International Regulatory Enforcement (PHIRE)

A Commitment to Transparency: Clarifying Key Enhancements to the U.S. Department of Justice’s Corporate Enforcement Guidance

March 30, 2023

By Nisa R. Gosselink-Ulep,Leo Tsao,& Candice C. Shang

Keynote Address by Assistant Attorney General Kenneth Polite Jr., at GIR Live: DC Spring 2023, hosted by Paul Hastings, Washington D.C.

Since September 2022, the U.S. Department of Justice (“DOJ” or “the Department”) has made a number of announcements signaling notable changes to its U.S. corporate enforcement policies.  These changes include key revisions to the Criminal Division’s Corporate Enforcement Policy (“CEP”); a path to declinations for companies with aggravating circumstances; greater potential rewards for voluntary disclosures; and increased expectations for a company’s corporate compliance program.  Many of these changes, however, have raised additional questions on how these new policies will be applied in practice.

On March 23, 2023 Assistant Attorney General (“AAG”) for the Criminal Division Kenneth A. Polite Jr. provided helpful clarity on these policies in his keynote address at the GIR Live: Spring 2023 conference, hosted at Paul Hastings’ Washington, D.C. office.  As the AAG explained, it is important for DOJ to provide corporations with greater “transparency and predictability” so that they can know what to expect under DOJ policies and make informed decisions on how to act.  In this post, we discuss two important areas addressed by AAG Polite.

First, the AAG provided helpful guidance on the new path to a declination under the revised CEP for a company with a prior history of misconduct or other aggravating factors.  Specifically, under the revised CEP, such a company can receive a declination if it meets the following: (1) an “immediate” voluntary self-disclosure; “extraordinary” cooperation and remediation; and (2) a fully functioning compliance program at the time of the misconduct and the disclosure.  AAG Polite noted that bright line rules on defining the terms “immediate” and “extraordinary” were difficult because “prosecutors need flexibility and discretion to apply their judgment in the myriad scenarios that may be presented.”

Still, AAG Polite did provide some helpful insights into what could be sufficient to constitute “extraordinary cooperation.”  He noted that in a prior resolution, a company “voluntarily made foreign-based employees available for interviews in the United States and produced relevant documents located outside the U.S. in ways that did not implicate foreign data privacy laws.  And to help our prosecutors assess that voluminous evidence, the company collected, analyzed, and organized the information, including by translating certain documents.”  This level of cooperation was extraordinary because it was “above and beyond the criteria for full cooperation” set forth in DOJ’s policies.

The AAG also provided helpful guidance on what actions could constitute “extraordinary” remediation.  While noting that there are many fact-specific ways for a company to remediate, he suggested that extraordinary remediation would typically require thorough root cause analysis; proactive measures to prevent further misconduct; business decisions that prioritize compliance even in the face of substantial cost or pressure from stakeholders; and even structural changes within a company to ensure that the compliance and legal functions have a seat at the table.

Second, AAG Polite’s remarks made clear that DOJ’s goals for its corporate enforcement framework go well beyond merely identifying and punishing wrongdoers, but rather also include proactively encouraging companies to become “good corporate citizens.”  As AAG Polite stated, DOJ seeks to” effectuate real change” by incentivizing companies to invest in designing and implementing effective compliance programs that can deter and prevent criminal conduct from happening in the first place.  For example, he addressed a new Pilot Program covering corporate compensation structures and clawbacks, as well as recent changes to the Criminal Division’s Evaluation of Corporate Compliance Programs on the same topic.  According to DOJ, these new policies encourage companies to take proactive measures and prioritize compliance to further individual accountability starting from the employees on the ground to the executives in the C‑suite.

AAG Polite suggested that as DOJ evaluates new cases, the Department will continue to consider new policies that help shape corporate behavior in positive ways.  Thus, it is reasonable to expect that DOJ will issue more policies to push more companies to become “good corporate citizens.”

Practice Areas

Anti-Corruption and FCPA

For More Information

Image: Nisa R. Gosselink-Ulep
Nisa R. Gosselink-Ulep

Partner, Litigation Department

Image: Leo Tsao
Leo Tsao

Partner, Litigation Department

Image: Candice C. Shang
Candice C. Shang

Associate, Litigation Department

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