Recently Deputy Attorney General Lisa Monaco delivered this speech at the American Bar Association National Institute on White Collar Crime.
Topics discussed included: “inspiring a culture of compliance,” “promoting compliance through compensation and clawback programs,” and “accountability.”
Monaco began her speech as follows:
“It’s a pleasure to be here to talk to you about an enduring Department of Justice priority: advancing the fight against corporate crime.
Corporate crime, as we all know, jeopardizes jobs, savings, our economic security, and increasingly, our national security.
Since returning to the department, the Attorney General and I have prioritized battling corporate crime in order to uphold the rule of law, to strengthen financial markets, and to reassure the public that no person and no company is above the law.
[T]wo years ago in October of 2021, I directed some immediate policy changes to invigorate corporate criminal enforcement, and I did so based on a few fundamental principles: preventing misconduct before it happens; holding individual wrongdoers accountable; and deterring and punishing recidivism.
[A]t the same time, we launched the Corporate Crime Advisory Group to recommend more advances, based on input, and this is important, input from outside as well as inside the department.
And based on that input, last fall I announced department-wide policy changes focused on promoting cultures of corporate compliance, while also ensuring consistency and predictability in the way the government treats corporate crime.
Our goal is to empower companies to do the right thing, by investing in compliance, in culture and in good corporate citizenship — while at the same time empowering our prosecutors to hold accountable those who don’t follow the law.
[M]any of the policies I announced last September required action across the Department of Justice — from the Criminal Division to the divisions that concentrate on tax and antitrust and environmental and national security crimes, to each of the 94 U.S. Attorneys’ Offices.
And today, I’ll update you on our progress we’ve made, including our work to cement a firm foundation for corporate criminal enforcement and reward investments in corporate compliance.
And I’ll also address the additional resources we are bringing to bear to confront emerging risks.
Because in today’s complex and uncertain geopolitical – very uncertain quite frankly – geopolitical environment, corporate crime and national security are overlapping to a degree never seen before, and the department is retooling to meet that challenge.
Our National Security Division will be elevating its attention to corporate crime through an infusion of personnel and expertise.
And we’re doubling down on the successful strategies we have deployed to attack cyber and crypto crime, to harness all tools across government to pursue prevention, deterrence and accountability.”
On the topic of “Inspiring a Culture of Compliance,” Monaco stated:
“[L]ast September, I emphasized the department’s commitment to finding the right incentives to promote and support a culture of corporate compliance.
And I noted two new areas of particular focus: a cross-department approach to promoting voluntary self-disclosure and how compensation structures can foster responsible corporate behavior.
We want companies to step up and own up when they discover misconduct and to use compensation systems to align their executives’ financial interests with the company’s interest in good corporate citizenship.
And since then, the department has been doing the hard work of turning principles into policy.
[W]ith respect to voluntary self-disclosure, I am pleased to report that, for the first time, every U.S. Attorney’s Office now has, and every component I should say, that prosecutes corporate crime, now has in place an operative, predictable and transparent voluntary self-disclosure program.
These policies share a common principle: absent aggravating factors, no department component will seek a guilty plea where a company has voluntarily self-disclosed, cooperated and remediated the misconduct.
[W]e recognize that companies and counsel rely on the department to apply its policies transparently and consistently throughout the country.
By adopting one policy for all U.S. Attorneys’ Offices, we are eliminating geographic disparities and uncertainties; the same policy applies whether a company voluntarily self-discloses to the U.S. Attorney’s Office in Alaska or right here in Miami.
[T]hese are not rigid, cookie-cutter policies. Each component thoughtfully tailored its policy to its specific mission.
Potential aggravating factors are different for the National Security Division than they are for the Environment and Natural Resources Division.
And even the Criminal Division — which pioneered this concept and already had a model policy from which components drew — the Criminal Division revised its policy to provide clearer assurances and increased incentives for companies that come forward and self-report.
Let me be very very clear. I want every general counsel, every executive and board member to take this message to heart: where your company discovers criminal misconduct, the pathway to the best resolution will involve prompt voluntary self-disclosure to the Department of Justice.”
On the topic of “Promoting Compliance Through Compensation and Clawback Programs,” Monaco stated:
“The second new policy to drive compliance-promoting behavior involves innovative approaches to compensation and the use of clawbacks.
[L]ast September, I announced that the department would examine corporate compensation programs, to shift the burden of corporate malfeasance away from uninvolved shareholders onto those more directly responsible.
Companies should ensure that executives and employees are personally invested in promoting compliance. And nothing grabs attention or demands personal investment like having skin in the game, through direct and tangible financial incentives.
So, at my direction, the Criminal Division studied this issue. I asked them to talk to practitioners, to consult with regulators and to develop guidance, guidance on how to reward corporations with compliance-promoting compensation programs.
[…] [W]e are now ready to launch the department’s first-ever Pilot Program on Compensation Incentives and Clawbacks.
[T]he program has two parts.
First, every corporate resolution involving the Criminal Division will now include a requirement that the resolving company develop compliance-promoting criteria within its compensation and bonus system.
This is something we have already debuted in recent Criminal Division cases, with criteria that are tailored to fit the company’s existing compensation program.
Second, under the pilot program, the Criminal Division will provide fine reductions to companies who seek to claw back compensation from corporate wrongdoers.
At the outset of a criminal resolution, the resolving company will pay the applicable fine, minus a reserved credit equaling the amount of compensation the company is attempting to claw back from culpable executives and employees.
If the company succeeds and recoups compensation from a responsible employee, the company gets to keep that clawback money — and also doesn’t have to pay the amount it recovered.
And because we heard from stakeholders about how challenging and how expensive the pursuit of clawbacks can be, the pilot program will also ensure that those who pursue clawbacks in good faith but are unsuccessful are still eligible to receive a fine reduction.
Our goal is simple: to shift the burden of corporate wrongdoing away from shareholders, who frequently play no role in the misconduct, onto those directly responsible.
We intend this program to encourage companies who do not already factor compliance into compensation to retool their programs and get ahead of the curve.
We believe the best way to combat corporate crime is to prevent it, or barring that, to surface it and address it head on.
[T] hese policies empower general counsels and compliance officers to make the case to company management, to make the case in the boardroom that investment in a robust compliance program, including a forward-leaning compensation system, is money well spent.”
On the topic of “Accountability,” Monaco stated:
“Let me close on what will always remain the most important priority in corporate enforcement: individual accountability.
Over the last two years, that focus on individual accountability has paid off.
[W]e have shown that we are serious about taking individual wrongdoers to trial. The Criminal Division’s Fraud Section, for example, secured more individual convictions at trial last year than in any of the previous five years. [For what it is worth there were few trials between 2020 – 2022 because of Covid]
So, our message is clear: the department will zealously pursue corporate crime in any industry, and we will hold wrongdoers accountable, no matter how prominent or powerful they are.
And to that end, I will close with this, an ounce of prevention is worth a pound of cure. Investing now in a robust compliance program is good for business, and it is good for our collective economic and national security.”
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