DOJ Criminal Investigations: “Boiling the Ocean” and Other Fish Tales (Part II of IV)

doj14The old maxim – “Justice delayed is justice denied” – is a powerful statement relating to our criminal justice system. A subject of a criminal investigation – corporate or individual — undergoes enormous stress from a continuing investigation. Our system is built on the idea that investigations and prosecutions cannot continue forever.

The Constitution includes a Speedy Trial provision as part of our Due Process rights. Congress enacted speedy trial requirements as part of the federal criminal justice system. Congress also enacted a statute of limitations for federal criminal offenses.

Nonetheless, DOJ has been criticized recently for the length of its FCPA criminal investigations. In addition, complaints have been raised against the SEC for significant delays in resolving FCPA investigations.

There is no question that the average time to complete FCPA corporate internal investigations has increased. Even the 2008 prosecution of Siemens took only around two years to complete. The reasons for this increase in time are not clear.

DOJ (and the SEC) have responded to this criticism by suggesting that outside counsel who are conducting these investigations sometimes “aimlessly boil the ocean” when conducting internal investigations. If true, that could be a significant reason for such delays.

However, DOJ’s statement about outside counsel internal investigations begs the question of how DOJ should exercise oversight and supervision of external investigations. DOJ is operating within a newly designed framework where outside counsel conducts much of an internal investigation. DOJ “pressure” tests the investigation and even will conduct parts of an entire investigation, depending on the situation.doj11

AAG Caldwell has exercised her authority to expedite the resolution of FCPA investigations, particularly those that have been pending for a long period of time. That is a welcome development and should be supported. Companies deserve to get an answer on the ultimate decision relating to an investigation.

DOJ’s recent comments concerning outside counsel performance reflect the new balance that is being created in the investigation function. DOJ does not have the resources to conduct as many criminal investigations under the traditional model from twenty years ago so they must now rely on outside counsel to do so. It is hard to say which model is “better” but the reality is that DOJ has embraced this new model and is highly unlikely it will ever be reversed.

Companies and outside counsel have to accept this new reality. In the future, I expect DOJ to exert even greater oversight and supervision of outside counsel investigations. DOJ is preparing to readjust the balance by notifying companies and counsel that they expect investigations to be focused and that the investigations must include a fulsome review of culpable individuals.

As I always say, DOJ tells everyone in advance what they are planning and then they carry it out. No one should be surprised when we see evidence of DOJ’s new balanced approach – investigations will be completed in a timelier manner and they will include more individuals charged with FCPA crimes.

doj8Some FCPA Paparazzi have criticized DOJ for fostering an amorphous “FCPA, Inc.” of former prosecutors who now practice in the FCPA arena. Those criticisms are naive and reflect the fact that the private sector always has responded to government enforcement priorities, going back to early days of False Claims Act, Antitrust enforcement, and many other initiatives. To imply that something irresponsible is occurring because government lawyers leave to join the private sector to practice in the same specialty in which they served the government, is unjustified, unwarranted and irresponsible.

Outside counsel will continue to conduct internal investigations that may or may not be credited by the Justice Department. It depends on whether they satisfy the government’s standards for such investigations. Such inquiries have to be conducted with independence and with fairness. DOJ has an important responsibility in this area to ensure that such investigations, as directed and ultimately credited by DOJ prosecutors, are done in accordance with these important standards.

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  1. May 19, 2015

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