Home Credit inquiry Monaco Speech: Part 1 – Individual Responsibility | Thomas Renard

Monaco Speech: Part 1 – Individual Responsibility | Thomas Renard



Deputy Attorney General (DAG) Lisa O. Monaco delivered a keynote address at the 36th ABA National Institute on White Collar Crime last week (Monaco speech). His remarks were noted by many commentators, most notably on Compliance Into the Weeds where Matt Kelly and I took a deep dive into his speech in a rare emergency podcast. His remarks reframed a discussion of this Department of Justice’s (DOJ) priorities for white-collar criminal law enforcement, including Corrupt Practices Abroad (FCPA). His remarks should be considered by all compliance professionals as they portend a very big change in the way the DOJ and potentially other agencies enforce the FCPA. This has important implications for every compliance officer (CCO), compliance professionals, and corporate compliance programs.

The main changes announced in Monaco’s speech were as follows: (1) “today, I order the department to restore the prior guidelines specifying that to be eligible for any cooperation credit, companies must provide the department with all the non-privileged information about the individuals involved or responsible for the misconduct in question. To be clear, a company should identify everyone involved in the misconduct, regardless of their position, status or seniority. This foreshadows a return to the restrictions of the Yates Memo. (2) “The second change I’m announcing today deals with the issue of past corporate misconduct and how this affects our decisions regarding the appropriate resolution of the business. (3) The last change I’m announcing today relates to the use of enterprise monitors. This latest change is a rejection of the restrictions set out in the Benczkowski Memo on DOJ’s use of corporate surveillance.

Today I’m going to address Change 1, a reinstatement of the Yates Memo requirement that companies hand over information and evidence to all employees involved in illegal conduct. In her speech, DAG Sally Yates said the following: “Indeed immediately, we have revised our policy guidelines to require that if a company wants credit for cooperation, credit at all, it must identify everyone involved. in the wrongdoing, regardless of their position, status or seniority in the company and provide all relevant facts regarding their fault. It’s all or nothing. No more picking and choosing what is disclosed. No more partial credit for cooperation that does not include information about individuals. This statement relates directly to the first bullet point of Yates’ Memo, titled “To be eligible for any cooperation credit, businesses must provide the Department with all relevant facts about those involved in corporate misconduct.” The Trump administration’s Justice Department relaxed this requirement for those “substantially involved.” Monaco said some of the reasons for the change included:

  1. Such distinctions are confusing in practice and leave too much leeway for companies to decide who should and should not be disclosed to government.
  2. Such a limitation also ignores the fact that individuals with peripheral involvement in the misconduct may nonetheless have important information to provide to officers and prosecutors.
  3. The ministry’s investigative team is often better placed than the company’s lawyer to determine the suitability and culpability of the individuals involved in the misconduct, even for those individuals who may be viewed by a corporation as less than substantially involved in the misconduct.
  4. To facilitate this assessment, cooperating companies will now be required to provide the government with all non-privileged information on individual wrongdoing.

What this means in practice is that an internal investigation must focus on individuals from the outset of an investigation, whether the investigation begins in civil or criminal matters. In addition, once a case is underway, the investigation of individual misconduct can and should take place in conjunction with the larger investigation of the company. Delays in the business case will no longer be enough to delay prosecution of those involved. For the CCO or the compliance practitioner, this means that the entire focus of your investigation protocol must now change. Previously, an investigation had to determine how behavior that may have violated the FCPA occurred, and then focus on how to remedy it. The first step that a CCO or Compliance Practitioner would take when sufficient evidence is developed would be to resolve the issue so that it does not happen again. If there were any weaknesses in the compliance program or internal control, they would be immediately corrected so that neither the original perpetrators could continue the conduct, but also others could not take advantage of such structural weakness.

The reinstatement of this requirement by DAG Monaco demonstrates that the DOJ expects you to provide them with information on all who may be prosecuted in the future. Monaco’s remarks also demonstrate that the DOJ expects you to turn over your own employees. This means the DOJ wants companies to ditch senior executives involved in illegal behavior. As Yates said in 2015, “We are not going to accept cooperation from a company when they simply offer the vice president in charge of going to jail. One of the difficulties with the FCPA’s requirement for prosecution or intent. How do you determine intent in a way that senior executives may never have been directly involved in a transaction? Does that mean the insufficient tone at the top will somehow turn into FCPA litigation intent? It appears the DOJ is either no longer comfortable with companies and their boards in making this decision, or they want to take over this assessment.

In addition to these shutters, I found point three of Monaco very interesting. The DOJ has been criticized by commentators and even the court for leaving the internal investigation process to the companies and their hired law firms. This part 3 can be a way for the GM to respond to these criticisms. It should be the Justice Department that assesses potential culpability and potential enforcement, not internal investigators. Monaco should be remembered on this point: “The department’s investigative team is often better placed than the company’s lawyer to determine the relevance and the guilt of individuals involved in misconduct, even for individuals who may be considered by a company to be less than substantially involved in wrongdoing. . “

Whatever the reason for the change, the Biden administration rejects the lightness of the previous administration led by former DAG Rod Rosenstein and later Brian Benczkowski. It looks like this could be the first step in trying to strengthen the individual enforcement of the FCPA and send the message that this administration is serious about fighting international corruption. There were other developments in the Monaco speech that I will take up in the following blogs this week.

Where I find myself this week in this series, I don’t know yet. Every time I read the speech, I see new angles of exploration. However, I promise that next time I will consider rejecting the Benczkowski Memo’s default position that no oversight would be used in FCPA enforcement actions or regulations.

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