DOJ Announces Changes to Enforcement, Mitigation, Monitorship Policies

The Department of Justice this week announced new initiatives to “strengthen” its enforcement of corporate crime, which could have wide-ranging effects on cases involving export controls, sanctions and foreign bribery violations. The initiatives were presented by Deputy Attorney General Lisa Monaco as “changes” to the agency’s enforcement policies, including how DOJ will calculate mitigation when assessing penalties, how it will weigh past misconduct for unrelated violations and how it will use independent monitors to ensure compliance with settlement agreements.

Monaco, speaking Oct. 28 at an event hosted by the American Bar Association, said the policy changes reflect the “increasing national security dimension” present in corporate crimes, “from the new role of sanctions and export control cases to cyber vulnerabilities that open companies up to foreign attacks.” She said the changes “are just a first step and will be followed by others” as DOJ prosecutors “continue to hold individuals and corporations accountable for their misconduct.”

Under one initiative, the agency will “restore prior guidance” to make clear that companies must provide DOJ with “all non-privileged information about individuals involved in or responsible for” the violations in order to qualify for cooperation credit, which can help mitigate penalties. “To be clear, a company must identify all individuals involved in the misconduct, regardless of their position, status or seniority,” Monaco said. “​​It will no longer be sufficient for companies to limit disclosures to those they assess to be ‘substantially involved’ in the misconduct.”

She said that “distinction” was “confusing in practice” and allowed companies “too much discretion in deciding who should and should not be disclosed to the government.” By requiring companies to disclose more information to receive mitigation credit, DOJ will better be able to “determine the relevance and culpability of individuals involved in misconduct, even for individuals who may be deemed by a corporation to be less than substantially involved in misconduct.” She said this may mean prosecutors could “unfairly prosecute minimal participants,” but stressed the agency will do its best to make “fair and just charging decisions.”

In another change, the agency will look more broadly at a company’s “prior misconduct,” regardless of whether it’s related to the “conduct at issue,” to determine penalties. Monaco said prosecutors will be directed to “consider the full criminal, civil and regulatory record of any company” beyond “just a narrower subset of similar misconduct.”

“A prosecutor in the [Foreign Corrupt Practices Act] 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?” Monaco said. “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.” She said this will help the agency gain insight into the company’s “overall commitment to compliance programs” and “harmonize the way we treat corporate and individual criminal histories.”

In a third shift, Monaco said the agency is changing the notion that monitorships -- or government-appointed independent compliance monitors -- are “disfavored or are the exception” in a case of corporate wrongdoing. She said “some have suggested” that monitors are only used when the government can’t trust a company to carry out its compliance commitments.

“I am rescinding that guidance,” Monaco said. “I am making clear that the department is free to require the imposition of independent monitors whenever it is appropriate to do so.” She also said the agency will study how it selects corporate monitors to determine whether to “standardize” the selection process across all divisions.

The agency is also reviewing several other policies in the coming months and will prioritize a review of how it treats repeat violators, Monaco said. She said the department has seen several cases in which the same company was subject to multiple investigations across divisions. “For example,” Monaco said, “a company might have an antitrust investigation one year, a tax investigation the next, and a sanctions investigation two years after that.”

She said that about 10% to 20% of all “significant” corporate criminal resolutions involve companies that previously entered into a settlement agreement with the DOJ, which should consider whether to “differently account” for those repeat violators. “Does the opportunity to receive multiple” settlement agreements “instill a sense among corporations that these resolutions and the attendant fines are just the cost of doing business?” Monaco said. “These are some of the questions we will be studying in the coming months.”