Companies under investigation will often seek credit from the government for cooperation in hopes of a more favorable resolution.
The Department of Justice (“DOJ”) recently announced significant policy changes for corporations facing enforcement investigations seeking to earn cooperation credit.
Under the Biden administration, DOJ has identified three significant areas where companies can expect a tougher stance before such credit is granted.
First, DOJ will now require that corporations identify all individuals involved in alleged misconduct. Previously, companies were typically only required to divulge individuals “substantially” involved in wrongdoing.
DOJ’s casting of a wider net will undoubtedly ensnare those once considered “minor players” in its enforcement crosshairs.
Second, DOJ will now scrutinize any and all prior misconduct, even if unrelated to the present investigation.
Corporations looking for cooperation credit previously understood that DOJ would usually only view similar prior bad acts unfavorably.
DOJ has signaled, however, that it will also routinely consider unrelated prior corporate misdeeds.
Prosecutors, for example, will examine a company’s civil and regulatory history, including IRS wrongdoing, when considering how best to resolve a current investigation.
Given DOJ’s new guidance, companies must be prepared to explain and differentiate any prior corporate malfeasance, even as to unrelated matters.
Third, DOJ will now return to using independent compliance monitors. The previous administration all but did away with this DOJ tool.
This means that, where DOJ deems it necessary and appropriate, DOJ will require independent monitors to ensure corporate compliance.
Based on this change, corporations should self-implement a robust internal corporate compliance program.
A corporation’s effective compliance program will be considered and hopefully positively weighed by DOJ when it determines the resolution of any corporate investigation. The current DOJ has made clear that it will prioritize corporate criminal enforcement, including holding individual corporate representatives accountable for corporate wrongs.
Corporations should proactively develop and strengthen robust corporate compliance programs to identify and eliminate potential criminal, civil and regulatory violations.
These programs should also work to mitigate the harm from any corporate criminal investigation.