Assistant AG Leslie Caldwell Says, “Just the Facts”

On September 9, 2015, the U.S. Department of Justice (“DOJ” or the “Department”) issued a memorandum outlining six specific policy measures designed to focus the Department’s resources on the prosecution of individuals alleged to be involved in corporate wrongdoing (the “Memo”). [1]   On September 22, 2015, Assistant Attorney General Leslie Caldwell provided much anticipated insight into the Memo’s aims and how the Memo should affect the DOJ’s handling of corporate and individual investigations going forward, ultimately warning corporate defense attorneys that they “should hear a new message and see a different approach.” [2]

At a conference hosted by Global Investigations Review (“GIR”), Ms. Caldwell said the Memo’s purpose was to correct the DOJ’s inconsistent approach toward investigating individuals.  While Ms. Caldwell stated that the Memo “strongly reinforced” what the DOJ’s Criminal Division had been doing for a long time, [3] Ms. Caldwell said the Memo created a new policy focus for all prosecutors in the DOJ.  Specifically, Ms. Caldwell said that the Memo was aimed at correcting the situations where certain U.S. Attorneys’ offices “were quick to resolve cases with corporations without really even investigating individuals,” or cases where investigations were concluded “without identification of who was responsible or who did what or who had knowledge of the facts.” [4]     

In addition to aligning the DOJ’s approach to prosecuting individuals, Ms. Caldwell said the Memo was intended to press companies under investigation to give more than just “compliance with a subpoena,” but to give the Department the facts, especially surrounding “what happened, who did it, who knew, who participated, [and] who said what.” [5]   The Memo is intended to push companies to conduct a thorough, proactive and timely investigation into the individuals involved by directing them to provide the DOJ with all relevant facts about individuals if the companies wish to qualify for any cooperation credit. [6]   As a result, the Memo sends the message that if a company wants leniency, they have to expose the individuals who were involved in the wrongdoing.  Ms. Caldwell expounded on this policy, saying that the companies did not need to “present[] a prosecution memo to [the DOJ] for specific individuals,” or provide an individual who would be prosecutable to qualify for cooperation credit. [7]   However, she said, “to receive credit for cooperating in a government investigation, the company must focus, whenever possible, on identifying the individuals responsible for the criminal conduct,” they need to give all of the relevant facts, and they need to do so in a timely manner. [8]  

To emphasize the different treatment of cooperating companies versus non-cooperating companies, Ms. Caldwell provided examples of past FCPA enforcement actions demonstrating that companies failing to cooperate fully with the government will receive more severe penalties, such as convictions, higher fines, and compliance monitors.  She discussed, for example, a French power company that pleaded guilty to an FCPA violation in December 2014 and paid the largest criminal penalty ever in an FCPA settlement -- $772 million.  In that case, the DOJ considered (1) the company’s failure to voluntarily disclose the misconduct and (2) its refusal to cooperate with the DOJ’s investigation until years later--after the DOJ had already charged several of the company’s executives.  In contrast, she noted a recent deferred prosecution agreement with a New Jersey based construction company that resulted in a much smaller penalty.  She said that in the latter case, the DOJ considered (1) the company’s cooperation with the investigations, including voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing and organizing key evidence; (2) the company’s extensive remedial efforts, including terminating the employees responsible; (3) the company’s demonstrated commitment to improving its compliance programs; and (4) the company’s agreement to continue to cooperate in ongoing investigations of their officers, directors, employees, agents and consultants. 

Ms. Caldwell did recognize some situations where companies may truly be unable to name the culpable individuals.  However, Ms. Caldwell warned that companies that are unable to name the individuals involved in the wrongdoing would be “carefully scrutinize[d]” and the DOJ would “test a company’s claim[] that it could not identify or uncover evidence regarding the culpable individuals.” [9]   It is important to note that Ms. Caldwell said the Memo did not change the DOJ’s policy on attorney‑client privilege or work‑product protection and the DOJ would not ask companies to waive privilege to receive cooperation credit, consistent with existing DOJ policy. [10]  

Similarly, Ms. Caldwell discussed the DOJ’s views on data privacy laws that may restrict a company’s ability to provide evidence to the U.S. regulators.  For example, certain data privacy laws in non-U.S. countries prohibit the transfer of data or information located within the country.  In her remarks at the GIR conference, Ms. Caldwell recognized that there may be situations where it is not possible to get the evidence to the DOJ, but the DOJ is “not going to accept, without questioning, knee-jerk invocations of ‘I can’t do this because foreign data privacy laws prohibit it.’” [11]   Instead, the Assistant Attorney General noted that she had seen a number of “workarounds” where companies were able to get the evidence to the government, and advised companies to “do what it can within its power to lawfully provide that information.” [12]  

To further align the DOJ attorneys in their pursuit of corporate individuals, Ms. Caldwell revealed that the Department recently held a multi-day training program on its new guidelines for U.S. Attorneys across the country.  Additionally, she said that certain experienced prosecutors are teaming up with U.S. Attorney offices to ensure that less experienced prosecutors are trained on investigations of individuals involved in corporate wrongdoing.  

Key Takeaways

Although the DOJ’s Memo is termed “guidance,” Ms. Caldwell’s remarks at the GIR conference have made it clear that the DOJ’s new Memo will carry with it a new approach to the DOJ’s corporate resolutions.  Given the DOJ’s heightened interest in building cases against individuals in corporate resolutions and in light of Ms. Caldwell’s remarks at the GIR conference, companies should consider the following points:  

• Just responding to a subpoena will not be enough to obtain cooperation credit.
  
  
  • The DOJ expects cooperating companies to make U.S. and non-U.S. individuals available for interviews and expects that companies will identify and organize the key evidence.  Therefore, companies are cautioned that the government will likely take the position that it is insufficient cooperation for a company to simply provide a substantial amount of data for the government to review without actually segregating or at least identifying the most critical, or “hot”, documents.
    
• Companies should conduct a thorough, proactive, and timely investigation into potential, substantial violations of the law.
  
  
  • In these instances, the government will expect companies to have engaged experienced outside counsel who have the ability to conduct independent and thorough investigations.
    
  • The DOJ will be conducting its own separate and parallel investigation from a company’s internal investigation and will use its factual findings to measure the extent of the company’s cooperation.  The companies who have conducted a clearly independent and thorough review will measure up best.  
    
• When conducting the investigation into certain non-U.S. individuals, companies will need to be creative within the bounds of the law when confronting data privacy concerns potentially limiting a company’s ability to transfer evidence to the government. 
  
  
  • The DOJ has seen companies resolve certain data privacy concerns without violating any laws and expects other companies to do the same. 
    
  • For example, as Assistant Attorney General Caldwell noted in her remarks, if there is evidence in a non-U.S. country about a particular non-U.S. individual where the company needs the authorization of the employee to review the data, the DOJ may expect that the company legally transfer the data to another jurisdiction in Europe where employee consent is not required and where it can be reviewed by company counsel without violating data privacy laws.  In those instances, the company should expect that the U.S. government may want to participate in that review of evidence in that jurisdiction, too. 
    
• While the DOJ recognizes certain situations in which it is legally impossible to provide all of the evidence on a particular individual, it will scrutinize the company’s reasons for withholding certain information. 
  
  
  • As a result, companies should document any of its legal ramifications for withholding information.  For instance, if foreign law prohibits the company from providing the evidence to the U.S. regulators, a company should be prepared to have a written memorandum written by local counsel explaining the legal limits. 
    
  • Companies should be prepared for the government to test any rationale for not making certain information available.
    
• In light of the DOJ’s amplified focus on individual culpability, companies should expect that individuals will seek independent counsel early in the investigation. 
  
  
  • As a result, more individuals may decide not to cooperate with the corporation’s investigation, resulting in both a potential decrease in the company’s ability to obtain all relevant facts and a corresponding interference in the company’s ability to cooperate fully with the government. 
    
• The development and implementation of a substantial and robust compliance program that reduces corruption issues may result in lightening the burdens placed on corporations by the DOJ’s recent pronouncements enlarging the focus on individuals.  This program should be regularly reviewed and modified as needed. [13]