Source: United States Department of Justice Criminal Division
Remarks as Prepared for Delivery
Thank you, Bob and Aisling, for that kind introduction. It is a pleasure to be here with you all this morning with so many friends and colleagues, both past and present.
This event brings together true experts in white collar crime, including department leaders, defense counsel at esteemed law firms, and in-house lawyers at major corporations. Attorneys who know all the ins and outs of these matters. Counsel who know the intricacies of government policies and can rattle off every major corporate resolution within the past 10 years.
Events like this one continue the important dialogue between the department and the defense bar and business community. We are committed to ensuring transparency and being clear and predictable about our expectations and our policies. Not only does this allow companies and their counsel to make informed, and often tough, decisions, it also helps promote foundational principles of justice. By being transparent, we can instill faith that the department is acting appropriately and fairly, that the law is applied equally to everyone, and that public servants are carrying out their mandate without fear or favor.
That is why we speak with you all and describe our priorities and practices. That is why so many of our policies and guidance documents are public, including of course the Justice Manual, the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP), the Evaluation of Corporate Compliance Programs, the recent Pilot Program, and more. We also publish CEP declinations on our website, as well as agreements with companies that identify the relevant considerations that led to a particular resolution.
And as I am sure you all are well aware, in the past few weeks and months, the Criminal Division has made many announcements in the area of corporate enforcement and white-collar crime. Many client alerts and news articles have been written about the meaning of our policies, revisions, and resolutions, how they will guide the department, and what else may be in store.
We welcome that attention. Indeed, that is why the Corporate Crime Advisory Group, or CCAG, which was created in October 2021 at the Deputy Attorney General’s direction, included input from experts from inside and outside the department. This bolsters our policies’ legitimacy and ensures we are carefully weighing all relevant equities.
But even though much has been published recently, do not mistake any one policy or revision as marking a sea change in how the department tackles white collar crime. Don’t fall victim to recency bias. A new announcement does not mean that we have only begun to focus on an issue, or that our prosecutors will place undue attention upon it at the expense of other considerations.
Take, for instance, the revisions to the Criminal Division’s Corporate Enforcement Policy that I announced at Georgetown in January. Since that announcement, many have focused on the policy’s provisions regarding “immediate” voluntary self-disclosure and “extraordinary” cooperation and remediation. Do not lose sight of the CEP’s larger context.
Since 2017, the then-FCPA CEP – which was extended to the rest of the division in 2018 – has provided that, absent aggravating factors, if a company voluntarily self-discloses misconduct, fully cooperates with our investigation, and timely and appropriately remediates, it can earn a presumption of a declination. These three requirements are detailed in the CEP and have remained constant. When a company meets them all, as we have consistently demonstrated over the last six years, the division will award a declination, absent aggravating factors.
But recall that “voluntary self-disclosure” is also defined to require, among other things, disclosure “within a reasonably prompt time after becoming aware of the misconduct.” So too here, we have predictably applied this definition for years. There is no requirement for immediate or extraordinary action in circumstances where that presumption applies.
The new CEP released in January does not disturb this well-trodden path to a declination. Instead, our revisions provide an additional avenue toward a declination for companies that voluntarily self-disclose, cooperate, and remediate but have aggravating factors and would otherwise be ineligible for a presumption of declination. It is only in that context – where a company has aggravating factors yet seeks a declination – that it must demonstrate “immediate” voluntary self-disclosure, “extraordinary” cooperation and remediation, and a fully functioning compliance program at the time of the misconduct and the disclosure.
But as I said, even this new provision has its roots in prior Criminal Division matters. As an example, take the August 2018 declination issued to Insurance Corporation of Barbados Limited, or ICBL. In that case, the company paid approximately $36,000 in bribes to a Barbadian government official in exchange for certain insurance contracts. Senior management was involved in the conduct, and as the CEP makes clear, that is one of the aggravating factors that removes the presumption of declination.
Nonetheless, we decided to issue a declination given all the factors, including the company’s timely, voluntary self-disclosure. Specifically, as to timeliness, within several weeks of ICBL’s parent company learning about the bribery scheme at its subsidiary (ICBL), the parent company disclosed the conduct to us. The company’s actions to remediate the misconduct is also worth emphasizing. The company’s full remediation included terminating all of the executives and employees involved in the misconduct. And the company’s efforts allowed us to charge culpable individuals, which remains our top priority.
This is a historical example of the division issuing a declination to a company that had aggravating factors, which is now explicitly accounted for in the new CEP. It is one of a number of important datapoints that show how our policies often take shape. We do not act suddenly and without basis. We instead consider the cases that come before us, evaluate all the facts and circumstances, and can then identify trends and themes that we can use to refine our policies. Proceeding in this manner can help achieve transparency and predictability.
But again, the much focused-upon terms in the revised CEP like “immediate” and “extraordinary,” apply only when there are aggravating factors. Absent such circumstances, if companies voluntarily self-disclose, fully cooperate with our investigations, and timely and fully remediate, they can rely on a presumption of a declination. This has been, and remains, the case.
The declination issued two weeks ago to Corsa Coal illustrates the point. In that case, from approximately 2016 to 2020, the company’s employees and agents engaged in a scheme to bribe Egyptian government officials to obtain and retain lucrative contracts to supply coal to an Egyptian state-owned and -controlled company. To carry out the scheme, Corsa paid approximately $4.8 million to a third-party intermediary that Corsa’s employees knew would be used, at least in part, to pay bribes. In exchange for the bribe payments, Corsa secured approximately $143 million in coal contracts and earned over $30 million in profits.
Under our CEP, we issued a declination with disgorgement. There were no aggravating factors, and the company satisfied the policy, including by fully cooperating with our investigation, which led to charges against two individuals, one of whom has already pleaded guilty. And the company fully remediated the misconduct, including by terminating a sales representative who engaged in the bribe scheme and substantially improving its compliance program and internal controls. In this example, the company received a declination without any need to demonstrate immediate or extraordinary action.
In the Corsa case, we also determined that it was appropriate to allow the company to pay a reduced amount based on the division’s inability to pay guidance, which we issued in 2018. We have consistently applied this guidance to all cases – where applicable – whether declinations, NPAs, DPAs, or guilty pleas.
To be sure, the revised CEP specifies a new path for a declination where there are aggravating factors. As I mentioned, this may occur where the company immediately self-discloses misconduct, provides extraordinary cooperation and remediation, and has an effective compliance program in place at the time of the misconduct and the time of the disclosure. We considered what drove our decisions in the older cases I mentioned and used those lessons to craft the new policy. To foster transparency and predictability, we take what we have seen and, where appropriate, adapt our policies to reflect these circumstances.
Even so, we recognize that under the revised CEP, one may ask what exactly constitutes “immediate,” or what precisely is “extraordinary”? Of course, we can never articulate, in advance, what exactly will or will not satisfy these provisions. Every case is different, and our prosecutors need flexibility and discretion to apply their judgment in the myriad scenarios that may be presented. The best way to understand these terms is to see how they are applied in future cases.
But we understand that companies may wish for more to guide their decision-making now. A company with aggravating factors that is contemplating self-disclosure may want to know what exactly it needs to do to receive a declination under the revised CEP.
That is why, when I announced the revisions in January, I noted that to receive credit for extraordinary cooperation, companies must go above and beyond the criteria for full cooperation set out in our policies – not just run of the mill, or even gold-standard cooperation, but truly extraordinary. And I noted some concepts – immediacy, consistency, degree, and impact – that will help to inform our approach to assessing what is “extraordinary.”
Last December’s FCPA resolution with ABB is illustrative. To be sure, the company was offered a DPA, not a declination, and therefore the CEP’s requirements for “extraordinary” cooperation and remediation would not strictly apply.
But the company’s extensive efforts to cooperate with our investigation shed light on what can constitute “extraordinary.” Among other things, the company voluntarily made foreign-based employees available for interviews in the United States and produced relevant documents located outside the U.S. in ways that did not implicate foreign data privacy laws. And to help our prosecutors assess that voluminous evidence, the company collected, analyzed, and organized the information, including by translating certain documents.
As with cooperation, “extraordinary” remediation must go beyond the policy’s criteria. There are often many fact-specific ways companies can remediate. The most effective remediation, however, includes conducting root cause analyses and taking action to prevent the misconduct from occurring, even in the face of substantial cost or pressure from the business. This can require significant structural changes to a company to ensure compliance and legal personnel have adequate access to corporate decisionmakers and receive necessary information from the business. A company’s remediation can also hold wrongdoers accountable, whether through termination, suspension, or recoupment of compensation.
Therefore, regardless of the specific acts taken, when assessing whether remediation has been “extraordinary,” we will consider if the action has been comprehensive, tailored to the causes of the misconduct under investigation as well as other potential wrongdoing, and able to prevent it from recurring. For that is our ultimate aim: to incentivize companies to invest heavily in designing and implementing effective compliance programs that can deter, prevent, and, if necessary, detect criminal conduct.
Indeed, remediation can take such different forms that, when evaluating corporate compliance programs, there is no one-size-fits-all approach. We have consistently decided not to offer prescriptive guidance but instead, through our Evaluation of Corporate Compliance Programs (ECCP), established criteria and questions that our prosecutors can ask when assessing these programs.
As I’m sure you know, we recently unveiled new revisions to our ECCP concerning a company’s approach to compensation structures as well as the use of personal devices and various communications platforms and messaging applications, including those offering ephemeral messaging.
But as I said at the ABA White Collar Crime Institute in Miami a few weeks ago, these revisions concern just two of the many aspects of a compliance program. Compensation systems and the use of messaging applications may be more relevant for some companies than others depending on the organization’s risk profile, geographic footprint, industry, and the like. While they are undoubtedly important, do not ascribe them undue weight. Do not forget all the other aspects that make an effective compliance program. The ECCP, by design, does not elevate any one aspect of compliance above any other.
Although these two topics may be newly detailed in the ECCP, the Criminal Division has long been focused on these issues. We have been evaluating these principles in the context of specific cases, and with that familiarity, we improved our policies accordingly. And by doing so, we promote stability, transparency, and predictability.
I said in my remarks in Miami that during an investigation, prosecutors will not simply accept a company’s inability to produce messages from third-party applications without adequate explanation. That is because we have seen how criminals often use these communication platforms – which have become a staple in modern life – and therefore can be crucial evidence of criminality.
For example, as I mentioned earlier, the voluntary self-disclosure by Corsa Coal allowed the division, together with our partners in the U.S. Attorney’s Office for the Western District of Pennsylvania, to charge two former executives of the company with FCPA-related offenses. As alleged, these executives, together with their co-conspirators, used multiple means of communications – including encrypted messaging services – to discuss the details of the bribery scheme. In fact, these co-conspirators emphasized the need to use encrypted messaging devices as well as personal email addresses to communicate.
As this one case – among many others – demonstrates, we have long realized the need for companies to develop policies concerning these messaging applications and, where appropriate, retrieve and then produce such communications. The ECCP simply provides additional detail and criteria for our prosecutors to use when evaluating a compliance program’s approach to these messaging applications.
The same is true for compensative incentives and clawbacks. In the Safran case from last December, the company voluntarily self-disclosed that it had discovered during post-acquisition due diligence that two subsidiaries paid bribes to a Chinese government official to obtain certain train lavatory contracts. In issuing a CEP declination, we specifically cited as an example of full remediation the company’s withholding of deferred compensation from a former employee involved in the misconduct.
Similarly, in the corporate resolutions with Danske Bank, Western Union, and MoneyGram, the agreements required the companies to implement certain compliance-related criteria into their executive review and bonus systems.
Of course, our recently announced Pilot Program is new. Over the next three years, we will require companies that enter into criminal resolutions to implement compliance-related criteria in their compensation systems and will offer fine reductions to companies that seek in good faith to clawback compensation from appropriate individuals.
But the Pilot Program is just that – a publicly announced trial period to allow the Criminal Division and the rest of the department to understand how shaping compensation structures and incentivizing the recoupment of money and other property from appropriate individuals can effect real change. As we have done in many contexts, we will assess what works, and what does not, all to improve our policies even further in the pursue of justice.
Through all of this work, one thing is clear. The Criminal Division has been the preeminent leader not only in corporate enforcement, but also in crafting white-collar policy for prosecutors. For years, our prosecutors have considered how we can best achieve our mission and put those ideas into practice. We have used these experiences to determine how we can encourage good corporate citizenship, incentivize the investment in robust compliance programs, and further our primary goal of individual accountability.
We have done so methodically. We evaluate particular cases, each with its own specific facts and circumstances, and identify themes. Themes that can be articulated into policies. Policies that can be crafted, refined, and then published.
Because through these policies, through our words, and through our enforcement actions, we strive to do more than just identify and punish wrongdoers. By being transparent and predictable, we can effectuate real change.
Maybe it is the company that, even though it has a history of misconduct, decides to self-disclose new wrongdoing to achieve a potential declination. Perhaps it is the Chief Compliance Officer who convinces the CEO to invest in additional personnel to adequately respond to internal reports of wrongdoing. Or maybe it is the executive who sees our recent insider trading case and decides to think twice before hitting “Sell.”
The point is that through our words and actions, we can effectuate change. Change rooted in transparent, effective, and predicable government action, which serves to benefit us all.
Thank you for your time this morning.