independent compliance monitor to ensure such monitor stays on task and on budget.[5] The guidance notes that DOJ will determine the need for a monitor on a case-by-case basis, and will not require the imposition of a monitor for a cooperating corporation that voluntarily self-discloses the relevant conduct if the company demonstrates that, at the time of its resolution with DOJ, it has implemented and tested an effective compliance program.[6] Other policies in DAG Monaco’s memo relate to corporate cooperation with government investigations and compliance—including evaluation of compliance programs, historical misconduct, and voluntary self-disclosure of misconduct—and are outlined below.
2. Advisory Opinion on Extortion and Duress
On January 21, 2022, DOJ issued a new Opinion Procedure Release (the Opinion) regarding the scope of the FCPA.[7] The Opinion, DOJ’s first opinion release since 2020 and only the second since 2014, was in response to an October 2021 request by a US-based company whose ship had been detained by a foreign country’s naval forces after inadvertently anchoring in that country’s waters.[8] The foreign country ordered the crew to remain on the ship and jailed the captain without providing any documentation authorizing his detention.[9] The company provided information showing that the captain was suffering from serious medical conditions that would be significantly exacerbated by the conditions of his detention and created a significant risk to his life and health.[10] Shortly after the captain and crew were detained, a third party purporting to act on behalf of the foreign country demanded a cash payment to release the captain and the vessel but refused to provide documentation stating a formal basis for the payment.[11]
After unsuccessfully seeking assistance from other US agencies, the company requested a DOJ advisory opinion as to whether the agency would bring an FCPA enforcement action if the company made the payment.[12] Due to the “highly unusual and exigent circumstances” involving the possibility of harm, DOJ issued a short “preliminary opinion” within two days of the company’s October 2021 request, indicating that it did not “presently intend to take an enforcement action under the FCPA’s anti-bribery provisions in response to the contemplated payment.”[13] In the more detailed January 2022 Opinion, DOJ stated that the company’s payment would not trigger an enforcement action under the FCPA because the payment was not made “corruptly” (i.e., intended to wrongfully influence the recipient) or to assist the company in obtaining or retaining business.[14] Rather, the payment was “to avoid imminent and potentially serious harm” to the employees.[15] Additionally, DOJ noted that under federal criminal law, actions taken under duress do not ordinarily constitute crimes.[16]
DOJ distinguished this situation from other circumstances in which a company is threatened with severe economic or financial consequences in the absence of a payment, noting that those circumstances do not constitute “duress” and payment under those circumstances may thus lead to liability under the FCPA.[17] DOJ also credited the company for its transparency regarding the proposed payment, its efforts to determine the legal basis for the payment request, and for having first exhausted other means of assistance by other US agencies.[18] This theme—that proactive self‑disclosure benefits companies—has become increasingly common in DOJ policies and public statements.
3. Sanctions as “The New FCPA”
At a New York City Bar Association event on April 27, 2022, DAG Monaco highlighted DOJ’s focus on sanctions evasion and export control violations as key to its work to combat corporate crime, describing economic sanctions as “the new FCPA.”[19] DAG Monaco reiterated this sentiment in another speech on June 16, 2022, highlighting the increasing overlap between corporate crime and national security, particularly with respect to sanctions imposed in response to Russia’s invasion of Ukraine, and stressed the need for both financial institutions and international corporations to closely monitor these sanctions.[20] Although enforcement of sanctions laws against corporate defendants has already been a focus of DOJ efforts, particularly involving financial institutions, such enforcement has never risen to the level of FCPA enforcement, and it remains to be seen if DOJ actually intends that kind of investment.
DAG Monaco’s statement signals an increased focus by DOJ on enforcement of US economic sanctions at a time when sanctions enforcement involves an increasingly multilateral regime and impacts an expanding number of industries.[21] Such increased focus also incentivizes companies to develop the capacity to identify and voluntarily disclose misconduct within their organizations.[22] DOJ’s emphasis on compliance with US economic sanctions should not be read, however, as an indicator that DOJ will reduce its FCPA-related enforcements efforts. As is evident by DOJ’s other public statements and newly launched initiatives, the FCPA will continue to be a high priority for the department.
4. Task Force KleptoCapture
On March 2, 2022, Attorney General Merrick Garland announced the launch of “Task Force KleptoCapture” to enforce “the sweeping sanctions, export restrictions, and economic countermeasures that the United States has imposed, along with allies and partners, in response to Russia’s unprovoked military invasion of Ukraine” in February 2022.[23] The interagency law enforcement task force is based in the Deputy Attorney General’s office and the Attorney General announced that it will “leverage all the department’s tools and authorities”—including data analytics, cryptocurrency tracing, foreign intelligence sources, and information from financial regulators and private sector partners—to target Russian officials, government-aligned elites and oligarchs, and those who aid or conceal such individual’s unlawful conduct.[24] In addition to using criminal charges to combat the crimes of the Russian regime, the Attorney General announced that the task force would rely on civil and criminal forfeiture to seize the assets of sanctioned individuals and the proceeds of unlawful conduct.[25]
In April 2022, the new task force made its first international asset seizure, of Russian oligarch Viktor Vekselberg’s $90 million yacht in Spain’s Balearic Islands.[26] Vekselberg and his associates had allegedly structured transactions to violate US sanctions and committed bank fraud to support and maintain the yacht.[27] The federal magistrate judge who signed the seizure order addressed three key issues that may recur in future KleptoCapture seizures. First, the order explained the basis for US jurisdiction to seize the property and venue to issue the seizure warrant in the District of Columbia. Second, the court held that the US government did not need a search warrant to search the yacht because the Fourth Amendment does not apply to property owned by a nonresident alien located in a foreign country. Third, the court held that forfeiture of the yacht would not violate the Excessive Fines Clause of the Eighth Amendment given the acute harm to society caused by Vekselberg’s actions.[28]
According to KleptoCapture Task Force Director Andrew Adams, since seizing Vekselberg’s yacht, the task force has seized “multiple hundreds of millions of dollars” worth of superyachts, jets, villas and bank accounts.[29] These include a $300 million yacht belonging to sanctioned Russian oligarch Suleiman Kerimov,[30] two aircraft worth more than $400 million belonging to oligarch Roman Abramovich,[31] an airplane worth over $90 million belonging to sanctioned oligarch Andrei Skoch,[32] and a $45 million airplane owned by sanctioned Russian energy company PJSC LUKOIL.[33] Director Adams also reported that the task force has frozen around $300 billion in assets since it was announced in March,[34] and that DOJ has charged several oligarchs and their associates “for evading sanctions, as well as for conducting foreign malign influence operations arising from illegal efforts to promote Russian propaganda and undermine Ukrainian democracy and society.”[35]
5. End of the Justice Department’s “China Initiative”
On February 23, 2022, Assistant Attorney General Matt Olsen announced an end to the China Initiative, a program launched by former Attorney General Jeff Sessions in November 2018 to identify and investigate economic espionage, trade secret theft, malicious cyber activity, transnational repression, and other tactics intended to benefit the Chinese state.[36] Under the Trump-era program, federal prosecutors brought a number of cases charging primarily Chinese and Chinese-American academics and researchers with fraud and false statements to federal agencies for allegedly misrepresenting their ties to the Chinese government.[37] Olsen, who heads DOJ’s National Security Division, acknowledged that to many, the China Initiative “fueled a narrative of intolerance and bias,” suggesting “that the Justice Department treats people from China or of Chinese descent differently,” a concern heightened in light of a rise in anti-Asian hate crimes.[38]
Olsen also announced that DOJ will apply its newly launched “Strategy for Countering Nation-State Threats” to potential threats from China, in addition to countries such as Russia, Iran, and North Korea, in response to such countries “becoming more aggressive and more capable in their nefarious activity than ever before” when “seek[ing] to undermine [the US’s] core democratic, economic and scientific institutions.”[39] Despite announcing an intent to effectively replace the China Initiative with the Strategy for Countering Nation-State Threats, however, Olsen also noted that DOJ’s shift away from the China Initiative does not indicate that the Biden administration will decrease enforcement of perceived threats from China.[40] Olsen emphasized that the Chinese government continues to pose a national security threat to US interests and that it “stands apart” from threats from other nation-state actors because the Chinese government’s concerted use of espionage and other covert tactics are “more brazen [and] more damaging than ever before.”[41] Indeed, DOJ recently charged 13 individuals in three separate cases involving an alleged scheme to cause the forced repatriation of a Chinese national residing in the US, and alleged intelligence activity by Chinese government agents.[42]
2022 Declinations and Deferred Prosecution Agreements
In a September 2022 speech about DOJ’s new guidance related to its corporate criminal enforcement efforts, DAG Monaco noted that “[v]oluntary self-disclosure cases have resulted in declinations and non-prosecution agreements with no significant penalties.”[43] In line with the department’s efforts to encourage voluntary self-disclosure, DOJ’s new guidance explained that in general, companies will receive credit when they disclose information pertaining to the individual misconduct on a timely basis and when the company prioritizes the production of the most relevant evidence for evaluating individual liability. While DOJ considers bribery schemes to be very serious, the cases the department decided not to pursue in 2022 highlight the emphasis DOJ places on the company’s willingness to provide access to the information necessary to fully investigate the offense and ensure that the company creates the internal safeguards necessary to prevent similar issues in the future.
In 2022, DOJ publicly announced two declinations under the FCPA Corporate Enforcement Policy (CEP).[44] In In re Jardine Lloyd Thompson Group Holdings Ltd., DOJ alleged that Jardine Lloyd Thompson Group Holdings Ltd. (JLT), through its employees and agents, paid approximately $10.8 million to a third-party intermediary in Florida that the employees and agents knew would be used for bribes to Ecuadorian government officials. According to DOJ’s letter detailing its decision to decline prosecution, the alleged bribes were made to obtain and retain contracts with Seguros Sucre, the Ecuadorian state-owned and controlled surety company. DOJ alleged that approximately $3.2 million in bribes were made and approximately $1.2 million of those payments were laundered through bank accounts in the United States. JLT was required to disgorge $29,081,951, representing the profits from the contracts that JLT obtained and retained, as part of any settlement. JLT also received offsets to this disgorgement amount equal to amounts it paid to other enforcement agencies.
In declining to prosecute, DOJ cited the factors set forth in the CEP.[45] Specifically, DOJ noted: (1) JLT’s voluntary self-disclosure of the misconduct; (2) JLT’s full and proactive cooperation in the matter; (3) the nature and seriousness of the offense; (4) JLT’s timely and full remediation; and (5) JLT’s agreement to disgorge the full amount of its ill-gotten gains. According to DOJ, JLT disclosed all relevant known facts about the misconduct, including relevant facts about the individuals involved in the scheme. JLT also severed ties from the key executive that was involved, as well as the third-party intermediary who acted as the main conduit for the bribe payments. JLT agreed to ongoing cooperation with DOJ, including making relevant officers and employees available for interviews and testimony at DOJ’s discretion. The declination made clear that it did not provide any protection to any individuals who might be prosecuted.
DOJ also declined to prosecute Safran S.A., a French company that designs, manufactures, and sales aircraft, among other defense technologies.[46] According to DOJ’s letter, it decided not to prosecute Safran “despite the bribery committed by employees and agents” of the company’s US subsidiary and another subsidiary based in Germany.[47] Specifically, DOJ alleged that the two subsidiaries paid “millions of dollars to a China-based business consultant” who was a family relative to a senior Chinese government official.[48] Safran’s subsidiaries allegedly paid the business consultant knowing that “the funds would be used, at least in part, to pay bribes” to the Chinese official.[49]
Safran’s declination is factually distinct because DOJ explained that the company identified the misconduct during its post-acquisition due diligence and then voluntarily self-disclosed.[50] Consistent with factors set forth in the CEP, DOJ also noted Safran’s “full and proactive cooperation” and the company’s remediation efforts, which included terminating an employee who was involved in the misconduct.[51] As part of the declination, Safran agreed to disgorge the full amount of the ill-gotten gains, totaling $17,159,753.[52]
Where DOJ concludes that a declination is not appropriate but certain factors support a decision not to prosecute at this time, it can negotiate a deferred prosecution agreement (DPA) with the company. When a company reaches a DPA, DOJ will file charging documents with the court but also request that prosecution be deferred for a certain period, allowing the company to demonstrate good conduct and implement remedial efforts. Honeywell UOP (Honeywell), a wholly owned subsidiary of the global technology and manufacturing company Honeywell International Inc., entered a three-year DPA with DOJ at the end of 2022.[53] The DPA required Honeywell to pay a criminal penalty of approximately $79 million in addition to $81 million in disgorgement and prejudgment interest as part of a resolution with the SEC.[54]
The criminal information filed with the DPA described that between 2010 and 2014, Honeywell, through certain employees and agents, knowingly conspired to bribe an executive of Petroleo Brasileiro S.A. (Pretrobas), an oil company controlled by the Brazilian government.[55] According to the court filings, Honeywell offered a $4 million bribe to the high-ranking Petrobas official in exchange for business advantages for a $425 million contract to build an oil refinery.[56] The advantages included “inside information and secret assistance” from the Petrobas official.[57]
In the DPA, DOJ explained that Honeywell did not receive any voluntary disclosure credit, however, Honeywell did receive full credit for cooperating with the investigation.[58] DOJ noted that Honeywell disclosed information that DOJ was not previously aware of allowing DOJ to “preserve and obtain” certain evidence.[59] While conducting the internal investigation, Honeywell also started implementing remedial measures and “strengthen[ed] its anti-corruption compliance program.”[60] Considering these factors and others, Honeywell received a 25 percent discount from the otherwise applicable fine range.[61]
DOJ also reached a DPA with ABB Ltd., a Swiss-based global technology company, for FCPA violations related to the bribery of a high-ranking official with South Africa’s state-owned energy company.[62] According to the criminal information filed with the plea agreement, ABB bribed the South African official by funneling money to “unqualified subcontractors,” understanding that they would provide “benefits to the South African official.” Furthermore, ABB inflated the cost of the work that it would perform for Eskom Holdings Limited.[63] The additional funds were then “used to provide benefits to the South African official.”[64]
Under the DPA, ABB agreed to pay more than $315 million in penalties. As in the JLT declination, DOJ explained several factors that that impacted the resolution with ABB, including that the company contacted DOJ “and scheduled a meeting [with the government] to discuss matters under investigation” shortly after learning of the misconduct.[65] Moreover, DOJ described ABB’s “extraordinary cooperation” with the investigation. The plea agreement noted that ABB promptly provided information that it learned through its internal investigation and made regular factual presentations to DOJ. Furthermore, ABB made foreign-based employees available for interviews with DOJ in the United States. DOJ also noted remedial measures that ABB implemented after discovering the alleged misconduct. The remedial measures included hiring “experienced compliance personnel” and “investing significant additional resources in compliance testing and monitoring throughout the organization.” Accordingly, ABB received a discount of 25 percent off the “mid-point between the middle and the high end of the otherwise-applicable United States Sentencing Guidelines fine range.”[66]
The ABB resolution is unusual and different than the Honeywell resolution because the company negotiated a DPA despite its status as a repeat offender – ABB received a DPA for FCPA violations in 2010 and pled guilty to FCPA charges in 2004. In DAG Monaco’s September 2022 memorandum revising the CEP, she noted that prosecutors should consider “corporations’ record of past misconduct, including prior criminal, civil, and regulatory resolutions, both domestically and internationally” when deciding how to resolve investigations.”[67] Despite its prior criminal misconduct, the ABB resolution may serve as an example of prosecutors considering the “form of the prior resolutions” or the “elapsed time between the instant misconduct,” when deciding the appropriate resolution for FCPA allegations.[68]
Compliance Update
This sub-chapter reviews how DOJ, over the course of 2022, reinforced its commitment to take an aggressive approach to corruption-related investigations and to corporate enforcement more broadly. Under the leadership of compliance-minded DOJ officials, DOJ announced a “revamped” Corporate Enforcement, Compliance, and Policy Unit in the Fraud Section with compliance specialists who will probe the effectiveness of a corporation’s compliance program and efforts to empower chief compliance officers to help corporations detect and prevent criminal conduct in the first instance. In September 2022, DOJ announced revisions to its corporate criminal enforcement policies that reflect recent DOJ trends of aggressively pursuing corporate crime, developing more guidance for the exercise of prosecutorial discretion, and centralizing departmental attention over corporate prosecutions.
1. DOJ’s Aim to Empower Chief Compliance Officers and Strengthen Corporate Compliance Programs
As previously reported by Jenner & Block, Assistant Attorney General (AAG) Kenneth Polite, for DOJ’s Criminal Division, delivered a speech on March 25, 2022, announcing initiatives that DOJ was undertaking regarding corporate compliance programs and Chief Compliance Officers (CCOs). AAG Polite anchored his remarks in his own experience as a former CCO at Entergy. He emphasized that the goal of these initiatives is to improve the stature of CCOs, help ensure CCOs can express concerns, and try to ensure CCOs feature prominently in an organization’s remedial efforts. The initiatives include: (1) asking Criminal Division prosecutors to consider requiring as part of corporate resolutions that CEOs and CCOs certify at the end of the resolution term that the company’s compliance program is reasonably designed and implemented to detect and prevent violations of law; and (2) “revamping” the Fraud Section’s former Strategy, Policy, and Enforcement Unit into a newly named Corporate Enforcement, Compliance, and Policy (CECP) Unit. These initiatives followed the policy guidance issued by DAG Monaco in October 2021, which reflected a rejection of Trump-era policies and practices and DOJ’s increased willingness to impose corporate compliance monitors on companies resolving criminal investigations.
AAG Polite directed Criminal Division prosecutors to consider whether to require as part of certain corporate resolutions that the company’s CEO and CCO certify when its resolution with DOJ is expiring that “the company’s compliance program is reasonably designed and implemented to detect and prevent violations of the law . . . and is functioning effectively.”[69] In resolutions that do not include an independent compliance monitor, companies are typically required to provide to DOJ annual self-reports on the state of their compliance program. In such cases, whether guilty pleas, deferred prosecution agreements, or non-prosecution agreements, prosecutors would consider whether to require “additional certification language” from the CEO and CCO attesting that all compliance reports submitted during the term of the resolution are “true, accurate, and complete.”[70] Polite said his goal for this change was to provide CCOs and compliance functions “true independence, authority, and stature within the company,” and that the certification was meant to ensure that CCOs “receive all relevant compliance-related information and can voice any concerns they may have prior to certification.”[71] Such a certification places the CEO and CCO at personal risk of criminal liability. For example, if they are aware at the time of the certification that the compliance program is not functioning effectively, DOJ might later attempt to prosecute the CEO or CCO for making false statements or for obstruction of justice.
Although AAG Polite’s remarks did not specify who in the Fraud Section will make the decision whether to require the new compliance-related certifications in each case, presumably lawyers in the CECP Unit will play a role in any such decision. AAG Polite emphasized that the proposed certification requirements are not intended to be “punitive in nature,” perhaps anticipating that the proposed certification may be viewed as creating additional burdens for companies resolving matters with the Criminal Division. AAG Polite described the certification as a “new tool” in CCOs’ “arsenal” and “the type of resource that compliance officials, including myself, have wanted for some time, because it makes it clear that you should and must have appropriate stature in corporate decision-making.”[72] It is unclear whether the newly envisioned certification requirement will have the effect foreseen by DOJ. In its public compliance guidance, including in its September 2022 policy revisions, DOJ emphasizes that a company’s commitment to a strong culture of compliance should exist at all levels of the corporation and “not just within its compliance department.”[73] It is true that the certification as described would require sign-off from both the CEO and the CCO, but in practice a certification from the CCO could send the message that business leaders can defer judgment. It will of course remain to be seen whether, in cases where DOJ chooses to impose the new certification requirement, the requirement has a discernable effect on companies’ compliance efforts.
In his March 25, 2022 speech, AAG Polite also highlighted enhancements to the CECP Unit, formerly known as the Strategy, Policy, and Training Unit. The CECP Unit sits within the Criminal Division’s Fraud Section; among the prosecutors in the section are former compliance attorneys and defense counsel. AAG Polite emphasized that the CECP Unit would not only provide training to prosecutors within and outside of the Fraud Section but also help ensure that companies are maintaining effective compliance programs in the post-resolution phase. The CECP Unit’s mandate will include helping the Fraud Section use a consistent approach when evaluating whether appointment of a compliance monitor is appropriate as part of a corporate resolution and helping ensure corporations are maintaining effective compliance programs post-resolution. Echoing DAG Monaco’s remarks from October 2021, AAG Polite also highlighted the consequences that companies could face if they fail to comply with the compliance obligations in DOJ resolutions, including extension of a monitorship term, extension of a resolution term, or declaring breach of a DPA and seeking a corporate conviction. In 2022, DOJ reportedly informed at least two companies that they were or might be in breach of their resolution agreements with DOJ.[74]
2. Latest Revisions to DOJ’s Corporate Criminal Enforcement Policies and Practices
As previously reported by Jenner & Block, on September 15, 2022, DAG Monaco issued a memorandum and delivered a speech to announce several revisions to DOJ’s corporate criminal enforcement policies and practices. The revisions reflect DOJ’s renewed focus on corporate compliance, as well as input from DOJ’s Corporate Crime Advisory Group, which convened in late 2021 to review and recommend improvements to DOJ’s approach to prosecuting corporate crimes. The key aspects of the policies revisions are detailed below. Overall, the revisions reinforce DOJ’s commitment to the principles announced in DAG Monaco’s October 28, 2021, memorandum, while clarifying areas of potential confusion and promoting consistency across the department on corporate crime issues.
First, the policy revisions emphasize that a corporation’s cooperation with DOJ must be timely and not strategically delayed to earn cooperation credit. Existing DOJ policy already required that, to receive any cooperation credit in a DOJ resolution, the corporation must provide the government “all relevant, non-privileged facts about individual misconduct.”[75] The new policy announced in September underscores that such information must be provided “on a timely basis,” such that “prosecutors have the opportunity to effectively investigate and seek criminal charges against culpable individuals.”[76] In particular, cooperating corporations must now prioritize the production of information that could be useful to investigate individuals. If DOJ identifies “undue or intentional delay,” cooperation credit may be “reduced or eliminated.”[77] Although this emphasis is not completely new—prosecutors have traditionally had leeway to downgrade cooperation credit where they see productions as sluggish or strategically delayed[78]—it will provide prosecutors with an explicit basis in department policy to direct and put pressure on a company’s internal investigation and production of materials to the government.
Second, the policy revisions clarified that, when deciding how to resolve a criminal resolution, prosecutors should weigh a company’s historical record of misconduct based on recency and similarity of misconduct. In her 2021 Memorandum, DAG Monaco directed prosecutors “to consider all misconduct by the corporation discovered during any prior domestic or foreign criminal, civil, or regulatory enforcement actions against it, including any such actions against the target company’s parent, divisions, affiliates, subsidiaries, and other entities within the corporate family.” This framing substantially broadened the way DOJ viewed a company’s record when making a charging decision or negotiating a resolution and led to concerns that an overemphasis on old or unrelated conduct in resolution determinations could chill voluntary disclosures if companies fear being brandished as recidivists and ineligible for a more lenient resolution.
Under the September 2022 revisions, DOJ clarified its approach largely as anticipated, stating that “[n]ot all instances of prior misconduct . . . are equally relevant or probative.”[79] The new revisions clarify that “prosecutors should consider the form of prior resolution and the associated sanctions or penalties, as well as the elapsed time between the instant misconduct, the prior resolution, and the conduct underlying the prior resolution.”[80] The “greatest significance” should be given to “recent” US criminal resolutions, and to prior misconduct “involving the same personnel and management.”[81] The new revisions explain that conduct addressed by prior criminal resolutions more than 10 years old, or civil or regulatory resolutions more than five years old “should generally be accorded less weight,” although prosecutors are still directed to consider the particular facts and circumstances of each prior resolution.[82] Prosecutors are also instructed to consider the nuances of a company’s particular industry when evaluating the weight to assign prior historical shortcomings: “For example, if a corporation operates in a highly regulated industry, a corporation’s history of regulatory compliance or shortcomings should likely be compared to that of similarly situated companies in the industry.”[83] Similarly, the new revisions direct prosecutors to give less weight to prior resolutions that involve entities that do not have common management with the entity under investigation, or involve acquired entities that have since been integrated into robust compliance programs and subjected to full remediation.[84]
The policy memo takes head-on the concern that a “recidivist” label would disqualify a corporation from receiving a non-prosecution or deferred-prosecution agreement, stating that “[w]hile multiple deferred or non-prosecution agreements are generally disfavored, nothing in this memorandum should disincentivize corporations that have been the subject of prior resolutions from voluntarily disclosing misconduct to the Department.”[85] DOJ’s clarified approach to the weight afforded to historical misconduct is a helpful development. But corporations and the defense bar will no doubt carefully monitor how the department in practice approaches circumstances where a corporation with a prior criminal resolution voluntarily self-discloses new conduct. A voluntary disclosure of criminal activity is already a weighty decision for a corporation, and it is weightier still if the department’s approach to prior misconduct narrows the opportunity to secure an NPA or DPA.
Third, throughout the revisions, DOJ directs components within the department to implement consistent and formalized policies in the name of transparency and to leverage best practices the department has developed and is developing around evaluating compliance programs. In many cases, these directives elevate policies and practices already in place at the Criminal Division and other components and expands them department-wide:
Voluntary Self-Disclosure: The revisions direct each DOJ component that prosecutes corporate crime “to review its policies on corporate voluntary self-disclosure, and if the component lacks a formal, written policy to incentivize such self-disclosure, it must draft and publicly share such a policy.”[86] The revisions set forth specific parameters for self-disclosure policies and expressly require that all DOJ components “must adhere” to certain “core principles.”[87] Among those, that DOJ will not seek a guilty plea where a corporation has voluntarily self-disclosed, fully cooperated, and timely and appropriately remediated the criminal conduct, absent aggravating circumstances.[88]
Cooperation Credit: DOJ will update the Justice Manual to so that there is “greater consistency across components as to the steps that a corporation will need to take to receive maximum credit for full cooperation.”[89] The new revisions highlight the challenges that come with gathering evidence overseas, particularly data privacy laws, blocking statutes, or other restrictions imposed by foreign law. The revisions direct prosecutors to “provide credit to corporations that find ways to navigate such issues of foreign law and produce such records,”[90] and, conversely, “where a corporation actively seeks to capitalize on data privacy laws and similar statutes to shield misconduct inappropriately from detection and investigation by US law enforcement, an adverse inference as to the corporation’s cooperation” may apply.[91]
Bring-Your-Own-Device Policies and Ephemeral Messaging Platforms: In March 2019, DOJ updated its FCPA corporate enforcement policy to clarify that, among other requirements, companies will not receive full remediation credit unless they implement “appropriate guidance and controls on the use of personal communications and ephemeral messaging platforms that undermine the company’s ability to appropriately retain business records[.]”[92] DOJ broadly acknowledged “the ubiquity” of mobile devices and ephemeral messaging applications that pose “significant corporate compliance risks” and instructs prosecutors to “consider whether the corporation has implemented effective policies and procedures governing the use of personal devices and third party messaging platforms to ensure that business-related electronic data and communications are preserved.”[93] To assist prosecutors in that effort, DAG Monaco instructed the Criminal Division “to further study best corporate practices regarding the use of personal devices and third-party messaging platforms and incorporate the product of that effort into the next edition of its Evaluation of Corporate Compliance Programs, so that the department can address these issues thoughtfully and consistently.”[94] In a follow-up speech delivered on September 16, 2022, AAG Polite advised that DOJ “has seen a rise in companies and individuals using these types of messaging systems, and companies must ensure that they can monitor and retain these communications as appropriate.”[95]
Monitor Selection Processes: After DAG Monaco’s 2021 memorandum, Jenner & Block observed that, as a matter of policy, DOJ would be leaning further forward toward the use of independent compliance monitors, especially “[w]here a corporation’s compliance program and controls are untested, ineffective, inadequately resourced, or not fully implemented at the time of a resolution.”[96] Since that time, DOJ has in fact announced several resolutions requiring monitorships. The new policy sets forth factors indicating when DOJ should seek a monitorship, and requires that the selection of monitors must be performed via a “documented selection process that is readily available to the public.”[97] DAG Monaco instructed that “[e]very component involved in corporate criminal resolutions that does not currently have a public monitor selection process must adopt an already existing process, or develop and publish its own selection process” by the end of the year.[98]
These efforts at requiring and in some cases standardizing written guidance across department components are generally positive for corporations facing DOJ scrutiny. Although many corporate resolutions already involved components, such as the Criminal or Antitrust Divisions, that rely on such written guidance, it will be helpful if other components adopt similar guidance as well. To the extent there are material differences between the components, those differences may become factors in some entities’ decisions on where to self-report.
Fourth, with these policy revisions, DOJ continues to sharpen its focus on the details of compliance programs, including compensation structures, compliance metrics, and positive incentives. Starting with a quietly published white paper in 2017, DOJ has provided more extensive and specific guidance on how prosecutors should evaluate corporate compliance programs and assess corporate culture. That guidance has become the benchmark by which companies present to DOJ regarding their compliance programs, and for many companies it has also become a resource to direct internal compliance efforts. The September 2022 policies revisions parallel DOJ’s increasing focus on the importance of effective compliance programs and empowerment of compliance personnel. Building on its existing guidance, DOJ’s new policy revisions instruct prosecutors to examine a corporation’s compensation structures—both as written and applied—in evaluating whether they promote an ethical corporate culture. For example, DOJ instructs prosecutors to consider:
Whether the company’s “compensation systems” (including compensation agreements, arrangements, and packages) include clawback provisions “that enable penalties to be levied against current or former employees, executives, or directors whose direct or supervisory actions or omissions contributed to criminal conduct.”[99] Because misconduct may be discovered after culpable personnel have left a company, the new revisions instruct prosecutors to examine whether companies have and use clawback measures to impose “retroactive discipline.”[100]
Whether compensation systems provide “affirmative incentives for compliance-promoting behavior” such as compliance metrics and benchmarks in performance reviews that measure and reward compliant conduct.[101]
Whether non-disclosure or non-disparagement provisions in compensation or severance agreements “inhibit the public disclosure of criminal misconduct by the corporation or its employees.”[102]
Consistent with these revisions and DAG Monaco’s direction, AAG Polite announced that the Criminal Division “will examine whether, in some cases, we may be able to shift the burden of corporate financial penalties away from shareholders—who in many cases do not have a role in misconduct—onto those more directly responsible.”[103]
Footnotes
[1] Dep’t of Justice, Memorandum from Deputy Attorney General Lisa Monaco, “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group” (Sept. 15, 2022), https://www.justice.gov/opa/speech/file/1535301/download.
[2] Dep’t of Justice, Memorandum from Deputy Attorney General Lisa Monaco, “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group” (Sept. 15, 2022), https://www.justice.gov/opa/speech/file/1535301/download.
[3] Dep’t of Justice, Memorandum from Deputy Attorney General Lisa Monaco, “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group” (Sept. 15, 2022), https://www.justice.gov/opa/speech/file/1535301/download.
[4] Dep’t of Justice, Memorandum from Deputy Attorney General Lisa Monaco, “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group” (Sept. 15, 2022), https://www.justice.gov/opa/speech/file/1535301/download.
[5] Dep’t of Justice, Memorandum from Deputy Attorney General Lisa Monaco, “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group” (Sept. 15, 2022), https://www.justice.gov/opa/speech/file/1535301/download.
[6] Dep’t of Justice, Memorandum from Deputy Attorney General Lisa Monaco, “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group” (Sept. 15, 2022), https://www.justice.gov/opa/speech/file/1535301/download.
[7] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[8] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[9] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[10] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[11] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[12] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[13] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[14] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[15] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[16] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[17] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[18] Dep’t of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[19] Kyle Brasseur, ‘The new FCPA’: Monaco stresses sanctions as top DOJ commitment, Compliance Week (Apr. 28, 2022), https://www.complianceweek.com/regulatory-enforcement/the-new-fcpa-monaco-stresses-sanctions-as-top-doj-commitment/31619.article.
[20] Dep’t of Justice, Deputy Attorney General Lisa O. Monaco Delivers Keynote Remarks at 2022 GIR Live: Women in Investigations (June 16, 2022), https://www.justice.gov/criminal-fraud/page/file/1466596/download.
[21] Dep’t of Justice, Deputy Attorney General Lisa O. Monaco Delivers Keynote Remarks at 2022 GIR Live: Women in Investigations (June 16, 2022), https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-delivers-keynote-remarks-2022-gir-live-women.
[22] Dep’t of Justice, Deputy Attorney General Lisa O. Monaco Delivers Keynote Remarks at 2022 GIR Live: Women in Investigations (June 16, 2022), https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-delivers-keynote-remarks-2022-gir-live-women.
[23] Press Release, Dep’t of Justice, Attorney General Merrick B. Garland Announces Launch of Task Force KleptoCapture (Mar. 2, 2022), https://www.justice.gov/opa/pr/attorney-general-merrick-b-garland-announces-launch-task-force-kleptocapture.
[24] Press Release, Dep’t of Justice, Attorney General Merrick B. Garland Announces Launch of Task Force KleptoCapture (Mar. 2, 2022), https://www.justice.gov/opa/pr/attorney-general-merrick-b-garland-announces-launch-task-force-kleptocapture.
[25] Press Release, Dep’t of Justice, Attorney General Merrick B. Garland Announces Launch of Task Force KleptoCapture (Mar. 2, 2022), https://www.justice.gov/opa/pr/attorney-general-merrick-b-garland-announces-launch-task-force-kleptocapture.
[26] Press Release, Dep’t of Justice, $90 Million Yacht of Sanctioned Russian Oligarch Viktor Vekselberg Seized by Spain at Request of United States (Apr. 4, 2022), https://www.justice.gov/opa/pr/90-million-yacht-sanctioned-russian-oligarch-viktor-vekselberg-seized-spain-request-united.
[27] Order, In the Matter of the Seizure and Search of the Motor Yacht Tango With International Maritime Organization Number 1010703 (Apr. 4, 2022), https://ia903006.us.archive.org/17/items/gov.uscourts.dcd.241254/gov.uscourts.dcd.241254.7.0.pdf.
[28] Order, In the Matter of the Seizure and Search of the Motor Yacht Tango With International Maritime Organization Number 1010703 (Apr. 4, 2022), https://ia903006.us.archive.org/17/items/gov.uscourts.dcd.241254/gov.uscourts.dcd.241254.7.0.pdf.
[29] Stephanie Baker & Joe Mathieu, Russian Oligarchs Running Out of Hiding Places for Jets, Yachts, Bloomberg Law (Nov. 16, 2022), https://news.bloomberglaw.com/banking-law/us-hunter-of-hidden-russia-wealth-sees-global-net-tightening-1; Bloomberg Markets and Finance, Sanctioned Russian Oligarchs Running Out of Hiding Places, YouTube (Nov. 16, 2022), https://www.youtube.com/watch?v=dBu3zNRuKno.
[30] Dep’t of Justice, $300 Million Yacht of Sanctioned Russian Oligarch Suleiman Kerimov Seized by Fiji at Request of United States (May 5, 2022), https://www.justice.gov/opa/pr/300-million-yacht-sanctioned-russian-oligarch-suleiman-kerimov-seized-fiji-request-united.
[31] Dep’t of Justice, United States Obtains Warrant for Seizure of Two Airplanes of Russian Oligarch Roman Abramovich Worth Over $400 Million (June 6, 2022), https://www.justice.gov/opa/pr/united-states-obtains-warrant-seizure-two-airplanes-russian-oligarch-roman-abramovich-worth.
[32] Dep’t of Justice, United States Obtains Warrant for Seizure of Airplane of Sanctioned Russian Oligarch Andrei Skoch, Worth Over $90 Million (Aug. 8, 2022), https://www.justice.gov/opa/pr/united-states-obtains-warrant-seizure-airplane-sanctioned-russian-oligarch-andrei-skoch-worth.
[33] Dep’t of Justice, United States Obtains Warrant for Seizure of $45 Million Airplane Owned by Russian Energy Company PJSC LUKOIL (Aug. 31, 2022), https://www.justice.gov/opa/pr/united-states-obtains-warrant-seizure-45-million-airplane-owned-russian-energy-company-pjsc.
[34] Tightening the Screws on Russia: Smart Sanctions, Economic Statecraft and Next Steps: Hearing Before the S. Comm. on Banking, Housing, and Urban Affairs, 117 Cong. (2022) (statement of Dir. Andrew Adams, Task Force KleptoCapture), available at https://www.banking.senate.gov/imo/media/doc/Adams%20Testimony%209-20-22.pdf.
[35] Tightening the Screws on Russia: Smart Sanctions, Economic Statecraft and Next Steps: Hearing Before the S. Comm. on Banking, Housing, and Urban Affairs, 117 Cong. (2022) (statement of Dir. Andrew Adams, Task Force KleptoCapture), available at https://www.banking.senate.gov/imo/media/doc/Adams%20Testimony%209-20-22.pdf.
[36] Dep’t of Justice, Assistant Attorney General Matthew Olsen Delivers Remarks on Countering Nation-State Threats (Feb. 23, 2022), https://www.justice.gov/opa/speech/assistant-attorney-general-matthew-olsen-delivers-remarks-countering-nation-state-threats.
[37] Michael German & Alex Liang, End of Justice Department’s ‘China Initiative’ Brings Little Relief to U.S. Academics, Brennan Center (Mar. 25, 2022), https://www.brennancenter.org/our-work/analysis-opinion/end-justice-departments-china-initiative-brings-little-relief-us.
[38] Dep’t of Justice, Assistant Attorney General Matthew Olsen Delivers Remarks on Countering Nation-State Threats (Feb. 23, 2022), https://www.justice.gov/opa/speech/assistant-attorney-general-matthew-olsen-delivers-remarks-countering-nation-state-threats.
[39] Dep’t of Justice, Assistant Attorney General Matthew Olsen Delivers Remarks on Countering Nation-State Threats (Feb. 23, 2022), https://www.justice.gov/opa/speech/assistant-attorney-general-matthew-olsen-delivers-remarks-countering-nation-state-threats.
[40] Dep’t of Justice, Assistant Attorney General Matthew Olsen Delivers Remarks on Countering Nation-State Threats (Feb. 23, 2022), https://www.justice.gov/opa/speech/assistant-attorney-general-matthew-olsen-delivers-remarks-countering-nation-state-threats.
[41] Dep’t of Justice, Assistant Attorney General Matthew Olsen Delivers Remarks on Countering Nation-State Threats (Feb. 23, 2022), https://www.justice.gov/opa/speech/assistant-attorney-general-matthew-olsen-delivers-remarks-countering-nation-state-threats.
[42] Dep’t of Justice, Two Arrested and 13 Charged in Three Separate Cases for Alleged Participation in Malign Schemes in the United States on Behalf of the Government of the People’s Republic of China (Oct. 24, 2022), https://www.justice.gov/opa/pr/two-arrested-and-13-charged-three-separate-cases-alleged-participation-malign-schemes-united#:~:text=A%20federal%20indictment%20was%20unsealed,as%20agents%20of%20the%20PRC.
[44] See In re Jardine Lloyd Thompson Group Holdings, Ltd., (S.D.N.Y. 2022)
[45] DOJ’s CEP defines the factors under which the DOJ will decline prosecution even if it has found otherwise prosecutable FCPA-related misconduct. These circumstances include the company: (1) self-discloses the misconduct; (2) cooperates with the investigation; (3) remediates the circumstances that led to the violation; and (4) agrees to disgorge ill-gotten gains. According to DOJ’s policy, when a company meets these requirements, it will presumptively receive a declination that can be rebutted only if aggravating circumstances, such as widespread or severe misconduct, or recidivism, are present.
[46] https://www.wsj.com/market-data/quotes/FR/SAF
[47] https://www.justice.gov/criminal-fraud/file/1559236/download
[48] Id.
[49] Id.
[50] Id.
[51] Id.
[52] Id.
[54] Honeywell DPA (justice.gov)
[55] Honeywell Criminal Information (justice.gov)
[56] Id.
[57] Id.
[58] Honeywell DPA (justice.gov)
[59] Id.
[60] Id.
[61] Id.
[63] ABB South Africa criminal information (justice.gov)
[64] Id.
[65] ABB Ltd. DPA (justice.gov)
[66] ABB Ltd. DPA (justice.gov)
[67] Further Revisions to Corporate Criminal Enforcement Policies, September 15, 2022 (justice.gov)
[68] Further Revisions to Corporate Criminal Enforcement Policies, September 15, 2022 (justice.gov)
[69] Kenneth A. Polite, Jr., Prepared Remarks by U.S. Assistant Attorney General Polite at the NYU Law Program on Corporate Compliance and Enforcement, NYU Program on Corporate Compliance and Enforcement (Mar. 25, 2022), https://wp.nyu.edu/compliance_enforcement/2022/03/29/prepared-remarks-by-u-s-assistant-attorney-general-polite-at-the-nyu-law-program-on-corporate-compliance-and-enforcement/.
[70] Id.
[71] Id.
[72] Id.
[73] Deputy Attorney General, Memorandum, “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group” (Sept. 15, 2022), https://www.justice.gov/opa/speech/file/1535301/download, at 9 (the “2022 Monaco Memo”).
[74] See [cross-reference to section of guide that further discusses these].
[75] DOJ, Deputy Attorney General Lisa O. Monaco Delivers Remarks on Corporate Criminal Enforcement (Sept. 15, 2022), https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-delivers-remarks-corporate-criminal-enforcement.
[76] 2022 Monaco Memo at 3 (emphasis in original).
[77] Id.
[78] DOJ Press Release, “Mobile Telesystems Pjsc and Its Uzbek Subsidiary Enter into Resolutions of $850 Million with the Department of Justice for Paying Bribes in Uzbekistan” (Mar. 7, 2019), https://www.justice.gov/opa/pr/mobile-telesystems-pjsc-and-its-uzbek-subsidiary-enter-resolutions-850-million-department.
[79] 2022 Monaco Memo at 5.
[80] Id.
[81] Id. at 6.
[82] Id. at 5.
[83] Id.
[84] Id.
[85] Id. at 6.
[86] Id. at 7.
[87] Id.
[88] Id.
[89] Id. at 8.
[90] Id.
[91] Id.
[92] Justice Manual § 9-47.120.
[93] 2022 Monaco Memo at 11.
[94] Id.
[95] DOJ, Assistant Attorney General Kenneth A. Polite Delivers Remarks at the University of Texas Law School (Sept. 16, 2022), https://www.justice.gov/opa/speech/assistant-attorney-general-kenneth-polite-delivers-remarks-university-texas-law-school (“Polite Texas Law Remarks”).
[96] Jenner & Block LLP, “Client Alert: Deputy Attorney General Announces Significant Changes to DOJ’s Corporate Criminal Enforcement Policies” (Nov. 3, 2021), https://jenner.com/library/publications/21379 (quoting Deputy Attorney General, Memorandum, “Corporate Crime Advisory Group and Initial Revisions to Corporate Criminal Enforcement Policies” (Oct. 28, 2021), https://www.justice.gov/dag/page/file/1445106/download, at 4 (the “2021 Monaco Memo”)).
[97] 2022 Monaco Memo at 13.
[98] Id.
[99] Id. at 10.
[100] Id.
[101] Id.
[102] Id.
[103] Polite Texas Law Remarks.