Companies received some good news Wednesday from the Department of Justice, which announced a new policy that encourages coordination internally and with other enforcement agencies when imposing multiple penalties for the same conduct. The move is another step in the Department’s efforts toward greater transparency and consistency in corporate enforcement.
“The aim is to enhance relationships with our law enforcement partners in the United States and abroad, while avoiding unfair duplicative penalties,” Deputy Attorney General Rod Rosenstein said in remarks Wednesday at the New York City Bar White Collar Crime Institute. The new policy instructs Department components “to appropriately coordinate with one another and with other enforcement agencies in imposing multiple penalties on a company in relation to investigations of the same misconduct,” he said.
In highly regulated industries, a company may be accountable to multiple regulatory bodies, creating a risk of repeated punishments that may exceed what is necessary to rectify the harm and deter future violations. “We need to consider the impact on innocent employees, customers, and investors who seek to resolve problems and move on,” Rosenstein said.
“Our new policy provides no private right of action and is not enforceable in court, but it will be incorporated into the U.S. Attorneys’ Manual, and it will guide the Department’s decisions,” Rosenstein said.
The new policy includes the following four key features:
It affirms that the federal government’s criminal enforcement authority should not be used against a company for purposes unrelated to the investigation and prosecution of a possible crime. “We should not employ the threat of criminal prosecution solely to persuade a company to pay a larger settlement in a civil case,” Rosenstein said. “That is not a policy change. It is a reminder of and commitment to principles of fairness and the rule of law.”
It addresses situations in which Department attorneys in different components and offices may be seeking to resolve a corporate case based on the same misconduct. The new policy directs Department components to coordinate with one another and achieve an overall equitable result, Rosenstein explained. The coordination may include crediting and apportionment of financial penalties, fines, forfeitures, and other means of avoiding disproportionate punishment.
It encourages Department attorneys, when possible, to coordinate with other federal, state, local, and foreign enforcement authorities seeking to resolve a case with a company for the same misconduct.
It sets forth factors that Department attorneys may evaluate in determining whether multiple penalties serve the interests of justice in a particular case. “Sometimes, penalties that may appear duplicative really are essential to achieve justice and protect the public,” Rosenstein said. “In those cases, we will not hesitate to pursue complete remedies and to assist our law enforcement partners in doing the same.”
Factors identified in the policy that may guide this determination include:
The egregiousness of the wrongdoing;
Statutory mandates regarding penalties;
The risk of delay in finalizing a resolution; and
The adequacy and timeliness of a company’s disclosures and cooperation with the Department.
“Cooperating with a different agency or a foreign government is not a substitute for cooperating with the Department of Justice—and we will not look kindly on companies that come to the Department of Justice only after making inadequate disclosures to secure lenient penalties with other agencies or foreign governments,” Rosenstein said. “In those instances, the Department will act without hesitation to fully vindicate the interests of the United States.”
Coordination will also help to identify culpable individuals and hold them accountable, Rosenstein said. “We will seek appropriate corporate penalties when justified by the facts and the law, but the primary question should be, ‘Who made the decision to set the company on a course of criminal conduct?’ Our investigations should focus on those individuals.”
International coordination. To achieve the goals of enhancing international coordination and promoting individual accountability, the attorney general assigned additional attorneys and paralegals to the Department’s Office of International Affairs. “The additional resources help us promptly and efficiently obtain necessary evidence from abroad through Mutual Legal Assistance Treaties and other mechanisms of foreign assistance,” Rosenstein said. “They also strengthen efforts to return fugitives from abroad for prosecutions here in the United States.”
At the same time, the Department of Justice is working to more expeditiously respond to requests for assistance from its foreign counterparts in securing evidence and fugitives. In 2017, the Office of International Affairs successfully returned more than 70 individuals to the United States to face fraud-related charges.
Deterrence as a goal of law enforcement. “Deterrence requires enforcement,” Rosenstein said. “Our goal in every case should be to make the next violation less likely to occur by punishing individual wrongdoers.”
The agency’s Working Group on Corporate Enforcement and Accountability (announced last year) is intended to promote consistency in white-collar enforcement efforts by making internal recommendations about white-collar crime, corporate compliance, and related issues. This working group includes Department leaders and senior officials from the FBI, the Criminal Division, the Civil Division, other litigating divisions involved in significant corporate investigations, and the U.S. Attorneys’ Offices.
Law enforcement as a compliance ally. Most U.S. companies are serious about engaging in lawful business practices and want to do the right thing. “They need and deserve our support to help protect them from criminals who seek unfair advantages,” Rosenstein said. “Corporate America should regard law enforcement as an ally. In turn, the government should provide incentives for companies to engage in ethical corporate behavior and to assist in federal investigations.”