by John Savarese, Randall Jackson, and Michael Holt
Left to right: John Savarese, Randall Jackson, and Michael Holt (Photos courtesy of Wachtell, Lipton, Rosen & Katz)
At the heart of every white-collar deferred prosecution agreement (DPA) is the deferral of filed criminal charges and a promise by DOJ to dismiss those charges at the end of a fixed term if the company has lived up to its remedial and other commitments. Breaches of these agreements are rare. But DOJ’s recent letter advising the U.S. District Court for the Northern District of Texas that Boeing breached its obligations under a January 2021 DPA (entered into with DOJ to resolve criminal charges relating to Boeing’s mishandling of FAA reporting concerning its 737 MAX aircraft following fatal crashes of two of those planes) provides a telling reminder of the critical need for companies to design and carry out an effective and comprehensive plan to abide by all terms established under a DPA.
In a series of speeches and policy pronouncements in the fall of 2021, Deputy Attorney General Lisa Monaco announced that DOJ would more closely monitor corporate compliance with DPA and non-prosecution agreement (NPA) requirements and would take action against those who fail to live up to their promises. As DAG Monaco put it, “DPAs and NPAs are not a free pass, and there will be serious consequences for violating their terms.” The recent DOJ notification of a breach relating to Boeing is the latest instance of this DOJ initiative being put into force. Other examples include DOJ’s determination in March 2022 that Deutsche Bank had violated its 2021 DPA (leading to the extension of the monitorship initially imposed pursuant to that DPA), and DOJ’s requirement in March 2023 that Ericsson, the Swedish telecommunications company, plead guilty after Ericsson breached its 2019 DPA by failing to provide accurate and complete information regarding various schemes to bribe foreign officials in accordance with the DPA’s requirements.
As these examples make clear, achieving full compliance with the terms of a DPA or NPA must be a central corporate objective. This requires engaged oversight by the board of directors, as well as effective implementation by management. The essential ingredients are a thoughtful and comprehensive plan to ensure compliance with DPA/NPA obligations, strong leadership, adequate resources (often including the retention of outside experts), and periodic and probing monitoring to see that compliance remains on track during the term of the agreement. Compliance with these agreements cannot be left on automatic pilot or delegated to low-level personnel. In appropriate cases, successful compliance may require a true culture change and a resetting of the company’s tone at the top and tone on the ground.
John Savarese and Randall Jackson are Partners and Michael Holt is Counsel at Wachtell, Lipton, Rosen & Katz. This post first appeared a client memo for the firm.
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