Attorney General Jeff Sessions is leaving the Justice Department, but his relatively soft approach to corporate crime enforcement is likely to outlast him.
Companies have benefited from policy changes instituted during Sessions’ 21-month-long tenure. Those include curbing settlements by multiple agencies, deemphasizing the need for corporate monitors and dangling lower fines to companies that self-disclose foreign bribery violations.
The changes come as the Justice Department has pursued fewer corporate prosecutions. The rate of declined prosecutions has nearly doubled under Sessions to 14.5 percent from 8 percent during late in the Obama administration, according to data compiled by the Corporate Prosecution Registry, a joint Duke University and University of Virginia research effort.
Sessions submitted a resignation letter Nov. 7 at the request of President Donald Trump, who subsequently tweeted that DOJ Chief of Staff Matthew Whitaker will serve as acting attorney general.
With Sessions out, “I doubt that there will be any changes in the DOJ’s approach,” said Stephen Saltzburg, a former deputy assistant attorney general in the DOJ’s criminal division during the Reagan administration, who is now a professor at George Washington University law school.
Sessions is expected to depart the Justice Department. President Trump hasn’t hid his dissatisfaction about the attorney general’s recusal from the investigation into Russian interference in the 2016 election.
Also potentially headed for the exit is Deputy Attorney General Rod Rosenstein, who has done much of the heavy lifting on corporate enforcement.
Trump deflected when asked about Sessions’ future at a press conference prior to the attorney general’s resignation.
“We’re looking at different people for different positions,” he said. Trump said he did not want to make any shifts before the midterms, but such changes are “very common after the midterms.”
The DOJ’s policy adjustments, many of which formalized practices begun during the Obama administration, have made a “significant impact” on how companies and their lawyers approach corporate criminal investigations, Barak Cohen, partner at Perkins Coie LLP in Washington and former federal prosecutor, told Bloomberg Law.
Codifying the changes as formal guidance in the Justice Manual, which is a reference document that outlines how all DOJ attorneys should investigate and charge corporations, provides companies more certainty about how prosecutors will approach their cases.
The full impact of the changes instituted by Sessions and Rosenstein may not yet be publicly known for some time, given the long lifespan of corporate criminal prosecutions.
Many of the notable announcements during Sessions’ tenure, such as Volkswagen A.G.’s $4.3 billion settlement over cheating on emissions tests and the DOJ’s $850 million foreign bribery settlement with Petróleo Brasileiro S.A. resulted from investigations that began during the Obama administration, according to Brandon Garrett, a professor at Duke University School of Law and leading criminal justice scholar.
Sessions’ Justice Department has declined to prosecute in eight of 55 corporate cases, or 14.5 percent of the time, compared with 13 of 162, or 8 percent, brought during the last two years of the Obama administration, according to the Corporate Prosecution Registry.
“Corporate criminal enforcement has become much more lenient under Sessions,” Garrett said. “The most noticeable impact has been a decline in major corporate crime settlements,” said Garrett, who is one of the authors of the prosecution registry.
Tough Sell for Compliance Officers
The Trump-era drop in corporate prosecution cases has convinced companies they may not need to invest as much in compliance measures, Garrett said based on his conversations with various compliance officers.
The DOJ’s soft approach on corporate crime “makes it a harder sell for heads of compliance to go to their boards and ask for investments in compliance mechanisms,” Garrett added.
Recent changes to the DOJ’s Justice Manual could lead to even more lax enforcement, critics of the DOJ’s new policies said.
Lessening the role of corporate compliance monitors in cases may result in companies not self-correcting internal compliance controls, said John Hanson, president of the International Association of Independent Corporate Monitors.
“A monitor’s ultimate goal is to verify to the government that a company is making adjustments in a timely and effective manner,” Hanson said. “Without an outsider’s critique of a company’s compliance efforts, corporations may find themselves in hot water yet again.”
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(Updates with Sessions' resignation letter and acting attorney general announcement.)