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On January 17, 2023, Assistant Attorney General Kenneth Polite announced revisions to the Department of Justice (DOJ) Criminal Division’s Corporate Enforcement Policy (CEP),1 expanding the availability of a potential full declination with self-reporting, even in some cases involving aggravating circumstances, and applying the CEP to a broader range of issues, including those involving fraud and money laundering. The announcement comes after a number of public statements by Deputy Attorney General Lisa Monaco promising more action to tackle corporate crime.
Historically, the DOJ has incentivized self-reporting of bribery and anticompetitive business practices; DOJ’s effort in this regard began in 2016 with the Foreign Corrupt Practices Act (FCPA) Pilot Program, which was expended into its FCPA Corporate enforcement policy, now incorporated in the DOJ Manual.
The DOJ’s existing CEP provides that companies that voluntarily self-disclose, cooperate, remediate are entitled to a presumption of declination so long as there are no aggravating circumstances present. Aggravating circumstances include, for example, involvement by executive management in the misconduct, egregious misconduct, or criminal recidivism. If the circumstances of a particular case overwhelm the declination presumption and DOJ decides to pursue a criminal resolution, the existing policy provides for a 50 percent sentencing reduction from the low end of the federal sentencing guidelines range.
Mr. Polite’s remarks signal the formal expansion of self-reporting for all corporate criminal matters handled by the Criminal Division. This expansion, Mr. Polite stressed, reflects the importance DOJ places on self-reporting in all corporate criminal cases and the availability of a potential declination in some situations in which such a result was previously foreclosed.
The DOJ’s newly announced policy permits (but does not presume) prosecutorial declination, even in the presence of aggravating factors, where a company’s conduct meets three conditions: first, that the company self-reported immediately upon becoming aware of the misconduct; second, that the company had an effective compliance program and controls at the time of the misconduct and disclosure which enabled its identification; and third, that the company provided “extraordinary” cooperation and remediation. Where the presence of a single one of these aggravating factor may have previously disincentivized any self-reporting, the new policy changes instead permit declination even with such aggravating factors present, provided that the company’s cooperation is deemed “extraordinary.”
Mr. Polite took care to describe how “extraordinary” cooperation would be assessed under the revised CEP. Although acknowledging that the difference between “full” and “extraordinary” cooperation was one of degree, Mr. Polite remarked that DOJ would look to concepts including immediacy, consistency of controls, degree, and impact of a company’s cooperative conduct in deciding whether a company’s cooperation was indeed extraordinary. Mr. Polite emphasized that “[t]o receive credit for extraordinary cooperation, companies must go above and beyond the criteria for full cooperation set in our policies,” including beyond “even gold-standard cooperation.”
As emphasized by Mr. Polite, having a robust compliance program in place, with appropriate, effective, and consistent policies, procedures, and controls, will be key to the DOJ’s evaluation in this regard. An effective compliance program should be able to immediately identify any misconduct and companies should use this opportunity to tighten controls to ensure that is the case.
Further, the DOJ specifically expanded the CEP to all corporate criminal matters handled by the Criminal Division, including all FCPA cases nationwide, all fraud cases, and all money laundering cases.
Short of efforts taken to warrant declination, if the DOJ decides a criminal resolution is still warranted where a company voluntarily self-discloses misconduct, fully cooperates, and timely and appropriately remediates the misconduct, the DOJ will recommend additional leniency: at least a 50 percent, and up to a 75 percent, reduction from the low end of penalties assessed under the federal sentencing guidelines. Further, the DOJ will not pursue a corporate guilty plea, absent multiple or particularly egregious aggravating circumstances.
For those companies who do not self-disclose misconduct but still fully cooperate and appropriately remediate, the DOJ will recommend up to a 50% reduction from the low end of penalties assessed under the federal sentencing guidelines, twice the reduction permitted under the prior CEP.
1 Press Release, Dep’t of Justice, Assistant Attorney General Kenneth A. Polite, Jr. Delivers Remarks on Revisions to the Criminal Division’s Corporate Enforcement Policy (Jan. 17, 2023), available at https://www.justice.gov/opa/speech/assistant-attorney-general-kenneth-polite-jr-delivers-remarks-georgetown-university-law.