The Justice Department is announcing a major update to its criminal enforcement policy on Thursday that will take into account a big question when it considers charging a corporate executive or business: Is the company a good actor that cooperates with the authorities and turns in wrongdoers?
“I wanted very much to arm and empower chief compliance officers and general counsel to be able to go into the boardrooms and say to the C.E.O., to the chair of the board, ‘We need to make these investments in compliance,’” Lisa Monaco, the deputy attorney general, told the DealBook newsletter in an exclusive preview of the changes that she will announce in a speech at New York University this afternoon.
Last October, Ms. Monaco announced a coming crackdown on companies, with a key plank: trying to motivate more people, whether through the promise of leniency or other benefits, to come forward. She reasoned that securing more voluntary disclosures would ultimately improve the department’s record in corporate criminal enforcement.
An advisory board got feedback from academics, consumer activists, lawyers, executives and compliance officers to help usher in the changes.
By the end of the year, every division at the department must write a policy that makes clear to businesses how they can win reduced fines and penalties for voluntary admissions of misconduct.
Companies must demonstrate that they’re willing to cooperate with the authorities — even naming individuals involved in suspected wrongdoing — and they must show how they are linking compensation to compliance and act fast to claw back compensation or perks given to bad actors.
“When I was out of government, I sat on some corporate boards and I saw that those are hard decisions and you have hard trade-off discussions,” Ms. Monaco said.
Monitors will now be closely monitored, too. During the review of department procedures, companies complained about a lack of clarity around monitoring programs imposed by prosecutors.
Ms. Monaco said she found that some monitors were not properly vetted for conflicts of interest or overseen to make sure they stayed on budget or task and they did not always have a plan. Among the new policies is a set of procedures that applies to all federal prosecutors’ offices nationwide and including more oversight, she said.
“The other thing I learned in this process and came through loud and clear, again, from all of the folks across the spectrum, is the importance of clarity,” she said.