In a speech given at NYU on September 15, 2022, DOJ Deputy Attorney General Lisa Monaco reviewed new and enhanced DOJ policies regarding criminal enforcement related to corporate entities. Monaco’s comments appear to signal that DOJ will be taking a significantly more aggressive posture in corporate investigations. We summarize briefly the new policy priorities below and also provide suggestions on how to contractors might manage risk and compliance issues accordingly.
Monaco discussed five points of emphasis: (1) individual accountability remains a DOJ priority but Monaco added that DOJ will penalize companies that appear to be slow-walking/delaying disclosures; (2) a company’s history of misconduct will be taken into account, but older matters and penalties arising from conduct outside the US will be given less weight; (3) DOJ will be implementing voluntary self-disclosure programs across all DOJ components, encouraging companies to disclose misconduct with the promise of no criminal guilty pleas or imposition of monitors; (4) DOJ continues to favor monitors as part of corporate criminal resolutions and will develop systems to help prosecutors “monitor the monitors”; and (5) DOJ will be more closely scrutinizing a company’s compensation packages to evaluate whether compliance is rewarded and non-compliant misconduct is penalized.
Based on these new policy announcements, contractors should consider the following types of compliance and risk management steps:
- DOJ is preparing to roll out self-reporting programs throughout the Department, similar to those already in place for FCPA and the Antitrust Division. Once the parameters of these new DOJ reporting programs are publicized, contractors that identify potentially criminal misconduct through, for example, internal investigations or internal reporting mechanisms, will need to seriously consider whether to voluntarily report those findings to DOJ. Depending on how DOJ sets up its programs, these voluntary reports may be satisfied by mandatory disclosure requirements already imposed by the Federal Acquisition Regulation (or similar requirements) but, more likely, will necessitate a separate disclosure specifically to DOJ.
- If a contractor makes a voluntary disclosure or otherwise becomes involved in a federal criminal investigation, the contractor will need to promptly consider what individuals are implicated and then make critical decisions about cooperation. If the contractor is seeking cooperation credit from DOJ, under the newly announced policies, DOJ will be expecting a list of all individuals involved in the misconduct and then will be expecting the contractor to quickly proceed with other factual or documentary disclosures. Questions of “delay” or “slow-walking” will vary with each case, meaning that contractors should be prepared to show that their disclosures are timely and thorough. Contractors also should be prepared to defend their actions if investigators threaten to limit cooperation credit – rightly or wrongly – if the contractor does not move more quickly.
The ways that a company’s compensation structure reinforces compliance and penalizes misconduct have long been factors evaluated by DOJ for cooperation credit and by the U.S. Sentencing Guidelines for penalty mitigation, but Monaco’s announcement indicates that DOJ will be scrutinizing compensation much more intensely. DOJ is apparently positioning its investigators to second-guess internal company decisions related to compensation and discipline as they bear on compliance issues. Contractors will need to carefully document internal disciplinary decisions that relate to compliance matters to show the scope of any investigation, findings, and rationale for any actions taken or not taken. Disciplinary actions that occur in connection with voluntary disclosures are easier to navigate, given their closeness in time.
The greater challenge will arise if discipline is imposed (or not), no disclosure is made, and then a federal investigation into the same area of conduct begins months or years later and with a scope that potentially puts the earlier decision in a different light. Careful memorialization of these internal decisions and the factors that led to them will be critical so that contractors can properly defend those decisions and themselves.