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DOJ Announces Policy to Promote Fairness Where Multiple Authorities Investigate the Same Misconduct

16 May 2018 Legal News: Government Enforcement Defense & Investigations

On May 9, 2018, the U.S. Department of Justice (DOJ) announced a policy related to resolutions of criminal and civil corporate enforcement. The new “Policy on Coordination of Corporate Resolution Penalties” was issued by Deputy Attorney General Rod Rosenstein, and instructs prosecutors to “consider the totality of fines, penalties, and/or forfeiture imposed by all [DOJ] components as well as other law enforcement agencies and regulators in an effort to achieve an equitable result.” While the policy appears to largely codify existing practice and contains few specifics, the effect of the new policy is likely to encourage coordination between DOJ and other law enforcement agencies, both in the United States and abroad, when resolving both civil and criminal corporate enforcement actions where multiple authorities are investigating a company for the same misconduct.

In describing the policy, Rosenstein noted that, while it is important for DOJ to aggressively pursue wrongdoers, DOJ should seek to discourage “piling on” by multiple governmental authorities, which can ultimately result in punishment that is disproportionate to the conduct at issue. By encouraging coordination among multiple agencies, Rosenstein expressed hope that DOJ will be “better able to detect sophisticated financial fraud schemes and [to] deploy adequate penalties and remedies to ensure market integrity.” Where companies are accountable to multiple regulatory bodies, or where conduct may be civil or criminal, such “piling on” can result in disproportionate penalties that go beyond remedying harm and deterring future misconduct. The risk of repeated investigations and punishments by multiple authorities, both in the United States and abroad, creates uncertainty and can deprive companies of the finality associated with the resolution of government investigations.

The new policy encourages cooperation between both the criminal and civil components of DOJ, as well as between DOJ and other U.S. regulatory agencies. This cooperation will particularly affect highly regulated industries where multiple agencies have overlapping investigation authority. For example, in the healthcare arena, this new policy will encourage cooperation between not only DOJ attorneys in the Criminal and Civil Divisions, but also between DOJ and other regulatory bodies that investigate false claims, such as the Office of the Inspector General for the Department of Health and Human Services.1

The policy also memorializes the recent trend toward increased coordination and cooperation between the United States and foreign law enforcement authorities, particularly in corruption cases. In his remarks announcing the policy, Rosenstein referenced the December 2017 bribery charges brought in United States v. Keppel Offshore and Marine Ltd. That case involved simultaneous resolutions among authorities in the United States, Brazil, and Singapore – the first time there had been such coordination with the Singaporean authorities. Keppel continued a trend over the last several years, in which DOJ’s FCPA Unit has announced coordinated global resolutions in foreign bribery investigations. Since the beginning of 2016, when authorities in the United States and the Netherlands announced the resolution of the investigation into the telecom company VimpelCom, DOJ has announced multiple coordinated global resolutions with Dutch authorities as well as authorities in Brazil, Sweden, and elsewhere. All indications are that this multi-jurisdictional investigation and resolution trend will continue, and the policy simply requires consideration of the potential for extra-jurisdictional “piling on.”

Specifically, the new policy has four fairly general features, none of which tread much new ground:

  1. It addresses concerns made by critics that prosecutors are seen to use the threat of criminal prosecution to exact larger civil settlements in related cases by reminding DOJ attorneys that the federal government’s criminal enforcement authority should not be used “unfairly to extract, or attempt to extract, additional civil or administrative monetary payments.”
  2. It directs DOJ components to coordinate with one another, and to focus on reaching an equitable result. Such coordination may include crediting and apportionment of financial penalties, fines, and forfeitures.
  3. It enshrines in policy the practice, growing in recent years, of encouraging enforcement authorities to engage in global coordinated resolutions by encouraging DOJ attorneys to coordinate with other federal, state, local, and foreign enforcement authorities as they investigate and resolve a case with a company for the same misconduct.
  4. Most specifically, it identifies factors that DOJ attorneys may use to evaluate whether multiple penalties serve the interests of justice: (1) the “egregiousness of the wrongdoing”; (2) whether there are “statutory mandates regarding penalties”; (3) the “risk of delay in finalizing a resolution”; and (4) the “adequacy and timeliness of a company’s disclosures and cooperation” with DOJ. These factors are intended to allow prosecutors to balance the desire for “reasonable” penalties with concerns regarding holding culpable corporations and individuals fully accountable, leaving DOJ with a potential ability to avoid a coordinated resolution if the circumstances warrant (particularly if doing so would unduly prolong a domestic investigation).

1 In 2014, DOJ announced that it had implemented a practice to encourage coordination between the civil and criminal components of DOJ in the investigation of false claims. As soon as a new qui tam complaint is filed, the complaint is shared by the civil component with the criminal component to determine whether to open a parallel criminal investigation. By directing DOJ components to cooperate, the new policy also appears to codify this practice.