The Department of Justice (DOJ) is considering issuing new guidance regarding companies’ record-keeping obligations for employees’ use of personal cell phones to conduct corporate business, as well as executive compensation clawback policies.
Nicole Argentieri, acting principal deputy assistant attorney general in the DOJ’s Criminal Division, said in a speech Thursday at a Foreign Corrupt Practices Act (FCPA) conference in Washington, D.C. the agency is “examining whether additional guidance is necessary about the use of personal devices and third-party messaging applications, including those offering ephemeral messaging.”
Currently, the DOJ’s FCPA corporate enforcement policy prohibits “the improper destruction or deletion of business records” and requires “implementing appropriate guidance and controls on the use of personal communications and ephemeral messaging platforms” for companies to receive full credit for timely and appropriate remediation.
Some firms allow their employees to use personal cell phones and third-party apps to conduct company business. This includes ephemeral communications, in which messages disappear and are not saved. These off-channel communications and apps present “significant challenges for companies’ ability to ensure they have a well-functioning compliance program and ability to access such communications when necessary,” Argentieri said.
New guidance could account for “rapidly changing technology, diversity of retention requirements between industries, (and) privacy implications in jurisdictions,” said Argentieri. She added the key for the DOJ in its considerations will be transparency.
“We understand that the department must be clear and predictable about our expectations and our policies so that you can provide the best advice to your clients and so that they can make tough choices about how to set priorities and where to direct resources,” she said.
Argentieri said the Criminal Division is also considering issuing guidance on how it evaluates executive compensation clawback policies. In addition to reviewing a firm’s policies for how it punishes illegal and unethical behavior using clawbacks, the DOJ is contemplating how it might “reward companies that employ clawback policies and/or bonuses and positive incentives for compliant behavior.”
“[T]his initiative underlines the importance of developing good corporate culture—culture that rejects wrongdoing for the sake of profit, that incentivizes good citizenship, and that empowers ethical employees,” she said.
Glenn Leon, head of the DOJ’s Fraud Section, acknowledged in remarks at the same conference Wednesday that changes are on the horizon regarding the agency’s FCPA corporate enforcement policy, according to the Wall Street Journal.
Leon, a former chief ethics and compliance officer, also defended a previously announced DOJ policy of having CEOs and CCOs personally certify to the effectiveness of their company’s compliance program at the end of a deferred prosecution agreement.
“Do not wait for us to call you. By then, it’s too late. A company that voluntarily self-discloses will see a lot of upside, while a company that decides to white-knuckle it through is taking on a lot of downside risk.”
Nicole Argentieri, Acting Principal Deputy Assistant Attorney General, Department of Justice
“If you’re a CCO that’s had a several year relationship with the DOJ and have been reporting out to my team and having regular touchpoints, you should be able to say, ‘My program is reasonably designed to protect against and detect violations of the law,’” Leon said, according to the Wall Street Journal.
In September, Deputy Attorney General Lisa Monaco discussed a variety of new DOJ policies on corporate criminal enforcement, including incentives for companies to voluntarily self-disclose FCPA violations and the agency’s prioritization of prosecutions of corporate executives who commit offenses related to bribery and corruption.
One incentive to corporations to self-report FCPA offenses is the chance to avoid a guilty plea.
Argentieri cited the DOJ’s decision not to prosecute FCPA violations by Jardine Lloyd Thompson Group Holdings (JLT) after the insurer allegedly paid approximately $3.2 million in bribes to government officials in Ecuador from 2014-16.
“After fully cooperating with the investigation, making enhancements to its compliance program to reduce the risk that the misconduct would recur, and agreeing to return the ill-gotten gains from the scheme, the department issued a declination letter to JLT,” she said.
While the company avoided prosecution, five employees of JLT were prosecuted for alleged crimes related to the misconduct, Argentieri said.
The DOJ will also consider declining to assign a compliance monitor as part of an FCPA settlement with companies that show their firm has a strong, adequately funded compliance function.
“[A]n additional carrot for a company that self-discloses is that the department may not require a monitor for a cooperating corporation, if at the time of resolution the company can demonstrate that it has implemented and tested an effective compliance program,” she said.
“The message here is clear. Do not wait for us to call you. By then, it’s too late,” said Argentieri. “A company that voluntarily self-discloses will see a lot of upside, while a company that decides to white-knuckle it through is taking on a lot of downside risk.”
- compliance monitorship
- Criminal Division
- Deferred Prosecution Agreement
- Department of Justice
- Executive Clawbacks
- FCPA Corporate Enforcement Policy
- Foreign Corrupt Practices Act
- Glenn Leon
- Nicole Argentieri
- off-channel communications
- Regulatory Enforcement
- Regulatory Policy
- Risk Management
- United States