On 22 February 2023, the US Department of Justice (DOJ) announced a new voluntary self-disclosure policy for corporate criminal enforcement in all 94 United States Attorneys’ Offices (USAOs) across the country.
This new voluntary self-disclosure policy is a response to Deputy Attorney General Lisa Monaco’s 15 September 2022 Memorandum (“Monaco Memo“) insisting all DOJ divisions develop a self-disclosure policy, to the extent one does not already exist. Other DOJ components, including the Criminal Division, have already taken steps to issue or update their own policies on this topic. See for example: United States: Department of Justice tweaks Criminal Division Corporate Enforcement Policy – Baker McKenzie InsightPlus
The new USAO policy symbolizes an effort to promote consistent treatment of corporate criminal defendants across all USAOs around the country and an attempt to incentivize more self-reporting. The goal of the new policy is to “provid[e] transparency and predictability to companies and the defense bar” in an effort to “standardize how [voluntary self-disclosures] are defined and credited by USAOs nationwide.”1 Despite its efforts to provide clarity and consistency, the policy raises issues that companies should consider before deciding to self-report, including how to coordinate voluntary self-disclosures among multiple components of the DOJ, each with their own policies.
The USAO policy comes as no surprise given that the DOJ under the Biden Administration has consistently supported self-disclosure policies. The USAO policy sets forth three primary criteria. First, and most obviously, the self-disclosure must be voluntary. Disclosures made under pre-existing obligations or prior DOJ resolutions will not be considered voluntary. The USAO policy, however, has carved out an exception whereby a company’s disclosure can still be considered “voluntary” if the misconduct may have been previously disclosed to the USAO by a whistleblower. Second, the self-disclosure to the USAO must be timely. A timely disclosure is one that occurs prior to a threat of government investigation, public disclosure, and within a reasonable time after a company is made aware of misconduct. Third, the disclosure must include all facts relevant to the misconduct known to the company at the time of disclosure.
Before making any disclosure, companies should be sure to have a full understanding of the risks and benefits associated with self-disclosure under all applicable policies. Many components of the DOJ now have their own unique reporting policies. Despite these delineations, some conduct may overlap, and many more complex cases will involve more than one component, and companies will need to assess which component’s policy is most applicable to their circumstances.2
Comparative analysis of the various DOJ policies
It is helpful to understand the differences between various DOJ component policies to evaluate when disclosure may be appropriate. For example, the level of certainty varies between policies. Under the USAO policy prior resolutions may not negatively impact a company’s qualifications. On the other hand, the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP), lists recidivism as a basis for rendering a company ineligible to receive a declination. The Antitrust Division’s Leniency Policy may provide companies with comparatively more certainty because companies are guaranteed to receive “Type A” Corporate Leniency so long as the company meets the stated requirements outlined in the policy.3 The USAO policy does not provide additional clarity on which office a company should bring its disclosure to while the National Security Division’s Guidance on Voluntary Self-Disclosures provides specific criteria for the point of contact for disclosure. Companies should be attentive to the amount of predictability and certainty a policy may offer in their decision on whether to self-report conduct.
Continuing cooperation requirements also vary amongst voluntary self-disclosure policies. The USAO policy requires companies to provide updates as the investigation progresses potentially obligating companies to continue the investigation and any associated costs. The CEP requires “proactive” cooperation including the collection, preservation, and disclosure of all relevant documents including documents overseas (along with translations where applicable) and facilitation of third-party production. The Antitrust Division recently updated its frequently asked questions setting forth a seemingly high bar for cooperation stating “[c]ooperation obligations extend as far as the investigation requires,”4 providing greater clarity but with potentially significant resource investment. Companies should understand that self-reporting will come with additional costs and ongoing obligations depending on who disclosure is disclosure is made to and where the internal investigation leads.
Another consideration is the potential for additional legal exposure. Companies may be faced with the risk of cooperating on multiple fronts and will need to balance the liability of senior executives (against whom recent DOJ guidance makes clear the company will be expected to cooperate). For example, some DOJ components may choose to cooperate with other domestic and foreign agencies, thereby confronting companies with a decision on whether they are prepared to actively cooperate simultaneously with multiple agencies that may have not issued their own guidance on how they treat companies that self-report, or may have issued differing rules.
As to individual liability, the USAO policy, like the CEP, only addresses corporate entities. This contrasts with the Antitrust Division’s Leniency Policy under which certain circumstances include non-prosecution coverage for individuals that may be necessary for the companies to fulfill their cooperation obligations. Increased exposure on all fronts is crucial for a company to consider as the costs of continued investigations and potential subsequent litigation can become unwieldy.
Ultimately, companies should continue to carefully evaluate all factors with the assistance of legal counsel that fully understands the enforcement landscape across DOJ and other agencies before voluntarily disclosing any potentially criminal conduct, weighing all potential risks and benefits that can arise from a disclosure.
1 Damian Williams and Breon Peace Announce New Voluntary Self-Disclosure Policy for United States Attorney’s Offices (28 February 2023) https://www.justice.gov/usao-edny/pr/damian-williams-and-breon-peace-announce-new-voluntary-self-disclosure-policy-united.
2 A company’s decision whether to voluntarily disclose criminal conduct will remain a difficult one. This decision must be made on a case-by-case basis, factoring all individual circumstances and risks. Some of these factors include, but certainly are not limited to, the likelihood of a response from other agencies. We will see whether the USAO policy will serve to incentivize more companies to disclose, or alter disclosure approaches.
3 Antitrust Division Leniency Policy and Procedures (4 April 2022) https://www.justice.gov/atr/page/file/1490246/download.
4 Frequently Asked Questions about the Antitrust Division’s Leniency Program (update published 3 January 2023) https://www.justice.gov/atr/page/file/1490311/download; see also Model Corporate Conditional Letter (4 April 2022) https://www.justice.gov/atr/page/file/1490291/download.