DOJ establishes new criteria for compliance in criminal investigations

The Department of Justice (DOJ) revealed modifications to its evaluation criteria for corporate compliance programs in criminal investigations, such as monitoring off-channel and cursory messages by employees, executive compensation programs, and how the agency chooses compliance monitors.

Assistant Attorney General Kenneth Polite Jr. stated in a speech that the revised Evaluation of Corporate Compliance Programs (ECCP) policy will for the first time evaluate "a corporation's approach to the use of personal devices as well as various communications platforms and messaging applications, including those offering ephemeral messaging."

Polite stated, "We will consider how policies governing these messaging applications should be tailored to the corporation’s risk profile and specific business needs and ensure that, as appropriate, business-related electronic data and communications can be preserved and accessed. Our prosecutors will also consider how companies communicate the policies to employees and whether they enforce them on a consistent basis."

The ECCP stated that prosecutors will consider three aspects when assessing how a corporation supervises its employees' use of messaging apps. Initially, prosecutors will want to know which electronic communication channels employees are permitted to use for business purposes and how the company monitors and stores these messages.

Then, prosecutors will seek to understand the organization's rules and procedures for preserving relevant business communications by employees, whether on company devices or on personal devices used for company business.

Thirdly, prosecutors will want to know the repercussions for an employee who fails to utilize the correct electronic communication tools or who refuses to grant the company access to their device to review pertinent communications.

The ECCP questioned, "How does the organization manage security and exercise control over the communication channels used to conduct the organization’s affairs?"

If a company has not produced employee communications from third-party messaging applications during an investigation, prosecutors will "ask about the company’s ability to access such communications, whether they are stored on corporate devices or servers, as well as applicable privacy and local laws, among other things," according to Polite.

"A company’s answers—or lack of answers—may very well affect the offer it receives to resolve criminal liability. So, when crisis hits, let this be top of mind ," he continued.

On Friday, the Department of Justice launched its three-year pilot program for compensation incentives and clawbacks. Thursday, Deputy Attorney General Lisa Monaco outlined the revised compensation and clawback provisions for business settlements implemented by the Department of Justice.

The DOJ's pilot program for compensation and clawback will require a corporation entering into a criminal settlement to "implement criteria related to compliance in its compensation and bonus system," including:

- A “prohibition on bonuses for employees who do not satisfy compliance performance requirements”;

- “Disciplinary measures for employees who violate applicable law and others who both (a) had supervisory authority over the employee(s) or business area engaged in the misconduct and (b) knew of, or were willfully blind to, the misconduct”; and

- Incentives for employees who “demonstrate full commitment to compliance processes.”

The pilot program will allow corporations to decrease their fines by the total amount of compensation they are able to effectively recoup from employees who engaged in the investigated misconduct. Even if a company is unsuccessful in recouping all of the requested compensation, it may still receive a fine reduction of up to 25 percent of the total compensation it attempted to recoup.

In addition, the Department of Justice released a revised policy for the selection of compliance monitors in criminal prosecutions.

Four aspects of the updated policy are clarified.

- Prosecutors should consider nonexhaustive factors when assessing the need for and potential benefits of a monitor, such as whether the company implemented an effective compliance program, tested that program's effectiveness, improved inadequate internal controls exploited to facilitate criminal conduct, and whether the risk of similar misconduct persists; 

- Many of the conflict-of-interest obligations required to be met by monitors will also apply to monitor teams, in addition to the titular monitors; 

-  Monitor selections are and will be made in keeping with the department’s commitment to diversity, equity, and inclusion;

- Prosecutors should consider nonexhaustive factors when assessing the need for and potential benefits of a monitor, such as whether the company implemented an effective compliance program, tested that program's effectiveness, improved inadequate internal controls exploited to facilitate criminal conduct, and whether the risk of similar misconduct persists; 

"In requiring new compliance-related criteria, our prosecutors will use their discretion to craft appropriate requirements based on the particular facts and circumstances, including applicable law," added Polite. "Our goal is to ensure that the company uses compliance-related criteria to reward ethical behavior and punish and deter misconduct."

By fLEXI tEAM