DOJ Criminal Division AAG Underscores Role of CCOs and Announces CCO Certification Requirements
In a homecoming speech, DOJ’s Assistant Attorney General Kenneth Polite gave a rousing speech to a room full of compliance professionals at the annual Compliance Week meeting in Washington, D.C. AAG Polite, who has served as a CCO himself, embraced the mission of compliance officers as a critical part of corporate governance systems.
AAG Polite specifically recognized the importance of the compliance functions and the challenges that CCOs face in the corporate governance landscape. He specifically referenced the difficulties posed by lack of adequate resources and stature within an organization. He labeled as misguided the notion that compliance is a drain or cost center in the overall corporate landscape. Instead, he warned that companies that fail to invest adequate resources in compliance will definitely pay in the event that they are subject to a DOJ enforcement action. In this respect, AAG Polite noted that companies “that make a serious investment in improving their compliance programs and internal controls will be viewed in a better light by the Department of Justice and by my Criminal Division.”
AAG Polite specifically warned that “Chief compliance officers should have true independence, authority and stature within their organizations.” AAG Polite emphasized CCOs should be empowered by having adequate access to and engagement with business functions, management and the board of directors.
AAG Polite mentioned a specific example when during a presentation by a company on proposed resolution of an investigation, the general counsel answered a question directed to the CCO. In response, AAG Polite observed “That single act gave me all the information I needed. That one act demonstrated, literally and figuratively, that CCO had no voice in that organization.”
AAG Polite continued that companies that do not invest in compliance will face a greater risk of prosecution and will be more likely to have an independent corporate compliance monitor imposed as part of a resolution. AAG Polite referenced the recent Stericycle FCPA settlement which included appointment of an independent corporate compliance monitor for a two-year term.
In a major announcement, AAG Polite observed that CCOs will be required to certify that the company’s compliance program is reasonably designed and implemented to help detect and prevent violations at the end of the term of a settlement agreement and, if applicable, the service period of the independent compliance monitor.
AAG Polite explained that this new requirement is not intended to be punitive but is a new tool in DOJ’s arsenal and will ensure that CCO must have appropriate stature in corporate decision-making. The requirement is intended to “empower our compliance professionals to have the data, access and voice” in organizations to ensure that the company is properly focused on its ethics and compliance program.
In an interesting note, AAG Polite stated that DOJ is “interested in how a company measures and tests its culture and how it uses the testing” to and improve its control environment and compliance program.