It should come as no surprise that much of the recent 2022 ACI Foreign Corrupt Practices Act (“FCPA”) conference centered around Department of Justice (DOJ) Deputy Attorney General Lisa Monaco’s September 15, 2022 memorandum (the “revised Monaco memo”) concerning updates to the DOJ’s corporate criminal enforcement policies. Among other things, that memo directs components of DOJ to provide further guidance on (1) corporate compensation structures that promote compliance, (2) corporate use of personal devices and third-party applications, and (3) voluntary self-disclosure by corporations. Although attendees were hoping to receive that further guidance at the FCPA conference, the government stated only that it would be forthcoming.
Of the three topics expected to be further clarified, many multi-national entities that have previously resolved FCPA or other regulatory violations are eagerly awaiting further guidance on voluntary self-disclosure and, in particular, whether recidivism is an aggravating factor that puts a guilty plea back on the table of possible outcomes for a corporation that otherwise voluntarily self-discloses, cooperates, and remediates.
For context, let’s start with the revised Monaco memo itself. The revised Monaco memo, which emphasized the significance of a corporation’s history of misconduct, also took pains to expressly state that “absent any aggravating factors, DOJ will not seek a guilty plea from a company that has voluntarily self-disclosed, fully cooperated, and timely and appropriately remediated the criminal conduct” (emphases added). The revised Monaco memo does not identify recidivism as an aggravating factor, instead leaving it to the DOJ components to identify those factors in further guidance and listing as examples only conduct that “poses a grave threat to national security or is deeply pervasive throughout the company.” (Of note to FCPA practitioners, the Biden Administration views corruption as a threat to national security.) On the other hand, in her speech announcing the revised Monaco memo, DAG Monaco also made clear that “frequent flyers” may face the possibility of a guilty plea and DOJ “will not shy away from bringing charges or requiring guilty pleas where facts and circumstances require.”
In a speech the day after the release of the revised Monaco memo, DOJ Assistant Attorney General Kenneth A. Polite went a step further by identifying specific aggravating factors that DOJ components should include in their voluntary self-disclosure guidance. These aggravating factors include, but are not limited to, “involvement by executive management of the company in the misconduct, significant profit to the company from the misconduct, or pervasive or egregious misconduct.”
In her keynote speech at the FCPA conference, Acting Principal Deputy Assistant Attorney General Nicole Argentieri went the furthest to date. Presumably in an attempt to reassure a recidivist corporation that there are still benefits for voluntarily self-disclosing, she emphasized that DOJ’s exclusion of recidivism from the aggravating factors identified to date was intentional. Significantly, she stated that: “a history of misconduct will not mean a guilty plea for a company that self-discloses, cooperates, and remediates unless other aggravating factors – aside from recidivism – are present.” In other words, under this formulation, DOJ will not put a possible guilty plea back on the table just because the corporation is a recidivist.
The various DOJ components have yet to release further guidance on how they will take recidivism into account when defining the relevant aggravating factors. Even guidance that adopts PDAAG Argentieri’s formulation may give little comfort to corporations with any criminal, civil, or administration resolutions within the last 10 years. Ultimately, although the DOJ is striving for predictability that incentivizes voluntary self-disclosure—even by recidivists—companies are likely to continue the uncertain balancing act they engage in today when making that important decision.