On October 28, 2021, Deputy Attorney General Lisa Monaco released a memo titled “Initial Revisions to Corporate Criminal Enforcement Policy.” The memo indicated that the Justice Department would give more weight to a company’s “misconduct history” when reaching a decision whether to file criminal charges against the company. Monaco’s memo sparked a wave of requests to instruct prosecutors to take into account, noting that past wrongdoings may indicate the strength of internal controls to prevent criminal activity. woke upall “Corporate fraud” should be considered as part of the overall evaluation in the claim determination. Past misconduct is understood to be any previous violation of criminal, civil or regulatory rules discovered in previous domestic or foreign conduct.
The decision to take all previous wrongdoings into account has caused waves among white-collar bars. and provided additional guidance on how previous charges should be considered. In a memorandum, “Further Revisions to Corporate Crime Enforcement Policy,” the DOJ clarified the weight that should be assigned to various cases of past misconduct. In particular, the memo stipulates:
- Not all instances of prior misconduct are equally relevant and probative. Recent misconduct should be weighed more heavily than past misconduct. Illegal behavior should be weighed above regulatory violations. In particular, less weight is given to criminal acts that occurred more than 10 years before the current act under investigation, and civil or regulatory settlements that occurred more than 5 years before the current act.
- Even if different laws apply, the similarities between previous and current wrongdoing must be assessed.
- Misconduct that occurs under supervision or supervision should be understood in its context. Similarly, the regulatory environment must be taken into account when reaching charging decisions, and companies operating in highly regulated industries are compared to their peers.
- Prior misconduct involving an entity that does not share common management is given less weight, especially if that entity has since been acquired and incorporated into a company with a strong compliance program. Shouldn’t.
- Similarly, in the case of multiple misconduct involving the same individual or organization under joint control, the DoJ suggests this may indicate a cultural issue that should be addressed.
- Multiple non-prosecution or deferred prosecution agreements are “generally disfavored,” especially when the same personnel or leadership are involved in both.
- None of the above is intended to discourage voluntary disclosure.
In a speech at the December 1, 2022 ACI Conference on FCPA, Acting Assistant Attorney General Nicole Argentieri elaborated on this last point related to voluntary self-disclosure. Noting that the Justice Department is trying to balance corporate recidivism with mitigating factors, the Deputy Attorney General said companies with self-disclosed fraudulent histories could It said it could avoid a guilty plea. said, “Recidivism is not intentionally one of these aggravating factors.” Put another way, according to the DOJ, even repeat offenders will benefit from self-disclosure under the new Department’s policy. about it.
These recently announced clarifications are already preceded by at least two “recidivist” enforcement actions in 2022. In June, the manufacturer’s Tenaris settled with his SEC, making him pay $53 million in disgorgement and $25 million in civil penalties for violating his FCPA by its Brazilian subsidiary. I was. Tenaris had previously entered into a non-prosecution agreement with the Department of Justice and a deferred prosecution agreement with the SEC arising from another misconduct allegation in Uzbekistan. And in September, Austin-based technology company Oracle Corporation reached a settlement for US$7.9 million disgorgement and $15 million stemming from Oracle Turkey’s use of slush funds to pay for travel and lodging expenses. Agreed to pay a civil penalty of USD. of that customer. Oracle had previously received enforcement actions related to his FCPA violations by an Indian employee in 2012. However, the relationship between these new fees and updated guidelines remains unclear.
The Wall Street Journal has reported that Switzerland-based ABB Ltd. is nearing the final stages of a settlement to resolve FCPA claims filed against its South African subsidiary. The settlement appears to be still in negotiations, but the Wall Street Journal reports that the corruption allegations relate to ABB’s work at the Kushire power plant, which is operated by Eskom, South Africa’s state-owned energy company. rice field.
If true, this would be ABB’s third FCPA enforcement action in the last 20 years. In 2004, ABB Ltd. acknowledged that its Jordan-based subsidiary paid a kickback to a former Iraqi government official and agreed to pay fines of approximately US$16.4 million in compliance with enhanced compliance and reporting obligations. Did. In 2010, her ABB Inc., a US subsidiary of ABB Ltd., pleaded guilty to bribing Mexican officials and paid a US$17.1 million fine.
ABB’s case is poised to be the first major test of the DoJ’s application of new guidelines on prosecuting repeat offenders, assuming the reports are true. The Wall Street Journal reports that ABB’s latest settlement terms include an agreement to pay fines and exploitation amounting to about US$325 million, but are subject to a guilty plea and forced corporate surveillance by its Swiss parent. is not included.
The final terms of the settlement with ABB, which are likely to be published soon, will provide important information regarding the application of the new DoJ guidelines and whether they are truly effective. stay tuned.
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