In a rather dramatic turn, the United States Department of
Justice ("DOJ") recently released a new memorandum outlining policies instructing
prosecutors to focus their efforts to secure evidence against
individuals, as opposed to their corporate employers responsible
for corporate wrongdoing. The memo comes in the face of criticism from a
number of quarters that focusing enforcement against large
corporations with deep pockets does little in terms of general
deterrence in the marketplace, sending a clear signal that in
conducting corporate investigations the DOJ is willing to pursue
charges against both individual and corporate defendants, and
emphasizing to leaders and corporate decision makers that
wrongdoers will held accountable.
Six Steps To Pursue Individuals Engaged In Corporate
The memorandum, which also sets out broader policies for federal
prosecutors and enforcement attorneys to follow, establishes six
To be eligible for any
cooperation credit, corporations must provide to the Department all
relevant facts about the individuals involved in corporate
misconduct – Eligibility for any cooperation credit
requires the company to identify all individuals involved in or
responsible for the misconduct under investigation.
Both criminal and civil
investigations should focus on individuals from the inception of
the investigation – The focus on individuals is
intended to uncover corporate misconduct, obtain information
against more senior individuals, and increase the likelihood of
charges being laid not only against the corporation but also
Criminal and civil attorneys
handling corporate investigations should be in routine
communication with one another – Increased
cooperation intended to allow the DOJ to more fully consider an
array of potential remedies to promote the most appropriate
resolution in each case.
circumstances, no corporate resolution will provide protection from
criminal or civil liability for any individuals –
The DOJ when settling matters with a corporate defendant will
preserve its ability to hold accountable culpable individuals
through potential criminal and civil actions.
Corporate cases should not be
resolved without a clear plan to resolve related individual cases
before the statute of limitations expires and declinations as to
individuals in such cases must be memorialized –
Individual investigations that have not concluded before the
resolution of the corporate case will now be subject to an
Civil attorneys should
consistently focus on individuals as well as the company and
evaluate whether to bring suit against an individual based on
considerations beyond that individual's ability to pay
– Whether a culpable individual has the ability to pay has
been explicitly rejected by the DOJ as a grounds for not pursuing
Implications for Canadian Corporations Operating In The United
The memorandum reflects an increasing trend toward enforcement
activities against individuals in an effort to curtail illicit
The new guidelines also impose a significant burden on the
corporate side, particularly in essentially requiring companies to
provide information on individual wrongdoing in order to
"cooperate" with regulators, and precluding corporate
resolutions from providing protection for individuals. While
corporations should always be live to the fact that their interests
may not always align with those of individual executives in any
regulatory activity, the new guidelines deepen the divide by
creating certain scenarios where, in order to protect their own
interests, companies are essentially forced to provide information
on the wrongdoing of their employees.
In light of this, companies are reminded that affected employees
may need to retain independent legal counsel at the outset of a
relevant investigation if individual wrongdoing could be alleged.
Investigations should be undertaken independent of implicated
personnel in order to ensure that parties with adverse interests
are not directly participating, and to the degree that information
is shared between counsel, companies should ensure this is done
under a common interest agreement so as to maintain privilege.
Companies should ensure to undertake thorough internal
investigations into allegations of wrongdoing to ensure they have
as much information as the authorities who are pursuing them or
their employees. While it is unclear at this point what is
necessary to satisfy the "all relevant facts" threshold
to be eligible for any cooperation credit, the guidelines arguably
impose an increased burden on companies to fully and independently
investigate potential enforcement issues.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Canadian engineering and construction giant SNC-Lavalin has been charged by the RCMP with paying bribes of nearly $48 million to Libyan government officials and defrauding Libya of nearly $130 million.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).