Late last week, the Wall Street Journal reported that the US Department of Justice's (DOJ's) fraud section is developing a process for settling companies to certify that they have disclosed fully all information about individuals involved in wrongdoing before finalizing a settlement agreement. This means that the company not only must "name names" as established by the recent Yates Memorandum, but now a corporate officer will be required to certify and "confirm to [the DOJ] that they have, in fact, turned over all non-privileged information about individuals."
The impact of such a certification should have ripple effects back to the initiation of any internal investigation, informing how even initial interviews and discussions are conducted. And, like the Yates Memo, eventual certification must be dropped into the complex considerations of whether or not to self-disclose.
On September 9, 2015, Deputy Attorney General Sally Q. Yates sent a memorandum within the DOJ, adding to and clarifying the Department's Principles of Federal Prosecution policy, which sets out the requirements for receiving cooperation credit in plea or settlement agreements. A key portion of that Memorandum adopted an unwritten, and inconsistently enforced, requirement that in order to get any cooperation credit, a corporation must investigate, determine and identify responsible individuals, and must provide a "complete" disclosure of "all" individuals involved in, or responsible for the misconduct, regardless of the person's position. The information that must be disclosed to the DOJ is "all facts" related to the misconduct, not just the relevant facts. The "cooperation credit" is often a critical factor in charging decisions and the mitigation of any fine or penalty handed down for wrongful conduct.
Now apparently, the DOJ will be stacking a certification process on top of the Yates Memo that will require cooperating corporations to enter a written statement of cooperation, where the corporation certifies it has in fact provided all of this information. Once adopted by the DOJ, a General Counsel, Chief Compliance Office, Board Member, Director or Audit Committee Member will have to put himself or herself on the hook regarding the company's disclosure.
One big resulting question is, what can the organization do to ensure the integrity of any disclosure made to the government? A related consideration is what can a corporate officer or director do to provide some protection for themselves when making the disclosure certification? The best course in response to both issues will be to change the way the company conducts pre-investigation planning, and to engage in some difficult discussion up-front, before an investigation is underway. Investigation team members within "the-need-to-know" group should understand from the outset (and be reminded during an investigation) that any evidence of individual misconduct found during a report of, or investigation into, wrongdoing must be disclosed in order to earn cooperation credit. Further, the investigative team must understand that someone will be required to certify that all information about alleged wrongdoers has been disclosed.
Knowing the disclosure of wrongdoing may be in the best interests of the organization may also raise questions whether certain individuals are adverse to the interests of the organization. While it may be unclear where interests line-up at the start of an investigation, planning for the issue and how you will address it at the outset may avoid problems down the road. This is particularly true when it is clear the government will use real or imagined conflicts to challenge the integrity of the investigation.
From the time a call on the hotline is reported, this certification and what the company must do for cooperation credit must be part of the decision-making process. Pre-investigation planning and an understanding of this obligation amongst the investigation team will lay a necessary foundation for that task down the road. It also must be considered in the company's ultimate decision to cooperate and disclose information to the government, as well as related indemnification and appointment of counsel considerations throughout an investigation.
The company's plan on handling this certification, and the accompanying issues it creates, should be closely linked to the company's internal investigations and indemnification policies. Those policies will establish a consistent approach for an investigations team and responsible officers to follow when addressing the expanding challenges they must face in the company's fight for cooperation credit.
In the end, DOJ's latest action demonstrates that pre-investigation planning is a critical step in ultimately deciding how you are going to mitigate your risk if your efforts detect conduct that creates legal risk.
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