Justice Officials Promise Clarity in Upcoming Corporate Guidance

Two Justice Department officials crafting new white-collar enforcement policies defended the Biden administration’s plans to hold corporate recidivists and more individuals accountable, assuring critics that reasonable clarity is coming.

DOJ deputies in the Criminal and Civil divisions, both of whom sit on a corporate crime advisory group tasked with recommending formal policy shifts, addressed concerns about their mandate at the American Bar Association’s white-collar conference in San Francisco Thursday. They were joined on a panel by a group of former DOJ officials who now represent companies opposite the department and voiced a range of complaints about the corporate crackdown announced by Deputy Attorney General Lisa Monaco last fall.

Responding to concerns that Monaco’s pledge to hold corporations responsible for a “full range” of prior misconduct would create unpredictability and ambiguity, Arun Rao, the deputy assistant attorney general for the Civil Division’s Consumer Protection Branch, said he was working towards a solution.

“That’s the hope,” Rao said, when asked if the advisory group’s end product would strike a balance that allows companies to make rational decisions.

“The idea behind” the advisory group that’s been meeting for a few months is “to come up with some clarity,” Rao added. “We are working to put more firm contours around what was expressed in the memo.”

He was referring to a memo Monaco issued in October announcing a new advisory group to develop a set of recommendations for prosecuting individuals and digging into a company’s prior wrongdoing when reaching resolutions.

Lisa Miller, the Criminal Division’s deputy assistant attorney general overseeing the Fraud Section, joined Rao in assuring the department’s new tone in scrutinizing corporations wouldn’t be unreasonable and that past misconduct won’t unilaterally be treated by DOJ as a critical factor for the new violation.

“For example, failing to account for risk and repeat transgressions” when committed by the same corporate executives “can be more serious than if actions by a divested subsidiary from long ago are in the company’s background,” Miller said.

Mark Filip, the Kirkland & Ellis partner and former DOJ deputy attorney general who spoke against the Monaco guidelines during the panel, ultimately said, “it’s very encouraging to hear these thoughtful responses from the government.”

Earlier, Filip suggested that DOJ’s promise to review a company’s full criminal history should be applied in a “golden rule way.” Just as DOJ attorneys would argue they have nothing to do with old scandals within the department, “I would just hope” that DOJ would think, “‘is it really that relevant that like 12 years ago there was a Superfund violation in Denver, and now we’re talking about an FCPA thing in Nigeria?’”

Rao discussed the initial implementation period—after Monaco’s speech but before formal recommendations expounding on her directives come from the advisory group.

“I think what Lisa and I can share in the few months that these have been in place is the department has been looking to counsel to come and present on the history of misconduct. We’re all ears. We’re here to listen,” Rao said. “We have now the discretion to weigh that misconduct. And so, tell us if you don’t think it’s relevant” for reasons such as “the distance in terms of years, its distance in terms of unit.”

“Everyone here in the audience should be prepared to make any kind of arguments about prior misconduct,” he said.

Until more detailed guidelines are issued, however, companies will be skeptical and may even be dissuaded from investing in compliance programs, said Ana Iacovetta, chief ethics and compliance officer at technology company VMware. That’s because executives fear that DOJ still wouldn’t give them credit for it in settlement talks, she said.

“If we could have that in writing, it would really help,” Iacovetta said of Rao and Miller’s remarks.

Defense-side panelists warned that some companies would be dissuaded from stepping forward and cooperating with DOJ, now that the Monaco guidance hands so much discretion to prosecutors, who behave in varying ways.

Rao replied, “The department can’t make these cases without cooperation, and so, to the extent that the guidance at this stage is giving off the impression that cooperation maybe isn’t worth it, well that’s something that we’ll have to work on in terms of actually putting together the hard contours of the guidance moving forward.”