Chapter Two: 
DOJ Speeches and Policy Changes

Anti-corruption enforcement in 2023 continued to build on 2022’s key areas of focus, further strengthening incentives for companies to cooperate with the US Department of Justice through increased rewards for voluntary self-disclosure, heightened compliance program requirements, and stricter penalties for recidivism. The first part of this chapter will provide an overview of DOJ’s ongoing initiatives and enforcement priorities, including risks that may arise from emerging technologies and international and national security threats. The second part of this chapter will explain the new policy changes and initiatives DOJ launched in 2023 to incentivize voluntary self-disclosure and effective compliance programs.

Ongoing Priorities and Initiatives

DOJ has continued anti-corruption initiatives to prioritize the prosecution of crimes involving emerging technologies and international and national security threats. DOJ revised its Evaluation of Corporate Compliance Programs to incentivize effective compliance polices for personal devices and business communication platforms, discussed in greater detail in Part II. And DOJ will continue to prioritize holding individuals accountable for corporate crimes, as Acting Assistant Attorney General Nicole Argentieri emphasized in a November 2023 speech, noting that corporate and individual accountability go hand-in-hand.[1]

DOJ has warned of the increased corruption risk that may arise from cybercrime, crypto-laundering, sanctions evasion, export control circumvention, and technology theft, which will require companies to be proactive with their compliance programs.[2] Cryptocurrency crimes continue to be a top prosecution priority for DOJ, as is international corruption more broadly. To support these areas of focus, DOJ has increased staffing at the Bank Integrity Unit of the Criminal Division’s Money Laundering and Asset Recovery Section, which, among other things, investigates and prosecutes cross-border cases involving financial institutions.[3] And DOJ repeatedly emphasized its cooperation with international partners to reach multiple corporate resolutions and to target kleptocrats.[4]

New Voluntary Self-Disclosure, Cooperation, and Compliance Incentives

DOJ also rolled out a host of policy changes and new incentives to encourage prompt voluntary self-disclosures, robust cooperation, and increased attention to compliance programs. These changes include revisions to the Criminal Division’s Corporate Enforcement Policy, updates to voluntary self-disclosure policies, and changes to the Evaluation of Corporate Compliance Programs, as well as a Compensation Incentives and Clawbacks Pilot Program and stricter penalties for violations of prior corporate resolutions.

Changes to DOJ Criminal Division’s Corporate Enforcement Policy

In 2022, DOJ announced two new aspects of its CEP, which conditions cooperation credit for companies on timely disclosure of information related to individual misconduct and prioritizing the production of relevant evidence to prosecutors.[5] In January 2023, DOJ introduced revisions to the CEP that enable a self-reporting company to still receive a declination to prosecute, even with aggravating factors, if the company:

• Immediately made a voluntary self-disclosure upon becoming aware of the misconduct;

• Had an effective compliance program and system of internal accounting controls that enabled the identification of the misconduct and led to the voluntary self-disclosure; and

• Provided extraordinary cooperation and undertook extraordinary remediation.[6]

Generally, DOJ will not require a guilty plea, absent multiple or particularly egregious aggravating circumstances. If a criminal resolution is nonetheless warranted, a company can still receive significant relief for its cooperation efforts: at least 50%, and up to 75%, off the low end of the US Sentencing Guidelines fine range (where previously the potential maximum was 50% off the low end of the sentencing guidelines range).[7]

DOJ has already followed through on these new policies in its resolution with Albemarle Corporation. The company voluntarily disclosed misconduct, but not sufficiently promptly to receive a declination of prosecution. Nonetheless, Albemarle still benefited under the new CEP because of its significant cooperation efforts, receiving a non-prosecution agreement and a 45% discount off the low end of the sentencing fine guidelines range.[8] With these changes to the CEP, DOJ hopes to incentivize more robust compliance programs that can quickly identify issues, as well as greater cooperation when misconduct occurs.

Voluntary Self-Disclosure Policy Developments

Standardized Voluntary Self-Disclosure

Pursuant to a 2022 directive from Deputy Attorney General Lisa Monaco,[9] US Attorneys Damian Williams and Breon Peace announced in 2023 the implementation of a new, standardized voluntary self-disclosure policy for all US Attorneys’ Offices. The nationwide policy will provide greater “transparency and predictability to companies and the defense bar concerning the concrete benefits and potential outcomes” of voluntary self-disclosure.[10]

Under the new standardized policy, being prompt and the first to disclose misconduct (e.g., not pursuant to existing legal obligations and prior to DOJ otherwise learning about the misconduct) is key to earning the benefits of voluntary self-disclosure. In doing so, a company must disclose all the known relevant facts about the misconduct. This means it is critical, and necessary under the CEP as well, for companies to have strong compliance programs and internal controls to identify issues before DOJ does and to timely report them. For a company that voluntarily self-discloses, fully cooperates, and timely remediates the misconduct, the US Attorney’s Office “will not seek a guilty plea” and may choose not to impose any criminal penalty, but certainly none “that is greater than 50% below the low end of the [USSG] fine range.”[11] Moreover, DOJ will not seek to impose an independent compliance monitor “if the company demonstrates that it has implemented and tested an effective compliance program.”[12]

The presence of aggravating factors may warrant a guilty plea even if a company satisfies the other voluntary self-disclosure policy requirements. Those factors are as follows: (1) “the misconduct poses a grave threat to national security, public health, or the environment;” (2) “the misconduct is deeply pervasive throughout the company;” or (3) “the misconduct involved current executive management of the company.” It is important to note, however, that in practice, each component prosecuting corporate crime tailors its policy to its specific mission (e.g., aggravating factors for the National Security Division will be different than for the Environment and Natural Resources Division).[13]

These developments indicate the growing importance to DOJ of voluntary self-disclosure and cooperation. Consequently, companies should expect that the corresponding stick to this carrot will be that DOJ is likely to come down harder on companies that reject its exhortations and fail to identify and self-report misconduct or offer less-than-robust cooperation.

Safe Harbor Policy in the M&A Context

DOJ is also looking at wrongdoing that arises out of mergers and acquisitions. In October 2023, Deputy Attorney General Lisa Monaco announced “a Department-wide Safe Harbor Policy for voluntary self-disclosures made in the context of the mergers and acquisition process.”[14] The policy aims to incentivize acquiring companies to make timely disclosures and to not deter companies with strong compliance programs from acquiring companies with poor compliance track records.

Under the new safe harbor policy, both acquiring and acquired companies will receive a presumption of a declination to prosecute if they disclose the misconduct at the acquired company within six months of closing, regardless of whether the misconduct was discovered pre- or post-acquisition, and fully remediate the misconduct within one year of closing.[15] Both deadlines are subject to prosecutors’ reasonable consideration of circumstances that may allow for extensions. For example, post-acquisition voluntary self-disclosure of a pre-acquisition bribery scheme earned French aerospace company Safran, SA, a DOJ declination to prosecute with a $17 million disgorgement.[16] Additionally, DOJ will treat aggravating factors differently in the M&A context; aggravating factors at the acquired company will not impact the acquiring company’s ability to receive a declination. The misconduct disclosed also will not factor into any future recidivist analysis for the acquiring company.[17]

The new safe harbor policy offers some comfort to acquiring companies, but the key to benefiting from the safe harbor policy is for companies to timely identify issues within the acquired company so that any misconduct can be timely disclosed to DOJ. This means that the acquiring company likely will need to devote resources to thoroughly review the acquired company’s books and records, high-risk transactions, and compliance protocols so that, where possible, it may properly remediate the issue(s) within one year from closing. DOJ has outlined a path to navigate in M&A scenarios, and companies with the appropriate systems and resources in place may be able to tread it successfully.

Updates to Evaluation of Corporate Compliance Programs

In March 2023, then-Assistant Attorney General Kenneth Polite announced two “significant” changes to the ECCP.[18] First, the updated guidance provides greater transparency into DOJ’s consideration of whether companies have effective policies on the use of personal devices and third-party messaging apps for business, including business-related data retention policies, training for employees on such policies, consistent enforcement of violations of their policies, and production of communications from third-party messaging apps in cooperating with DOJ to ensure individual accountability. Under the updated guidance, DOJ “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.”[19]

Second, DOJ will scrutinize more closely “compensation structures and consequence management” as part of its efforts to assess the effectiveness of a company’s compliance program under the revised ECCP. DOJ also launched “a pilot program (1) to require, as part of a criminal resolution, that corporate compliance programs include compensation-related criteria and (2) to offer fine reductions for companies that seek to clawback compensation in appropriate cases,” which is discussed in greater detail below.[20] But, in a seeming effort to counter the singular focus and increasing pushback on companies’ ability to clawback compensation, DOJ also emphasized that companies can benefit from imposing compensation penalties for misconduct as a deterrent of risky behavior and as a measure to foster a culture of compliance.[21] Additionally, rewarding good behavior through bonuses, promotions, and other rewards is a positive way to drive compliance, and DOJ “expects” companies to do so.[22]

Compensation Incentives and Clawbacks Pilot Program

Last year, DOJ announced that it was considering ways to incentivize corporations to improve compliance via compensation programs and to shift accountability from shareholders to the individuals more directly responsible for misconduct. To further that goal, the Criminal Division announced in March 2023 that it would launch the Compensation Incentives and Clawbacks Pilot Program.[23] DOJ explained that the pilot program would be in effect for three years.

Under the pilot program, companies entering into criminal resolutions will implement compliance-related criteria in their compensation and bonus systems and will report to DOJ on that implementation over the course of the resolution. Prosecutors will consider fine reductions where a company fully cooperates, timely and appropriately remediates, and implements a program to recover compensation from employees who engaged in the wrongdoing or employees who had supervisory authority over the business or employees who engaged in the wrongdoing and knew of or were willfully blind to it. The pilot program will take into account relevant labor and employment laws. Albemarle already participated in the program, and the company received a penalty reduction because it withheld $763,000 in bonuses from employees identified in its investigation.[24]

DOJ also recognizes the challenges a company faces in clawing back compensation. If a company’s good faith effort to claw back compensation is unsuccessful by the end of a resolution, prosecutors may, in their discretion, accord a fine reduction of up to 25% of the compensation targeted for clawback.[25] Companies should weigh the potential costs to shareholders and the prospects of success in litigating a clawback against the value of recouping compensation.

The pilot program is part of DOJ’s ongoing commitment to holding individuals accountable for corporate crime and dovetails with DOJ’s focus on enlisting companies’ cooperation to punish individuals beyond termination by creating incentives for companies to both expand consequences for individuals beyond termination and bolster their compliance going forward through integration of compliance metrics in compensation. The program signals that companies should expect an ongoing focus on individuals and be prepared to make terminations, clawbacks, and providing evidence for prosecutions an important part of cooperation.

Stricter Punishment for Breaches of Prior Resolutions

DOJ is also getting tougher on companies that violate the terms of their agreements with the government. While earning an NPA or a deferred prosecution agreement is an important milestone for a company, DOJ emphasizes that significant investment into cooperation can be undermined or undone by failing to maintain momentum and vigilance.

Citing Ericsson’s $206 million plea deal, which was a result of its breach of a DPA in connection with a bribery scheme, Associate Deputy Attorney General Marshall Miller explained that requiring a guilty plea for violating a DPA or NPA will now be routine.[26] DOJ will extend the same strict approach it takes toward DPA breaches to other types of resolutions, such as civil settlements or Committee on Foreign Investment in the United States mitigation agreements or orders.[27] However, this stricter approach creates increased risk for cooperating companies. Harsher penalties for failures in the post-resolution stage of cooperation could undercut incentives for companies to self-report to DOJ in the first instance; companies may conclude that they face less risk by not self-reporting than by making a disclosure and ending up with a guilty plea for breaking the terms of the resolution.

At the same time, DOJ is taking a broader view of recidivism, assessing the type and age of the misconduct, overlap in personnel, and whether there is a pattern of insufficient safeguards. Two recent examples highlight DOJ’s nuanced approach. ABB Ltd. received a DPA to resolve Foreign Corrupt Practices Act violations, despite the fact that “ABB was a three-time FCPA recidivist,” because ABB’s prior misconduct was dated; ABB convincingly demonstrated that it was about to voluntarily disclose when the media reported on the misconduct; and “ABB provided top-notch cooperation and remediation, and had an effective compliance program” that uncovered the misconduct.[28] Prosecutors considered these facts in light of the recidivism factors noted above and decided that a DPA was more appropriate than a guilty plea. In contrast, NatWest Markets Plc. breached its NPA for securities fraud conduct, “committed a new market manipulation crime” during its probation term, and failed to fully implement its compliance program.[29] Prosecutors considered the same factors as they did with ABB, but the facts in NatWest’s case were sufficiently different to warrant a guilty plea and the imposition of an independent compliance monitor.

These policy developments emphasize that companies must stay on top of compliance best practices and policies around emerging technologies, international threats, and hybrid work. For example, companies with exposure in the cryptocurrency space should understand that DOJ is unlikely to be forgiving of lagging corporate compliance, even in such a quickly evolving area. Companies should carefully heed the revised ECCP to implement and update policies to meet DOJ’s expectations around personal devices, messaging platforms, and compensation.