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Announcement of Policy Revisions Reflects a More Practical, Flexible Enforcement Approach

The US Justice Department has adjusted its approach to holding individuals, and not only corporations, responsible for improper conduct. In remarks at the ACI’s FCPA conference on November 29, Deputy Attorney General Rod Rosenstein softened the DOJ’s formal policy on what information corporations are required to provide on individuals in order to receive credit in FCPA cases.

Rosenstein has effectively amended the Yates Memo, issued by Deputy Attorney General Sally Yates in 2015, which required companies to provide the DOJ with all relevant facts regarding individuals involved in corporate misconduct. This change follows Rosenstein’s announcement in September 2017 that the Yates Memo was under review within the DOJ.

Under the DOJ’s revised approach to criminal enforcement, the focus is now on “the individuals who play significant roles in setting a company on a course of criminal conduct.” In place of the previous requirement to share information on every employee with any role in misconduct, regardless of culpability, the revised policy requires companies to share specific information about individuals who authorized misconduct and what knowledge these individuals had. Rosenstein made it clear that, except in extraordinary circumstances, no corporation resolution should shield individual wrongdoers from the consequences of criminal actions. For criminal prosecutions, this remains consistent with the Yates Memo.

The DOJ’s retreat from the previous policy is a practical move, reflecting the actual approach of prosecutors in FCPA cases today. The revised approach aims to enable prosecutors to take a more flexible approach and avoid unnecessarily dragging out corporate resolutions. While good-faith cooperation with this policy is necessary for corporations to receive cooperation credit in the criminal context, the shift in focus back to individuals who are “substantially involved in or responsible for criminal conduct” allows companies to focus DOJ cooperation efforts on actors who played significant roles in misconduct.

This policy change is already codified at Section 9-28.700 of the Department of Justice Manual, which was amended in November 2018. The new Section 9-28.700 requires companies to identify everyone substantially involved in or responsible for misconduct and, further, requires companies to disclose all relevant facts about these individuals’ conduct. The amended policy simultaneously allows, however, that “there may be circumstances where, despite its best efforts to conduct a thorough investigation, a company genuinely cannot get access to certain evidence or is legally prohibited from disclosing it to the government.” Under these situations, “the company seeking cooperation will bear the burden of explaining the restrictions it is facing to the prosecutor.” Rosenstein’s remarks simply highlight this change to the Justice Manual.

With respect to providing information to DOJ on individuals in the civil context, Rosenstein announced a more substantial change to the Department’s previous all-or-nothing approach to cooperation credit. The new approach is graduated, and a restoration of discretion traditionally exercised by prosecutors in assigning cooperation credit. To receive any civil cooperation credit, a company must identify all senior officials who engaged in wrongdoing. To receive maximum cooperation credit, the company must identify all individuals who were substantially involved in or responsible for wrongdoing. Finally, if a company meaningfully assists the government investigation, civil prosecutors have the discretion to provide some level of cooperation credit.

This principle behind this change in approach with respect to information about individuals was also codified by a recent amendment to the Justice Manual. Section 4-3.100 of the revised Manual requires only “meaningful assistance” with government investigations, and specifies that, for “maximum cooperation credit, a corporation must do a timely self-analysis and be proactive in voluntarily disclosing wrongdoing and identifying all individuals substantially involved in or responsible for the misconduct.”

Finally, Rosenstein emphasized that DOJ attorneys are being given additional discretion in civil matters. They can negotiate civil releases, with supervisory approval, for individuals who do not need to remain involved in corporate investigations. This is a departure from the Yates Memo, which had required individual prosecutions except under extraordinary circumstances. In an effort to steward government resources, the DOJ has also restored prosecutorial ability to consider an individual’s ability to pay when determining whether to pursue a civil enforcement action. As Rosenstein recognized, this is also a practical change in approach, as civil cases are largely focused on financial recovery.

Rosenstein’s address emphasized a continued focus on individual accountability, and it is not clear that the new approach would result in fewer individual prosecutions. The announced policy changes reflect DOJ’s desire to enable efficient disposition of cases before the Department and are consistent with other recent DOJ statements reflecting a more practical and flexible (while still rigorous) approach to cases of corporate misconduct. The policy changes should not change how companies respond to potential improper conduct, which should continue to be promptly and thoroughly investigated and remediated.

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Maurice Bellan is a Washington, DC. based partner and is Vice-Chair of the Firm's North America Litigation and Government Enforcement Practice Group. He also leads the Firm's False Claims Act practice and advises clients on a broad range of fraud and anti-corruption matters. Maurice is a former trial attorney at the US Department of Justice and has been named by Savoy magazine as one of the most influential African-American lawyers in the United States.range of concerns involving fraud and anti-corruption, focusing on the US Foreign Corrupt Practices Act and the False Claims Act. A former criminal investigator and trial lawyer at the US Department of Justice, Mr. Bellan has over 20 years of complex investigative, civil and criminal litigation experience. He was a former member of the judicial nominating committee of the Maryland bar and has served on the boards of organizations such National Senior Campuses, Inc. and the Downtown Columbia Arts & Culture Commission.

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Richard Dean is a partner in the Firm’s Washington, DC office and focuses on the US Foreign Corrupt Practices Act (FCPA) and related legislation, including US money laundering laws and their application to the activities of global companies in emerging markets such as the former Soviet Union, China, Indonesia and Latin America. Prior to joining Baker McKenzie, Mr. Dean worked at Coudert Brothers’ New York, Sydney, Moscow and Washington, DC offices, and was head of that firm’s Russia and Central Asia Practice from 1988 to 2005. He has an in-depth understanding of the key political, economic and cultural issues facing organizations doing business in these challenging markets.

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Reagan Demas has significant experience working on behalf of companies and investors in emerging markets and high risk jurisdictions. He has managed major legal compliance investigations for a variety of Fortune 500 companies and negotiated settlements before the US Department of Justice, US Securities and Exchange Commission, and other federal and state regulatory entities, obtaining declinations in a number of matters. He has also conducted risk assessments and due diligence in a variety of legal compliance matters for companies across industries, and has worked on the ground evaluating partnerships, investments and other business opportunities worldwide. Reagan has written and spoken extensively on emerging compliance trends, ethics, corruption and doing business in Africa. In 2019, Reagan was selected as a BTI Client Service All Star by corporate counsel in recognition of being a leader in superior client service.

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Widge Devaney is a partner in the Firm's North America Litigation group in New York, Chair of the North American Government Enforcement Practice and Co-Chair of the Global Compliance and Investigations Group. Since 2011, Mr. Devaney has been listed in New York Metro Super Lawyers in the Criminal Defense: White Collar category. Mr. Devaney is co-chair of the ABA's Transnational Crime Subcommittee, and an officer of the IBA's Business Crime Committee. He previously served on the Criminal Justice Act Panel for the Southern District of New York, representing indigent clients in federal criminal matters. Mr. Devaney served as law clerk to the Honorable Oliver Gasch on the US District Court for the District of Columbia from 1993 to 1994.

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Tom Firestone is Co-chair of the firm's North American Government Enforcement practice and is a member of the Firm's Global Compliance & Investigations Steering Committee. He represents clients in matters involving anti-corruption and the US Foreign Corrupt Practices Act (FCPA), internal investigations and transactional due diligence. Prior to joining the Firm, he spent 14 years at the US Department of Justice. He worked as an Assistant US Attorney in the Eastern District of New York where he prosecuted transnational organized crime cases. He also worked as Resident Legal Adviser and Acting Chief of the Law Enforcement Section at the US Embassy in Moscow. In the latter capacity, he facilitated US-Russian law enforcement cooperation, assisted the Russian government in drafting new criminal legislation, advised the US government on policy issues related to criminal justice in Russia and twice won the US State Department Superior Honor Award.

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Robert Kent is a partner at Baker McKenzie's Chicago office. He is a member of the Compliance & Investigations Steering Committee. He is recognized as a leader in the areas of business crimes and investigations and corporate compliance. Mr. Kent formerly was chief of the Complex Fraud Section of the US Attorney’s Office in Chicago, and has extensive experience handling clients’ issues with respect to compliance programs and allegations of misconduct.

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William Roppolo is a partner in Baker McKenzie's Miami office. He has successfully tried commercial and criminal cases throughout the United States, including matters involving alleged antitrust, fraud and money laundering violations. William began his legal career investigating financial crimes with the United States Customs Service. He is a former president of the Federal Bar Association's South Florida chapter and was recently appointed to the national Federal Bar Association's Professional Ethics Committee. He has published many articles on topics ranging from anti-corruption to successor liability. He consistently ranks among South Florida Legal Guide's "Top Lawyers". He heads the Firm's Litigation and Government Enforcement Practice Group in Miami and is a member of the Government Enforcement steering committee.

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Jerome Tomas is Chair of the Firm's SEC and Financial Institutions Enforcement Group and has been recognized by Chambers for White Collar Crime & Government Investigations. He represents multinational companies faced with government investigations and conducts internal investigations to assess and remediate legal and compliance concerns in domestic and global operations. With his experience as a former member of the SEC Division of Enforcement’s Cyberforce, the agency’s internet and cyber fraud unit, Jerome regularly advises companies involved in data security breaches and incident response. Jerome now leads teams of lawyers to address government law enforcement perspectives and where necessary, meet and refute government legal theories of corporate and individual liability head-on, while also being pragmatic and business-oriented for management and boards to compete internationally.

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Brian Whisler is a member of Baker McKenzie’s Compliance and Investigations, Dispute Resolution and Global Pharmaceuticals Practice Groups. Prior to joining the Firm, Mr. Whisler served as the criminal chief assistant United States attorney in the Eastern District of Virginia, where he managed the criminal trial practice of the Richmond office which handled cases ranging from white collar crime, violent crime, public corruption and terrorism. Mr. Whisler focused his own trial practice on white collar prosecutions including health care fraud, securities fraud, money laundering, and tax fraud. He also served as an assistant United States attorney for the Western District of North Carolina where he focused on white collar prosecutions and served as chief of appeals and health care fraud coordinator.

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Joan Meyer is a partner and chair of Baker McKenzie’s N.A. Compliance and Investigations Group. Prior to joining the firm, she held a variety of positions at the Department of Justice, including Senior Counsel to the Deputy Attorney General.

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Raija Churchill’s practice focuses on harmonizing business needs with legal savvy, so that corporations can concentrate on creating marketplace value. Before joining Baker McKenzie, Raija advised federal, state, and local agencies on legal compliance and policymaking. She has an insider’s perspective on judicial decision making, after spending well over 1,000 hours in confidential discussions with judges at almost every level of the state and federal courts. Raija clerked in the Seventh Circuit and District of Nevada, and externed in Los Angeles Superior Court. She served as Editor in Chief of the Pepperdine Dispute Resolution Law Journal and Editor for the Harvard Journal of Law & Public Policy. Through Raija’s work in legal, corporate, start-up, non-profit, and government spaces, she is adept at seeing and translating between different stakeholders’ goals. She therefore solves challenges by integrating law, policy, and business resources.