Justice Department: companies will have to certify investigation disclosures

The Department of Justice’s Fraud Section has confirmed that it is working on developing a new policy whereby settling companies will soon have to certify that they have, in fact, disclosed fully all information about individuals involved in wrongdoing before finalizing a settlement agreement.

“Companies seeking full cooperation credit must affirmatively work to identify and discover relevant information about the individuals involved through independent, thorough investigations,” Peter Carr, a spokesman with the Department of Justice, tells Compliance Week. “Companies cannot just disclose facts relating to general corporate misconduct and withhold facts about the individuals involved.”

“Internal investigations cannot end with a conclusion of corporate liability, while stopping short of identifying those who committed the underlying conduct,” Carr adds. “To ensure that companies understand the importance of this, the Fraud Section now requires that cooperating companies confirm to us that they have, in fact, turned over all non-privileged information about individuals.”

This announcement follows the recent issuance of the “Yates Memo.” Issued by Deputy Attorney General Sally Yates in September 2015, a key part of the Yates Memo states that in order to get any cooperation credit companies must disclose all relevant facts relating to the individuals responsible for misconduct, if the company hopes to receive cooperation credit during that investigation.

On its face, that requirement was “unwritten and inconsistently enforced,” a client alert from law firm Dentons noted. The Justice Department’s newly developing policy of a company having to certify that it has, in fact, provided all relevant information signals that the agency is one step closer to putting into practice the Yates Memo.

“The impact of such a certification should have ripple effects back to the initiation of any internal investigation, informing how even initial interviews and discussions are conducted,” the client alert stated. “And, like the Yates Memo, eventual certification must be dropped into the complex considerations of whether or not to self-disclose.”

From the time a hotline call comes in, “this certification and what the company must do for cooperation credit must be part of the decision-making process,” Dentons said.

As Compliance Week previously reported, and as Justice Department officials have said numerous times, conducting a thorough investigation of employees amid allegations of corporate misconduct and preserving all relevant evidence in the course of an investigation has always been part of winning cooperation credit. The Yates Memo, however, significantly raises the stakes, and compliance and legal teams would be wise to respond accordingly.