Enhancements to the Department of Justice Policy on Voluntary Self-disclosure

On February 22, 2023 the United States Department of Justice (DOJ) announced a policy, effective immediately, to provide a nationwide standard for how the U.S. Attorney’s Office (USAO) is to incentivize voluntary self-disclosures (VSDs) in DOJ enforcement matters. VSDs form an important part of the compliance-and- ethics (C&E) landscape and so C&E practitioners need to be aware of this development.

Under this policy, for a company to receive credit for a VSD the disclosure must meet the following criteria:

*) The disclosure must be truly voluntary. A disclosure is not considered voluntary if “there is a preexisting obligation to disclose, such as pursuant to regulation, contract or a prior Justice Department resolution.”

*) The disclosure must be timely. It must be made “prior to an imminent threat of disclosure or government investigation”; “prior to the misconduct being publicly disclosed or otherwise known to the government”; and “within a reasonably prompt time after the company becoming aware of the misconduct, with the burden being on the company to demonstrate timeliness.”

*) The disclosure must be complete.  The VSD “must include all relevant facts concerning the misconduct that are known to the company at the time of the disclosure.”  Where a company is not aware of all relevant facts at the time of a disclosure, it “should make clear that its disclosure is based upon a preliminary investigation or assessment of information.”  The company should also “move in a timely fashion to preserve, collect, and produce relevant documents and/or information, and provide timely factual updates to the USAO,” including information learned during a subsequent internal investigation.

The policy encourages companies to make VSDs even if they believe the government is already aware of the misconduct.

Absent the presence of an aggravating factor, the USAO will not seek a guilty plea where a company has (a) voluntarily self-disclosed in accordance with the criteria set forth above, (b) fully cooperated, and (c) timely and appropriately remediated the criminal conduct. Aggravating factors that may warrant the USAO seeking a guilty plea include, but are not limited to, misconduct that:

  1. poses a grave threat to national security, public health, or the environment;
  2. is deeply pervasive throughout the company; or
  3. involved current executive management of the company.

The presence of an aggravating factor does not necessarily mean that a guilty plea will be required. The “USAO will assess the relevant facts and circumstances to determine the appropriate resolution.”

To meet the remediation requirement the company must agree to pay disgorgement, forfeiture, and restitution resulting from the misconduct. If a company meets all the requirements, the USAO may choose not to impose a criminal penalty, and at a minimum may not impose a criminal penalty that is greater than 50% below the low end of the U.S. Sentencing Guidelines fine range.  Where an aggravating factor is present, the USAO may require the company to enter a guilty plea and recommend a reduction of at least 50% and up to a 75% reduction off the low end of the U.S. Sentencing Guidelines fine range and will not require appointment of a monitor if the company has, at the time of resolution, demonstrated that it has implemented and tested an effective compliance program.

As noted above, VSDs play a very important role in C&E programs. Of course, disclosures are not like training or other routine programs features. But companies should prepare for “rainy days,” particularly by ensuring that managers and other key players understand the importance of promptly escalating C&E matters as appropriate to law, compliance and other appropriate functions. They should also receive communications and in some instances training on how to avoid engaging in misconduct in connection with investigations.

From the Conflict of Interest Blog:

In his latest installment, Jeff summarizes key takeaways from Deputy Attorney General Lisa Monaco’s recent announcement promoting the use of incentives in compliance. Click here for the full scoop. 

(link: http://conflictofinterestblog.com/2023/03/a-moral-hazard-moment-for-the-department-of-justice.html )

International Women’s Day

In honor of International Women’s Day, The Anti-Corruption Report and Cybersecurity Law Report interviewed notable women in the markets and industries they cover to highlight what inspired them, and their advice for others. Amii Barnard-Bahn was featured, and to read about her challenges, inspiration, and best advice for women coming up in the profession, check out her interview here.

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