by Bob Connolly

             For your weekend reading and viewing pleasure you might want to set aside a bit of time to digest the Department of Justice’s latest guidance on how they intend to treat corporate crime. [Read DAG’s LISA O. Monaco’s remarks (here)(and watch the same on video (here) and review the DAG’s related memo (here). ]  There are three main takeaways: an increasingly high bar for a company to receive “cooperation credit;” more expansive evaluation of a company’s past conduct in making settlement/plea negotiation demands; and a likely increase on insistence of compliance monitors.

  1. Cooperation Credit

            DAG Monaco opened by stating: “Attorney General Garland has made clear it is unambiguously this department’s first priority in corporate criminal matters to prosecute the individuals who commit and profit from corporate malfeasance.”  I don’t think there is anything new here for the Antitrust Division which has long made individual accountability a cornerstone of its enforcement efforts.  DAG Monaco’s remarks reflected what I believe to already be the Antitrust Division approach:  “I am directing the department to restore prior guidance making clear that to be eligible for any cooperation credit, companies must provide the department with all non-privileged information about individuals involved in or responsible for the misconduct at issue. To be clear, a company must identify all individuals involved in the misconduct, regardless of their position, status or seniority.”

DAG Monaco set forth the standard in evaluating individual prosecutions:

“As set forth in the Justice Manual, a prosecutor should commence a case if he or she believes that a putative defendant’s conduct constitutes a federal offense, and that the admissible evidence will probably be sufficient to obtain and sustain a conviction. So long as those principles are followed, we will urge prosecutors to be bold in holding accountable those who commit criminal conduct.”

The Antitrust Division’s need for cooperating witnesses and limited resources means that not every culpable individual will be prosecuted.  The “Big fish–little fish” theory of prosecution will live on–as will disagreements about who is a “little fish” when it comes to individual prosecutions.  It is still best not to be a fish at all swimming in cartel waters.

  1. Expansive View of Prior Misconduct

 “The second change I am announcing today deals with the issue of a company’s prior misconduct and how that affects our decisions about the appropriate corporate resolution.”  DAG Monaco explained:  “Foremost, the department will now consider all a company’s prior misconduct when considering how to settle a current case — civil, criminal, and regulatory actions; whether or not that prior misconduct is similar to whatever issue put your company on the frying pan today.”

DAG Monaco gave this example:

“A prosecutor in the FCPA unit needs to take a department-wide view of misconduct: Has this company run afoul of the Tax Division, the Environment and Natural Resources Division, the money laundering sections, the U.S. Attorney’s Offices, and so on? He or she also needs to weigh what has happened outside the department — whether this company was prosecuted by another country or state, or whether this company has a history of running afoul of regulators. Some prior instances of misconduct may ultimately prove to have less significance, but prosecutors need to start by assuming all prior misconduct is potentially relevant.”

This change could well impact Antitrust Division’s settlements; especially in larger national/international conspiracies.  Companies at that level often have many divisions, lines of business and may well have had regulatory/criminal issues unrelated to cartel activity (or a line of business/subsidiary, etc. that was involved in cartel activity).  This “history” must now be considered by Division prosecutors in negotiating a settlement.

     3.     More Extensive Use of Corporate Monitors

 “The final change I am announcing today deals with the use of corporate monitors.”  DAG Monaco expressly rescinded prior guidance from 2018 that seemingly disfavored  the use of external compliance monitors:

“To the extent that prior Justice Department guidance suggested that monitorships are disfavored or are the exception, I am rescinding that guidance. Instead, I am making clear that the department is free to require the imposition of independent monitors whenever 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.

On the plus side, DAG Monaco highlighted the incentives for a company to have a compliance program before the government not so gently indicates that one is needed:

“A company can fulfill its fiduciary duty to shareholders and maintain a commitment to compliance and lawfulness. In fact, companies serve their shareholders when they proactively put in place compliance functions and spend resources anticipating problems. They do so both by avoiding regulatory actions in the first place and receiving credit from the government. Conversely, we will ensure the absence of such programs inevitably proves a costly omission for companies who end up the focus of department investigations.”


             It is well worth the time to read DAG’s remarks (here) and watch the same on video (here) and review the DAG’s related memo (here).  DAG Monaco concluded with this helpful summary:

 “I’m sure many of you in the audience are going to get calls from clients over the next few days with questions about what this all means. So, let me conclude by giving you the answers — with these five points:

  • Companies need to actively review their compliance programs to ensure they adequately monitor for and remediate misconduct — or else it’s going to cost them down the line.

  • For clients facing investigations, as of today, the department will review their whole criminal, civil and regulatory record — not just a sliver of that record.

  • For clients cooperating with the government, they need to identify all individuals involved in the misconduct — not just those substantially involved — and produce all non-privileged information about those individuals’ involvement.

  • For clients negotiating resolutions, there is no default presumption against corporate monitors. That decision about a monitor will be made by the facts and circumstances of each case.

  • Looking to the future, this is a start — and not the end — of this administration’s actions to better combat corporate crime.

Thanks for reading.  Bob Connolly

The post Important Remarks of Deputy Attorney General Lisa O. Monaco: DOJ Enforcement Priorities/Policies on White Collar Crime appeared first on Cartel Capers.