Day: November 2, 2021

Deputy Attorney General (DAG) Lisa O. Monaco gave a Keynote Address at ABA’s 36th National Institute on White Collar Crime last week (Monaco Speech). Her remarks were noted by many commentators, including on Compliance Into the Weeds where Matt Kelly and myself took a deep dive into her speech in a rare emergency podcast. Her remarks reframed a discussion about this Department of Justice’s (DOJ) priorities on white collar criminal enforcement, including under the Foreign Corrupt Practices (FCPA). Her remarks should be studied by every compliance professional as they portend a very large change in the way the DOJ and potentially other agencies enforce the FCPA. This has significant implications for every Chief Compliance Officer (CCO), compliance professional and corporate compliance programs.
Today, I am going to take up the third change announced by Monaco, the use of corporate monitors. I asked Affiliated Monitors Inc., (AMI) founder Vin DiCianni for his thoughts around the remarks on monitors. He said, “For Affiliated Monitors this refreshed approach by DAG Monaco highlights the seriousness which businesses must place on the investment in their programs and in addressing what has for some been a negative experience with a monitor.  For those who might be the subject of a monitorship, DAG Monaco recognized that the negativity that has sometimes surrounded monitorships as being punitive, should be seen in a different light bringing value, pointing a way forward and as a solution which has had great success in resolving matters.”
In 2021, we have seen several enforcement actions which seemed quite well suited for monitors.Of course, the DOJ recently announced that some companies have been failing to live up to their settlement resolutions and have proposed the extension of current monitorships. Monaco echoed this sentiment stating, “Recently, two different multinational corporations separately announced that each had received a breach notification from the Justice Department.”
Monaco’s remarks may well have been tailored to these 2021 FCPA resolutions and companies in breach of their settlement obligations when she stated, “In recent years, some have suggested that monitors would be the exception and not the rule. To the extent that prior Justice Department guidance [Benczkowski Memorandum] suggested that monitorships are disfavored or are the exception, I am rescinding that guidance. Instead, I am making clear that the department is free to require the imposition of independent monitors whenever it is appropriate to do so in order to satisfy our prosecutors that a company is living up to its compliance and disclosure obligations under the DPA or NPA. Of course, the decision to use monitors must also include consideration of how the monitorship is administered and the standards by which monitors are expected to do their work. And the selection of monitors will continue to be accomplished in a fashion that eliminates even the perception of favoritism. The department will study how we select corporate monitors, including whether to standardize our selection process across the divisions and offices.”
Monaco went on to explain several reasons for need for the increased use of monitorships.  The first is in the area of recidivist offenders. However, this is beyond simply recidivist FCPA offenders and ties into another part of the Monaco speech. It deals with the DOJ taking into account the full panoply of corporate misconduct which might lead to tax investigations, import control enforcement actions or any anti-trust concerns to resolve any FCPA enforcement action. It all seems to me to be around the issue of trust. Monaco stated, “Stepping back, any resolution with a company involves a significant amount of trust on the part of the government. Trust that a corporation will commit itself to improvement, change its corporate culture, and self-police its activities. But where the basis for that trust is limited or called into question, we have other options. Independent monitors have long been a tool to encourage and verify compliance.” If the DOJ cannot trust you to follow the law in some areas, it may not trust you to fulfill your compliance obligations under a FCPA resolution.
Earlier in her speech Monaco talked at length on the importance of corporate culture. She noted, “But corporate culture matters. A corporate culture that fails to hold individuals accountable, or fails to invest in compliance — or worse, that thumbs its nose at compliance — leads to bad results. Let me also be clear: a company can fulfill its fiduciary duty to shareholders and maintain a commitment to compliance and lawfulness. In fact, companies serve their shareholders when they proactively put in place compliance functions and spend resources anticipating problems. They do so both by avoiding regulatory actions in the first place and receiving credit from the government. Conversely, we will ensure the absence of such programs inevitably proves a costly omission for companies who end up the focus of department investigations.”
When taken as a whole, Monaco’s speech says that once again, the DOJ wants companies to be good corporate citizens. Moreover, it all starts with culture and flows from there. If a company puts making a quarterly number above all else, that becomes the corporate culture and employees will do whatever is necessary to accomplish this goal. Conversely, if the values of the company are to do business ethically and in compliance, that will be taken into account. This ups the ante for corporations which find themselves in an FCPA investigation or enforcement action.
Join us tomorrow when we consider Monaco’s remarks on corporate culture.