White Collar Defense & Investigations Alert
On May 9, 2018, the U.S. Department of Justice (DOJ) issued a new, non-binding policy that aims to curtail the “piling on” of corporate penalties by different government authorities to punish the same wrongdoing. The policy contains four key components:
First, the policy instructs DOJ attorneys not to use the threat of criminal prosecution solely to persuade a company to pay a larger settlement in a civil case.
Second, in resolving a case with a company that multiple DOJ components are investigating for the same conduct, the policy directs DOJ attorneys to coordinate with one another to avoid the unnecessary imposition of duplicative fines, penalties, and/or forfeiture against the company and achieve an overall equitable result.
Third, the policy encourages DOJ attorneys to coordinate with and consider the amount of fines, penalties, and/or forfeiture paid to other federal, state, local, and foreign enforcement authorities that are seeking to resolve a case with a company for the same misconduct.
Finally, the policy sets forth factors that DOJ attorneys may evaluate in determining whether multiple penalties are warranted in a particular case. These factors include: the egregiousness of a company’s misconduct; statutory mandates regarding penalties, fines, and/or forfeitures; the risk of unwarranted delay in achieving a final resolution; and the adequacy and timeliness of a company’s disclosures and its cooperation with the DOJ.
The new policy, officially titled “Policy on Coordination of Corporate Resolution Penalties,” will be added as a new section to the U.S. Attorneys’ Manual.
The concept of “piling on” has been discussed for a number of years, particularly in connection with enforcement of the Foreign Corrupt Practices Act (FCPA). For some time, the FCPA Unit within the Fraud Section of the DOJ has been coordinating with other U.S. agencies and foreign jurisdictions in reaching settlements with companies. For example, in the settlement with Telia Company AB, the company agreed to pay an aggregate of approximately $548 million in criminal penalties to resolve charges with the DOJ and related charges by the Public Prosecution Service of the Netherlands, in addition to agreeing to pay disgorgement to the U.S. Securities and Exchange Commission. Similarly, in an action against Keppel Offshore & Marine Ltd., which is a Singapore-based company that paid a fine of approximately $422 million to settle bribery allegations that touched the United States, Singapore, and Brazil, the criminal penalty was divided among those jurisdictions. Thus, the new policy appears to formalize the approach the FCPA Unit has been taking in recent years.
We are likely to see more instances where the FCPA Unit is involved in large-scale, multi-jurisdictional settlements with international companies. Given that the policy is not limited to the FCPA Unit, we may also begin to see this practice expand to prosecutions undertaken by other areas within the DOJ.