Compliance Week 2019 is in full swing. The conference opened with a very interesting talk by Principal Deputy Associate Attorney General Claire McCusker Murray. She provided some excellent insights for the compliance professional. There are some quite interesting developments coming down the pike for the compliance practitioner and the compliance discipline.
First she articulated another reason to have a best practices compliance program in place. It is that having a best practices compliance program in place before the time an incident, which might give rise to a Foreign Corrupt Practices Act (FCPA) or other legal violation, is evident of the attitude of the company towards not only compliance but also doing business in a legal and ethical manner. Murray stated, “When the Department [DOJ] takes enforcement actions against corporations, our prosecutors and affirmative civil enforcement attorneys will often take a deep dive into the company’s compliance programs. Why? Because we generally apply the same prosecutorial principles in charging corporations that we would with respect to an individual. Just as an individual’s efforts to avoid engaging in criminal behavior are probative of his state of mind, so are a company’s compliance efforts relevant to its culpability. For that reason, a fair resolution frequently requires an understanding of the compliance function at the time of the conduct at issue and any subsequent remedial steps that have been taken by the company.”
Another interesting fact was regarding the DOJ’s 2016 FCPA Pilot Program. She related that from the time of its implementation in April 2016 until the announcement of the FCPA Corporate Enforcement Policy in November 2017, “The FCPA Pilot brought about almost twice as many voluntary disclosures from companies over an 18-month period, and as a result, the Department codified – and improved – the policy within the Justice Manual.”
The DOJ has clearly demonstrated that the “Corporate Enforcement Policy provides significant advantages to FCPA defendants who voluntarily disclose misconduct, cooperate with the Department’s investigation, and take remedial measures. The policy makes clear that the implementation of an effective ethics and compliance program is necessary to receive the maximum benefit. [See Cognizant Technology Solutions Corporation] The leadership of the Criminal Division went even further last year and announced that this same Corporate Enforcement Policy can be applied in any of their criminal enforcement actions – not just FCPA cases.”
Murray then turned to a topic that one generally never hears at compliance conferences; regulatory interpretation and guidance, where she laid “out some practical thoughts for the compliance personnel in the room.” She began by noting, “Agency guidance can obviously be helpful in educating the industry about an agency’s views – especially when the statutes and regulations are vague or ambiguous – and we all know that compliance personnel are always looking for the practical thing to do in light of new agency guidance.” But, “when faced with new guidance, the best first step is to determine the extent to which a new guidance document mirrors the requirements of the underlying statutes and/or regulations, particularly in light of binding judicial precedent.”
Murray went on to state, “The key is to distinguish between two categories of guidance, the part that mirrors what the law requires and everything else. The rest might include, for example, language suggesting obligations that go beyond what the law requires, language that represents the agency’s interpretation of an ambiguity in a statute or regulation, or language where the agency is recommending “best practices.” For the first category, the response is simple: you’ll want to ensure that your business practices are consistent with the portion of the guidance that mirrors binding law.”
Moving from that starting point is “where you make a good faith risk calculation – really, a business decision, informed by a legal assessment – about whether to follow an agency’s subregulatory guidance, which may be persuasive, or whether to take another lawful approach that differs from the guidance. Unless and until the Supreme Court charts a new course with respect to Auerdeference in Kisor v. Wilkiethis Term, an important part of that good faith risk calculation will be informed by your legal team’s analysis of whether the guidance at issue is likely to be accorded deference.”
Frankly I have never heard a DOJ speaker go this far into the weeds on regulatory and guidance interpretation. Indeed it seems worthy of a full Compliance into the Weedspodcast with Matt Kelly. Clearly the safer approach is to “ensure that your business practices are consistent with the portion of the guidance that mirrors binding law.”
Finally, and perhaps most interestingly, there may be a very big change coming in the Antitrust Division’s Corporate Leniency Policy. Basically, it provides that the first conspirator in a cartel case who comes in and admits its conduct to the DOJ garners a full pass for its illegal conduct. It is simply a race to the DOJ standard, the first in gets it and no one else qualifies. Here Murray quoted Assistant Attorney General Makan Delrahim, who recently “said, “the Antitrust Division long has been home to the ultimate credit for an effective compliance program that detects and allows prompt self-reporting—leniency.”” Murray went on to state, “As Makan stated a couple weeks ago, the Antitrust Division is at an inflection point, and they may soon formally recognize that “even a good corporate citizen with a comprehensive compliance program may nevertheless find itself implicated in a cartel investigation.” And instead of just crediting “extraordinary prospective commitment to corporate compliance,” we may soon be in a position to “credit robust compliance programs at the charging stage, even when efforts to deter and detect misconduct were not fully successful in this particular instance.””
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© Thomas R. Fox, 2019