DOJ Promoting Enforcement and Compliance Message
Contrary to the often-repeated narrative, the Justice Department is transparent about its enforcement plans and compliance expectations. Since the issuance of the FCPA Guidance in 2012, DOJ has continued to provide guidance on a number of important issues. It also telegraphs its compliance priorities by acknowledging assignment of resources and creation of specific task forces. Of course, DOJ can provide more transparency on a range of enforcement topics and reasons underlying declinations, but it is important to recognize how far DOJ has moved toward transparency over the last twenty years.
DOJ political appointees provide important information in Congressional appearances, industry meetings and subject-matter education and training programs. In two recent speeches, Mark Miller, Principal Associate Deputy Attorney General Marshall Miller, spoke to the American Bankers Association Financial Crimes Enforcement Conference, and Criminal Division Assistant Attorney General Kenneth Polite spoke to the International Conference on Anti-Corruption. The headlines from each speech are outlined below:
Miller noted that the new Corporate Enforcement Policy is designed to incentivize corporate responsibility and promote individual accountability. Miller emphasized the importance that DOJ applies to entities that voluntarily disclose wrongdoing, cooperate with DOJ’s investigation, and encourage companies to “rethink” and “retool” their compensation systems to promote compliance. The overall objective of the revised CEP is to encourage legal and compliance professionals to invest in compliance and an ethical corporate culture. According to Miller, DOJ is placing a new and enhanced premium on voluntary self-disclosure. When companies make such disclosures, DOJ wants to ensure a smooth road to various benefits. Companies that make a voluntary disclosure will not be required to enter a guilty plea (absent aggravating factors such as recidivist) and will not be assigned a compliance monitor (so long as it has cooperated, remediated and implemented and tested an effective compliance program).
As examples of the new CEP, Miller cited the recent ABB FCPA settlement in which two of ABB’s subsidiaries pleaded guilty to FCPA conspiracy and the parent company entered into a deferred prosecution agreement (“DPA”). Miller underscored the importance of ABB’s voluntary disclosure, which was derailed by a press report which drew public attention to the misconduct immediately before ABB completed its voluntary disclosure. ABB, however, was able to demonstrate intent and actual efforts to self-disclose prior to the media report (of which ABB did not have any knowledge), and DOJ awarded ABB significant credit for its disclosure.
Notwithstanding ABB’s two prior FCPA settlements, DOJ agreed to a DPA and two subsidiary guilty pleas because of ABB’s voluntary disclosure, and its “A+ cooperation,” which included the production to authorities of significant materials located overseas, as well as its “extensive” remediation and testing of its compliance program.
Aside from the ABB case, Miller cited the Uber settlement for its practical approach to self-disclosure. Uber did not immediately disclose its wrongdoing – actually, its chief security officer covered up a cyber incident and obstructed the FTC’s investigation. When Uber’s new CEO was appointed and learned of the CSO’s conduct, Uber self-disclosed all the facts regarding the cyber incident and the CSO’s obstructive conduct. In the end, DOJ entered into a non-prosecution agreement with Uber. (The Uber CSO was subsequently prosecuted and convicted for criminal obstruction).
Miller addressed recent DOJ guidance on compliance compensation systems and the importance of incentivizing ethical behavior. The Sarbanes-Oxley Act included a claw back requirement that was recently enacted by the SEC with respect to financial restatements. DOJ’s attention to the issue is focused on promoting ethical conduct and conversely punishing wrongdoers by claw backs of financial payments. Miller encouraged companies to “review how compensation policies, including as to claw backs, are structured to incentivize compliant behavior and deter misconduct.” In particular, Miller warned companies that maintain paper policies to refresh these policies and make sure they operate to promote compliance and punish wrongdoers. DOJ expects companies to come up with innovative, effective and targeted ways to use compensation to incentivize good corporate behavior and deter misconduct.
Also, Miller cited a number of areas that DOJ expects to address in the near future, including: (a) specific requirements for compensation systems to reduce the burden on corporate shareholders and target wrongdoers for financial penalties; (b) requirements for preserving corporate data from personal devices and third-party messaging services; (c) review of debarment and suspension process and information sharing with relevant agencies and financial organizations; and (d) promoting acquisitions by companies with strong compliance programs of companies with records of past misconduct or weak compliance programs.
AAG Polite delivered closing remarks at the 20th International Anti-Corruption Conference. At the outset, Polite underscored the importance of attacking corruption given the important link between anti-corruption and peace, security and development. In his view, corruption threatens our collective security by weakening democratic processes and empowering corrupt government officials. According to Polite, fighting corruption is a top priority for the Biden Administration.
Polite called out the large international network dedicated to fighting international corruption, and in particular cited the coordination and cooperation with law enforcement and prosecutors in the United Kingdom, Brazil, Malaysia, Switzerland, Ecuador, France, the Netherlands, Singapore and South Africa. This international coalition has been dedicated to fighting foreign corruption and recently has been focused on the KleptoCapture initiative relating to Russian illicit finance. As an example of this cooperation, Polite cited the recent ABB settlement as the first coordinated resolution with authorities in South Africa.
Over the last 11 years since the start of the Kleptocracy Initiative, DOJ has repatriated more than $3.4 billion. Just a few weeks ago, DOJ repatriated over $20 million in assets to Nigeria. These assets were stolen by a former Nigerian dictator and his co-conspirators.
As part of the 1MDB scandal in Malaysia, DOJ and its foreign partnbers were ablke to return over $1.2 billion to the people of Malaysia.
In response to Russia’s invasion of the Ukraine, the G7 Russian Elites, Proxies and Oligarchs Task Force (“REPO”) has frozen or seized tens of billions of sanctioned assets in financial accounts, luxury yachts and real estate controlled by sanctioned oligarchs.