Jonah Lomu died this week. If you have more than a passing interest in sports, you will recognize Lomu as one of the very few game-changers in a sport, his being rugby. I do not pretend to understand the sport very well (except that it involves running, blocking, hitting and tackling – which I do understand), yet I could even tell that he was a true original, a 6 foot 5 inch, 265 lb. behemoth who could run a 4.4 forty. He played for the New Zealand All-Blacks but not in middle as you might expect for a man his size but as winger, really just a wide-out for those who want it translated into American-football.
If you saw the movie Invictus about South Africa’s 1995 Rugby World Cup championship, you will remember the clips of a 20-year old Lomu single handedly destroying England with four tries (read: touchdowns) in the Semi-Finals. Yet South Africa was able to keep him under control to win one of the greatest finals upsets in Rugby World Cup history. Yet even at that youthful age, he had been diagnosed with a rare kidney disease that would eventually lead to his death at the age of 40. Here’s to you Jonah Lomu, to your true greatness and a true original.
I thought about Lomu when reading the comments from the Department of Justice (DOJ) and Assistant Attorney General Leslie R. Caldwell about how the DOJ will consider a company’s actions in any decision on whether or not to prosecute. These comments, changes and clarifications would appear to bookend the process that began with the Yates Memo, released back in September. Earlier this week, Deputy Attorney General Sally Quillian Yates clarified how the DOJ would be evaluating companies going forward.
Stephen Dockery, writing in the Wall Street Journal (WSJ) online publication, Risk and Compliance Report, in an article entitled “U.S. Justice Dept. Changes Corporate Credit Process in Prosecutions”, said that the DOJ explained how the process laid out in the Yates Memo would go into effect. He wrote there “will be two factors prosecutors can use in giving more favorable treatment” when making decisions on whether or not to prosecute. He quoted Yates as saying, “one focused solely on the company’s timely and voluntary disclosure and the second on its cooperation. We made this change to emphasize that while the concepts of voluntary disclosure and cooperation are related, they are distinct factors to be given separate consideration in charging decisions. In recognition of the significant value early reporting holds for us, prompt voluntary disclosure by a company will be treated as an independent factor weighing in the company’s favor.”
Dockery also noted that Yates clarified what might be considered “all relevant facts” from an investigation. Once again he quoted Yates directly, “There is nothing in the new policy that requires companies to waive attorney-client privilege or in any way rolls back the protections that were built into the prior factors. But to earn cooperation credit, the corporation does need to produce all relevant facts – including the facts learned through those interviews.” Dockery also said that Yates noted, “the Justice Department wouldn’t look favorably on companies trying to twist privilege to shield information from investigators.”
Caldwell expanded on these remarks in a speech made on Tuesday of this week, when she said, “In our view, a company that wishes to be eligible for the maximum mitigation credit in an FCPA case must do three things: (1) voluntarily self-disclose, (2) fully cooperate and (3) timely and appropriately remediate.” Regarding point 1, self-disclosure, Caldwell went on to say, “I mean that within a reasonably prompt time after becoming aware of an FCPA violation, the company discloses the relevant facts known to it, including all relevant facts about the individuals involved in the conduct.” Moreover, “To qualify, this disclosure must occur before an investigation—including a regulatory investigation by an agency such as the SEC (U.S. Securities and Exchange Commission)—is underway or imminent. And disclosures that the company is already required to make by law, agreement or contract do not qualify.”
Caldwell also expanded on Yates second prong, ongoing cooperation, she said, “Second, in line with the focus on individual accountability for corporate criminal conduct…companies seeking credit must affirmatively work to identify and discover relevant information about the individuals involved through independent, thorough investigations. Companies cannot just disclose facts relating to general corporate misconduct and withhold facts about the individuals involved. And internal investigations cannot end with a conclusion of corporate liability, while stopping short of identifying those who committed the underlying conduct.” But it means more than simply doing an investigation and turning over the results of the investigation. Full cooperation also “includes providing timely updates on the status of the internal investigation, making officers and employees available for interviews—to the extent that is within the company’s control—and proactive document production, especially for evidence located in foreign countries.”
Finally Caldwell added a third prong which Yates did not discuss, that being remediation. She noted that remediation includes a “company’s overall compliance program as well as its disciplinary efforts related to the specific wrongdoing at issue. For example, when examining remediation we consider whether and how the company has disciplined the employees involved in the misconduct. We also examine the company’s culture of compliance including an awareness among employees that any criminal conduct, including the conduct underlying the investigation, will not be tolerated.”
This is where the new DOJ Compliance Counsel comes into the picture. Caldwell said, “We look forward to her insights on issues such as whether the compliance program truly is thoughtfully designed and sufficiently resourced to address the company’s compliance risks and whether proposed remedial measures are realistic and sufficient.” I was interested to read that Caldwell also said this new person would also “be interacting with the compliance community to seek input about ways we can work together to advance our mutual interest in strong corporate compliance programs.” While her remarks this week did not go into the detail she did in her previous speech outlining the metrics the new Compliance Counsel will use in evaluating corporate compliance programs, Caldwell clearly referenced those standards as well.
The Yates remarks clarifying how “businesses will get an extra shot at favorable treatment based on their disclosure of wrongdoing to the government” and Caldwell’s speech further laying out the parameters and what will be expected in the form of a corporate compliance programs should be welcome news to every Chief Compliance Officer (CCO) and compliance practitioner. These two pieces of information, coupled with Caldwell’s earlier remarks on the Compliance Counsel metrics, lay out for you, with the most precision yet, how to move forward towards obtaining the best possible outcome if you are embroiled in a Foreign Corrupt Practices Act (FCPA) investigation. If your management wants to know what credit it will receive and the roadmap of how to get the best possible result, the DOJ has laid it out for you.
I further believe these series of remarks serve as a bookend to the information announced in the Yates Memo in September. That Memo set forth the expectations for prosecutors in white-collar cases, including FCPA matters, to prosecute more individuals. You see what substantive cooperation means and how your compliance program will be evaluated. The DOJ has laid it out for you in plain back and white.
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© Thomas R. Fox, 2015