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January 20, 2023

Revisions to the DOJ’s Corporate Enforcement Policy Further Incentivize Self-Reporting and Cooperation


On Tuesday, Assistant Attorney General Kenneth A. Polite, Jr., of the DOJ’s Criminal Division, delivered remarks concerning new revisions to the Criminal Division’s Corporate Enforcement Policy (CEP). AAG Polite delivered the remarks in person at Georgetown University Law Center, his alma mater. During the announcement, he noted the presence of current and former colleagues in the room and pointedly directed his remarks at the defense and corporate counsel, who were the target audience for the DOJ’s push for cooperation. His remarks emphasized that the Criminal Division “could never completely identify and address this area of criminality without corporations . . . coming forward and reporting the conduct of . . . wrongdoers.”

The Corporate Enforcement Policy

The DOJ’s CEP contains a presumption that when a company voluntarily discloses misconduct, fully cooperates with an investigation, and timely and appropriately remediates its actions, the Criminal Division will decline prosecution in the absence of aggravating circumstances. Such aggravating circumstances “include, but are not limited to, involvement by executive management of the company in the misconduct; a significant profit to the company from the wrongdoing; egregiousness or pervasiveness of the misconduct within the company; or criminal recidivism.”

In announcing “the first significant changes to the Criminal Division’s CEP since 2017,” AAG Polite outlined several revisions, noting that the changes will “incentivize[] even more robust compliance on the front-end . . . and require[] even more robust cooperation and remediation on the back-end.”

According to AAG Polite, the previous CEP may have dissuaded companies and their outside counsel from self-disclosing misconduct for fear that aggravating factors would preclude their earning a declination. While aggravating circumstances will still preclude a company from qualifying for the presumption of a declination under the new CEP, the revised policy permits declination in the face of aggravating circumstances if a company can show that it has met the following conditions:

  • Immediate and voluntary self-disclosure: Immediately upon becoming aware of the allegation of misconduct, the company must alert the relevant law enforcement authorities;
  • Maintenance of an effective compliance program: At the time of the misconduct and the disclosure, the company must have maintained an effective compliance program and system of internal accounting controls that enabled the identification of the misconduct and led to the voluntary self-disclosure; and
  • Extraordinary cooperation and remediation: The company must have provided extraordinary cooperation with the DOJ’s investigation and undertaken extraordinary remediation.

Criminal Resolutions Following Voluntary Self-Disclosure, Cooperation, and Mediation

The AAG acknowledged that even when a company “self-discloses misconduct, fully cooperates, and timely and appropriately remediates,” the company’s behavior may still warrant a criminal resolution. Under the revised CEP, in such a situation, the DOJ will generally:

  • [A]ccord, or recommend to a sentencing court, at least 50%, and up to 75%, off of the low end of the US Sentencing Guidelines fine range[—]a significant increase from the previous potential maximum reduction of 50% off the Guidelines range; and
  • [Abstain from requiring] a corporate guilty plea—including for criminal recidivists—absent multiple or particularly egregious aggravating circumstances.

Corporate Cooperation in the Absence of Voluntary Self-Disclosure

While the AAG underscored the importance the policy places on self-disclosure, he noted that the new changes “provide[] incentives for companies that do not voluntarily self-disclose but still fully cooperate and timely and appropriately remediate.” Indeed, in these instances, the Criminal Division will now generally “recommend up to a 50% reduction off of the low end of the Guidelines fine range[—]twice the maximum amount of a reduction available under the prior version of the CEP.” Though criminal recidivists are unlikely to receive a reduction off of the low end of the range, the revised CEP will allow prosecutors to decide on the starting point in the range and the specific percentage based on the particularities of each case.

Despite such allowances, however, AAG Polite emphasized that corporations “start[] at zero cooperation credit and must earn credit based on the parameters and factors outlined in the CEP.” He also stated that “[a] reduction of 50% will not be the new norm.” Instead, “it will be reserved for companies that truly distinguish themselves and demonstrate extraordinary cooperation and remediation.”

Differentiating Between “Full” and “Extraordinary” Cooperation

Recognizing that the “differences between ‘full’ and ‘extraordinary’ cooperation are perhaps more in degree than kind,” the AAG mentioned that factors that may result in the showing of extraordinary cooperation include “immediacy, consistency, degree, and impact.” He also noted that “[t]o receive credit for extraordinary cooperation, companies must go above and beyond the criteria for full cooperation set in our policies—not just run of the mill, or even gold-standard cooperation, but truly extraordinary [cooperation].”

AAG Polite made a point to note, however, that “the government will not affirmatively direct a company’s internal investigation.” Rather, the AAG emphasized that companies are in the best position to determine how to maximize the value of their cooperation. The DOJ’s interactions with company counsel during that company’s internal investigation has been an area of focus for defense counsel and some courts. See Jonathan E. Green, The Uncertain Future of Gov’t Investigations Post-Deutsche, Arnold & Porter (June 3, 2019), available here.

Contextualizing the New Revisions

In his remarks, AAG Polite repeatedly stated that the absence of the mitigating behavior prescribed by the CEP will lead to harsher criminal resolutions. DOJ will not apply a presumption of declination where aggravating factors are present or where the company fails to meet the disclosure, cooperation, and remediation criteria set forth in the CEP. Rather, companies must “earn” declination by following the Criminal Division’s policy. “The revisions,” the AAG explained, “make clear that there will be very different outcomes for companies that do not self-disclose, meaningfully cooperate with our investigations, or remediate”—an approach that dovetails with the DOJ’s determination to identify and prosecute the individuals who are responsible for wrongdoing in addition to ensuring that corporate entities are held accountable.

Undergirding the AAG’s remarks is a significant message about the importance of collaboration between corporations and the DOJ’s Criminal Division. This strategy is unsurprising as the DOJ relies on corporate cooperation to prosecute complex cases, particularly those involving transnational crime. Indeed, near the close of his remarks, the AAG stated plainly “[w]e need corporations to be our allies.” The point is especially salient given AAG Polite’s own background as a corporate compliance officer and former US Attorney.

While companies facing investigation may take some comfort from the new CEP, the changes are more appropriately characterized as “tweaks” to existing policy, rather than a radical departure from previous guidance. Accordingly, the companies that should fear indictment are still mainly those that are obstinate and refuse to cooperate in—or even obstruct—a criminal investigation or those that reward employees, officers, or directors who refuse to cooperate. The message of the AAG’s remarks is crystal clear: if there is a problem, report it promptly and address it thoroughly. Whether this policy change will play out as intended to increase the number of voluntary self-disclosures is yet to be seen.

* Tamuz Avivi contributed to this Advisory. Ms. Avivi is a graduate of Columbia University School of Law and is employed at Arnold & Porter's New York, NY office. Ms. Avivi is not admitted to the practice of law in New York.

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.