Corporate investigations and white collar partner Patrick Hovakimian, a former Associate Deputy Attorney General and Director of Counter-Transnational Crime at the U.S. Department of Justice, commented on the Justice Department’s recently announced white collar agenda. The agenda was previewed in a speech by Deputy Attorney General Lisa Monaco, who said that predictions about tough corporate enforcement under the Biden administration may be starting to come to fruition.
In the defense bar, lawyers are mostly waiting to see how prosecutors apply the policy changes, wary of potential unintended consequences.
Hovakimian said the changes announced by Monaco “give some teeth” to the department’s tough rhetoric and show that DOJ is potentially broadening its approach. He noted that the department is considering standardizing its guidelines on appointing independent monitors, something that has traditionally been handled within each division.
“If they're (DOJ) saying both, we're going to look at all types of potential corporate wrongdoing in determining whether a resolution is appropriate and what kind of resolution is appropriate for a corporation, and we're going to increase the use of monitors and potentially standardize how monitors are selected across the department, it really does just start sounding like there's going to be this more holistic, department-wide approach to combating corporate crime,” he said.
One potential sticking point for defense lawyers is whether the Justice Department is removing incentives for companies to cooperate with the government. The department has often used deferred and non-prosecution agreements as a carrot to allow companies to avoid the devastating effects of criminal charges, but to still collect financial penalties and secure admissions of wrongdoing and future commitments from companies to correct behavior that led to misconduct.
Hovakimian said having to identify all potential individuals involved in misconduct may make companies more wary of cooperation, something he said was a “possible unintended side-effect” of the new policy that would be detrimental to the overall enforcement system.
“It's one thing for a company to be proactive and self-disclose for cooperation credit if it can do so in a cabined way where DOJ policy reflects the sentiment that someone has to be ‘substantially’ involved for the company to have to disclose for cooperation credit that a corporate officer or director may be someone for DOJ to look at,” he said. “But it’s possible a company says we're just not going to cooperate at all if DOJ is requiring us, for any credit, to cast the net wider than that.”
Defense attorneys are emphasizing the need for companies to incorporate DOJ’s new policies in their internal investigations, including exploring their own broad range of past violations.
“Even the companies that have the most robust and good compliance regimes, they’re taking a hard look at those, and saying, are there other things that we should look at? Are there ways we can beef up our own internal controls? I think it behooves clients, and a few of them have thought about this, to look at what internal investigations they have ongoing and see if they're broad enough to capture the policy changes that were announced by DOJ,” Hovakimian concluded.