Part 1: Cooperation in Government Investigations and Voluntary Self-Disclosure: What to Expect After DOJ’s Latest Guidance

3 min

On September 15, Deputy Attorney General Lisa Monaco issued a department-wide memorandum containing revisions to the Justice Department’s (DOJ) corporate criminal enforcement policies (“the Memorandum”), including guidance on DOJ’s expectations of cooperation in government investigations and the benefits of self-disclosure. The guidance contained in the Memorandum was delivered in the context of the Department’s overarching focus on individual accountability and the expectation that good corporate actors will provide timely and robust disclosures of employee misconduct. Businesses that become aware of misconduct should review the new guidance and ensure their decisions regarding disclosure, cooperation, and remediation meet the DOJ’s new expectations.

DOJ’s Definition of Cooperation

The new guidance underscores a years long focus on corporate criminal resolutions: the “first priority” is to hold accountable individuals who commit and profit from corporate crime. To that end, in order to receive any cooperation credit in a settlement with the Department, companies must disclose “all relevant, non-privileged facts about individual misconduct.” The Memorandum explains that merely disclosing records will be insufficient, and that to secure full cooperation credit, the disclosing company will need to make such disclosures in a timely manner in order to allow prosecutors to investigate and prosecute bad actors. The Department will consider the expiration of statutes of limitations, the dissipation of corroborating evidence, and “other factors” that can inhibit individual prosecutions when determining whether cooperation was timely. It is important to note that although cooperation with a government investigation and self-disclosure remain distinct factors in determining a corporate penalty, their timing is now a primary element of evaluating a company’s cooperation.

While individual prosecutors will set expectations for a company’s cooperation in a particular case, the Memorandum makes clear that companies that identify significant facts but delay their disclosure will jeopardize their eligibility for cooperation credit. Cooperating corporations will be expected to prioritize the production of evidence, including “information and communications associated with relevant individuals,” and where prosecutors identify “undue or intentional delay,” cooperation credit will be reduced or eliminated. In a departure from previous practice, prosecutors will now be required to assess whether the disclosing corporation provided cooperation in a timely fashion.

Benefits of Self-Disclosure

The Memorandum also directs all DOJ components to review their corporate voluntary self-disclosure policies and to ensure a formal, written, and published policy exists that encourages self-disclosure. While each DOJ component policy will provide details on what will be required of a voluntary self-disclosure, two core principles are enumerated. First, absent aggravating factors, such as a threat to national security or misconduct that is pervasive within the company, the Department will not seek a guilty plea where a corporation has voluntarily self-disclosed, fully cooperated, and in a timely and appropriate manner remediated the criminal conduct. Each department’s policy must also include in its written guidance a definition and examples of “aggravating factors.” Second, DOJ will not require the imposition of an independent compliance monitor for a cooperating corporation that voluntarily self-discloses the relevant conduct if, at the time of resolution, it also demonstrates that it has implemented and tested an effective compliance program.

Companies Facing Potential Enforcement Actions

The Memorandum’s guidance on corporate cooperation and voluntary self-disclosure provides additional considerations when a company is presented with the difficult decision about if, what, and when to disclose. Companies should have in place guidelines and team members who are prepared to act quickly when misconduct is uncovered or reported, and, when necessary, outside counsel who are ready to assist and are experienced in investigating and remediating misconduct and disclosing it to enforcement agencies.