New DOJ Corporate Enforcement Policies Offer Greater Disclosure Incentives, Agency Says

DOJ this week released its revised criminal corporate enforcement policies for voluntary self-disclosures, outlining new criteria companies must meet to qualify for declinations even in cases where there are aggravating factors. The new updates, which are the “first significant changes” to the Criminal Division’s corporate enforcement policies (CEP) since 2017, offer companies “new, significant, and concrete incentives to self-disclose misconduct,” Assistant Attorney General Kenneth Polite said, speaking at Georgetown Law Center. He also said they give companies incentives to “go far above and beyond the bare minimum when they cooperate with our investigations.”

Polite said the revised policies are specifically aimed at companies that have discovered violations and are considering submitting a disclosure but are concerned an aggravating factor may prevent them from obtaining a declination -- a decision by DOJ not to prosecute. “That concern may have led companies and their outside counsel to conclude, under the prior version of the CEP, that it is more prudent not to disclose the misconduct,” he said. “The revised CEP presents another path for companies facing such a choice.”

Even if “aggravating circumstances are present,” Polite said, DOJ prosecutors, under the new policy, may “nonetheless determine that a declination is the appropriate outcome” if the company can prove it has met three factors:

• The company made the voluntary self-disclosure immediately after becoming aware of the allegation of misconduct.
• The company had an effective compliance program and internal accounting controls at the time of the misconduct and disclosure, which led to the disclosure.
• The company “provided extraordinary cooperation” with the DOJ’s investigation and “undertook extraordinary remediation.”

The new policies don’t explicitly outline what qualifies as “extraordinary” cooperation. “In many ways,” Polite said, “we know ‘extraordinary cooperation’ when we see it.”

But Polite listed some actions that may qualify, including a company cooperating “immediately” with an investigation and “consistently” telling the truth. He also said DOJ will look for companies that “allow us to obtain evidence we otherwise couldn’t get, like quickly obtaining and imaging their electronic devices, or having recorded conversations.” Other “extraordinary” cooperation may include “testifying at a trial or providing information that leads to additional convictions.”

“These, of course, are just examples in the individual context,” Polite said. “To receive credit for extraordinary cooperation, companies must go above and beyond the criteria for full cooperation set in our policies -- not just run of the mill, or even gold-standard cooperation, but truly extraordinary.”

Polite said the policies also include new disclosure incentives for companies that don’t meet the "extraordinary" standard. If a firm submits a voluntary disclosure and fully cooperates with DOJ, but the agency determines that a “criminal resolution is still warranted,” he said the agency will recommend to a sentencing court anywhere from 50% to 75% off “of the low end of the U.S. Sentencing Guidelines fine range,” except in cases of recidivism.

“In that case, the reduction will generally not be from the low-end of the fine range, and in all cases, prosecutors will have discretion to determine the starting point within the Guidelines range,” Polite said. But he noted this change is a “significant increase” from the previous maximum penalty reduction of 50% off.

He also said DOJ will “generally not require a corporate guilty plea” in these cases, including for criminal recidivists, unless there are “multiple or particularly egregious aggravating circumstances.” Polite stressed that this policy applies to all corporate resolutions by the agency's Criminal Division, not just Foreign Corrupt Practices Act cases or those that involve voluntary self-disclosures.

“A reduction of 50% will not be the new norm; it will be reserved for companies that truly distinguish themselves and demonstrate extraordinary cooperation and remediation,” Polite said. “But having a greater range of cooperation and remediation credit available … will allow our prosecutors to draw greater distinctions among the quality of companies’ cooperation and remediation.”

DOJ will be “closely examining how companies discipline bad actors and reward the good ones," Polite said. "The policy is sending an undeniable message: come forward, cooperate, and remediate."