DOJ Announces Revised Corporate Enforcement and Voluntary Disclosure Policy

Addressing corporate crime is not new for the Department of Justice (“DOJ”); however, as the complexity of this area evolves, so does the DOJ’s response. Through announcements made in September 2022, January 2023, and most recently on February 22, 2023, the DOJ’s Criminal Division has outlined new measures to address corporate crime and strengthen its former policy, the Foreign Corrupt Practices Act (“FCPA”) Corporate Enforcement Policy.  

Following the recommendations of the DOJ’s Corporate Crime Advisory Group, the DOJ has revised its priorities concerning corporate crime. These changes make clear that the DOJ’s top priority is individual accountability, regardless of the person’s position, status, or seniority within the corporate structure. To assist the government in identifying, investigating, and prosecuting individual wrong-doers, the DOJ has implemented a new “carrot and stick” approach, which provides corporate counsel and chief compliance officers incentives to self-report misbehavior while also “empowering prosecutors to hold accountable those who do not.”

Collectively, these policy revisions mark the first substantial change in the DOJ’s efforts to prosecute corporate crime since implementing the FCPA Corporate Enforcement Policy in 2017. Notably, this revised policy - effective on a prospective basis as of January 2023 - applies to all FCPA cases nationwide and all other corporate criminal matters handled by the Criminal Division. Indeed, for the first time, every DOJ component that prosecutes corporate crime must have a formal, documented program and policy that incentivizes voluntary self-disclosure.

INDIVIDUAL ACCOUNTABILITY

The top priority for DOJ corporate criminal prosecutions will remain the pursuit of persons who commit and profit from corporate crime. The new policy rewards timely reporting of misconduct and punishes the purposeful delay of relevant information through a reduction or complete denial of cooperation credit. This new guidance is designed to push DOJ prosecutors and corporate counsel alike to expedite investigations.

EVALUATION OF PRIOR CORPORATE MISCONDUCT

When contemplating an appropriate resolution, the DOJ will consider a company’s full criminal, civil, and regulatory record and acknowledges that not every instance of historical misconduct is equal. The most significant examples of prior misconduct (e.g., recent criminal resolutions in the United States, wrongdoing involving the same personnel or management as the current misconduct, etc.) will be accorded greater weight. Other bad acts (e.g., prior criminal resolutions occurring more than ten years before the present conduct, civil or regulatory resolutions that took place more than five years before the current allegations, etc.) will be accorded less weight, as the DOJ recognizes they are not necessarily reflective of a company’s existing commitment to compliance. Other factors considered will include the circumstances of the prior misconduct and whether it is similar to the current allegations; a company’s compliance culture, management team, or executive leadership; and whether a company operates in a heavily regulated industry and how it compares to similarly situated entities. DOJ management will strictly scrutinize any proposed case resolutions to ensure consistency and fairness with its new policy. 

VOLUNTARY SELF-DISCLOSURE

On February 22, 2023, the DOJ announced implementation of the voluntary self-disclosure policy for corporate criminal enforcement in all U.S. Attorney’s offices across the nation. This country-wide policy seeks to reward those companies that voluntary self-disclose and have invested in compliance programs. The newest directives seek to further highlight the advantages of self-disclosure so that chief compliance officers, general counsel, and others can advocate to their respective executive staff that voluntary self-disclosure is a smart business decision. Under the policy’s terms (which are effective immediately), a timely voluntary self-disclosure means a company must self-report before “an imminent threat of disclosure” or the initiation of a government investigation.

            Significantly, the new policy creates a presumption of declination when a company has self-disclosed misconduct, fully cooperated, and timely and appropriately remediated the alleged misconduct, so long as there are no aggravating factors. The DOJ will also not require an independent compliance monitor (assuming at the time of a resolution, the company has implemented an effective compliance program). In taking this approach, the DOJ argues that self-disclosure can save a company millions of dollars in fines, penalties, and costs. Self-disclosure can also avoid reputational harm and other collateral consequences that could have an impact on a company.  The presence of certain aggravating factors, however, will impact DOJ’s decision to resolve matters without a corporate plea.  A copy of the revised policy, which defines and further outlines the various incentives and deterrents afforded for self-disclosure, can be found here.

            According to the DOJ, the recent policy changes are intended to send “an undeniable message: come forward, cooperate, and remediate.” To enlist corporations in its mission to deter and prevent criminal conduct, the DOJ is “committed to incentivizing companies to detect and prevent crime in their own operations, and to come forward and cooperate with [the DOJ] when they identify criminal wrongdoing.” The DOJ is steadfast in its belief that it “need[s] corporations to be [its] allies in the fight against crime” and that the revised policies “further [the DOJ’s] ability to bring individual wrongdoers—the corporate executives, employees, and agents who engage in misconduct—to justice.” Corporate counsel and chief compliance officers would be wise to consider the DOJ’s new guidance if corporate misconduct is suspected or discovered; the incentives for doing so have never been clearer.   

Attachment: Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy