White Collar Criminal Defense Group

DOJ Increases Scrutiny on Corporate Compliance Programs

Takeaway:

With corporations facing increased scrutiny by the DOJ’s heightened compliance policy, it is more important than ever to have a robust compliance program to detect and prevent corporate misconduct.

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The federal government is increasing its efforts to fight corporate crime, and compliance programs are just one part of that.  As the Biden Administration increases anti-corruption and white-collar enforcement efforts, the Department of Justice (DOJ) reminds corporations that compliance programs will be under rigorous scrutiny.

In October, Deputy Attorney General Lisa Monaco unveiled the administration’s new compliance policy, expanding the expectations for corporate defendants on cooperation when investigating and resolving misconduct.  Implementing this new policy is the responsibility of Kenneth Polite, U.S. Department of Justice Criminal Division chief.

In an interview with Law360, Polite explained some nuances of the new policy and gave an important warning to corporations: “my scrutiny is going to be very rigorous… but I’m trying to highlight that if you are proactive now, and you properly resource these programs, and you give them the power to actually be independent, there will be significant rewards for your cooperation.”

Although the DOJ has been committed to policing corporate crime, the new policy has elevated these efforts, ensuring that investigators have data analysis tools to detect fraud and more thoroughly evaluate corporate compliance programs.

To encourage corporations to be more proactive, the new policy contains both incentives and punishments.  Under the new policy the DOJ:

• Will recognize and reward corporations and individuals that self-report and take affirmative steps to strengthen their compliance programs. 
• However, if corporations do run afoul of government regulations, there will be significant oversight and scrutiny of the individuals involved and of the corporation itself.

Polite explained that the DOJ will evaluate corporate compliance programs with a greater emphasis on data.  This includes:

• Reviewing the testing and independence of a corporation’s compliance program
• Reviewing compliance reports on monitorships
• Self-reporting
• Actively engaging with corporations in follow-up dialogue

Regarding monitorships, Polite says that companies act “at their own peril” if they breach these agreements, and face “very significant exposure” by doing so.  Monitorships under the new compliance policy are narrowly tailored to the misconduct and seek to determine if a company’s compliance program is rigorous and tested enough to be effective.

Compliance programs within corporations need to be independent, according to Polite.  They must be able to share information, report problems, and take steps to fix these problems before the federal government gets involved. 

Under the new policy, the DOJ looks at all prior corporate misconduct – in essence, corporations now have a “rap sheet.”  When asked if these heightened standards may make corporations reluctant to self-report misconduct, Polite advised, “I would still err on the side of advising clients to come forward in making the self-disclosures.”  The new policy also empowers the DOJ attorneys who prosecute corporate misconduct cases with more resources than before, giving them access to data and coordination with law enforcement to investigate cases and identify potential targets.

Considering these heightened standards and scrutiny, corporations are encouraged to be proactive in their internal compliance monitoring.  Pietragallo’s team of experienced practitioners is well suited to respond to government investigations.  We also work with clients to proactively maintain effective compliance programs and conduct internal investigations as needed.  We assist clients in all 50 states, the District of Columbia, and abroad.

Biden Administration Issues Strategy to Counter Corruption

Takeaway:

The Biden administration has prioritized fighting corruption on a global scale, addressing it as a national security concern and focusing on accountability and financial transparency. With the heightened government oversight of this initiative, corporations should be cautious in their dealings with suppliers and customers in foreign countries, especially those with connections to foreign governments.

On December 6, 2021, the Biden administration released the first-ever United States Strategy on Countering Corruption, aiming to prevent corrupt actors from using the United States and international financial systems to hide assets and launder money. The result of a 200-day review conducted by more than a dozen government agencies to improve the government’s ability to prevent, combat, and punish corruption, this strategy is organized under five pillars:

Under these new guidelines, the threat of corruption will be addressed as a national security concern. Federal departments and agencies will provide annual reports to the President. To read the Fact Sheet published by the White House, click here: https://www.whitehouse.gov/briefing-room/statements-releases/2021/12/06/fact-sheet-u-s-strategy-on-countering-corruption/

With the heightened government oversight of this initiative, corporations should be cautious in their dealings with suppliers and customers in foreign countries, especially those with connections to foreign governments.

Pietragallo Gordon Alfano Bosick & Raspanti, LLP assists corporations and their leadership in enhancing compliance and in responding to government enforcement actions. We assist clients in all 50 states, the District of Columbia, and abroad.