Category Archives: Corporate Criminal Liability and Enforcement

Assistant Attorney General Makan Delrahim Delivers Remarks at the New York University School of Law Program on Corporate Compliance and Enforcement

Wind of Change*: A New Model for Incentivizing Antitrust Compliance Programs

Makan Delrahim
Assistant Attorney General
Antitrust Division
U.S. Department of Justice

Remarks as Prepared for Delivery at New York University School of Law Program on Corporate Compliance and Enforcement (July 11, 2019)

I.     Introduction

Thank you, Professor First for your kind introduction and for inviting me back to this great institution.  Let me also thank Professor Jennifer Arlen and Executive Director Allison Caffarone, along with everyone involved in the Program on Corporate Compliance and Enforcement (PCCE), for organizing this event.  You should be proud of the incredible enduring program you have developed exploring the causes of corporate misconduct and the nature of effective enforcement and compliance.

It is great to be back at NYU Law School and to be joined by many colleagues from across the Department of Justice and other government officials, scholars, and leaders in the antitrust bar and the world of corporate compliance.  Continue reading

Arbitration Now Requires Knowledge of Criminal Law Principles

By Stéphane Bonifassi

Bring arbitrators and criminal-law experts in a room together these days and watch a debate about applicable laws unfold.

Arbitrators naturally tend to focus on the contract, the dispute at hand and the laws governing both.  Criminal lawyers, like me, think it’s important for arbitrators to consider other laws, especially criminal laws, to ensure the enforceability of arbitral awards and to ensure that no one is held criminally liable for one reason or the other, including the arbitrators themselves. I experienced this paradigm-shifting debate firsthand working on a project initiated by Professor Mark Pieth of the Basel Institute on Governance.

Pieth, who rightly recognized the differing position between arbitrators and financial crime litigators two years ago, invited representatives from academia, arbitration, and financial crime litigation to help him put together a toolkit for arbitrators that will guide them through the increased scrutiny that surrounds companies entering into contracts with arbitration clauses. His academic assistant and author of “Proving Bribery, Fraud and Money Laundering in International Arbitration” Kathrin Betz helped Pieth synthesize our discussions and viewpoints to develop “Corruption and Money Laundering in International Arbitration – A Toolkit for Arbitrators,” published May 30. Continue reading

The Financial Action Task Force Evaluation of Russia: An Opportunity

By Joshua Kirschenbaum and Jennifer DeNardis

Introduction     

Russia in recent years has been the most conspicuous source of illicit flows into European banks and the Western financial system. The Russian government weaponizes these opaque channels to export corruption, facilitate influence operations, and prop up the domestic patronage system. Despite a money laundering crackdown by the Central Bank of Russia (CBR), the country’s main financial supervisor, recent history poses serious questions about the effectiveness of the central bank, law enforcement agencies, and prosecutors in combating illicit financial activity.

The Financial Action Task Force (FATF) sets international anti-money laundering (AML) standards (PDF 6.37 MB)  and evaluates its member states for compliance. It was created in 1989 and is housed at the Organization for Economic Co-operation and Development.  Russia joined in 2003. FATF last evaluated Russia over a decade ago under the old “technical compliance” review process, which largely focused on the country’s legal framework. FATF now evaluates (PDF 1.51 MB) jurisdictions on the basis of the effectiveness of their AML regimes. The new method focuses on enforcement and outcomes. That makes this year’s FATF evaluation of Russia a unique opportunity to protect democratic countries from corrosive financial flows.

Should FATF conclude that Russia falls short, it could “greylist” the jurisdiction, which would have immediate reputational effects. It could ultimately lead to a process by which other FATF members, would require their financial institutions to take special steps in dealing with Russian banks. This would raise the cost of international business and banking in Russia. Such a decision against an FATF member state would be unprecedented but not necessarily unjustified. Continue reading

The Slow Introduction of Pre-Trial Diversion Mechanisms in the Italian System of Corporate Liability

by Simone Lonati

The Common Law-inspired decision to enlist corporations as precious, proactive allies in the essential activities of detection and combat of crime, and particularly of bribery, has often been looked at with the typical skepticism of civil law systems, which – a long way from accepting the idea of equal cooperation in the fact-finding mission – require a neat distinction of roles in proceedings. Nonetheless, it is by now undeniable that the perception of corporate compliance in the Italian legal system has undergone a significant transformation in recent years.

The structure of Legislative Decree n. 231/2001, which established for the first time in the Italian legal system an administrative liability of legal persons and entities without legal personality for the crimes committed by employees and executives, outlines a correction model that views the conduct held by the accused legal entity during an investigation and the related criminal proceedings as one of the cornerstones triggering the virtuous path towards compliance monitoring, which should bring the entity back on the tracks of profitable compliance. Continue reading

Scapegoating: A Structural Risk in Current U.S. Cross-Border Corporate Crime Enforcement

by Laurent Cohen-Tanugi

The interaction of corporate and individual liability in cases of corporate misconduct raises complex issues for prosecutors, management, and employees alike. Such issues, however, are generally discussed in connection with situations where corporate wrongdoing can be attributed to one or more individuals. Yet those “rogue employee” situations are neither the most difficult ones to address, nor the most frequent to arise.

More common, as evidenced by the numerous DPAs acknowledging wrongdoing entered into by corporate entities, and more problematic from a fairness standpoint, are situations where wrongdoing is instructed more or less overtly by senior management, and/or imbedded in a company’s business model and corporate culture, and implemented by lower level executives as part of their duties. The fairness issue stems from the pressure on both prosecutors and the company’s senior management to identify sanctionable individuals who may not be those ultimately responsible. And this problem is compounded in cross-border enforcement situations. Continue reading

DOJ Updates Guidance on Evaluating Corporate Compliance Programs

by Matthew L. Biben, Kara Brockmeyer, Helen V. Cantwell, Andrew J. Ceresney, Andrew M. Levine, David A. O’Neil, David Sarratt, Jonathan R. Tuttle, Mary Jo White, Bruce E. Yannett, Lisa Zornberg, Ryan M. Kusmin, Jil Simon

On April 30, 2019, Assistant Attorney General Brian Benczkowski announced an updated version of the Evaluation of Corporate Compliance Programs (the “Updated Guidance”).[1] This Updated Guidance supersedes a document of the same name that the Fraud Section of DOJ’s Criminal Division published online in February 2017 without any formal announcement (the “2017 Guidance”). Although not breaking much new ground, we believe the Updated Guidance can serve as a valuable resource for those grappling with how best to design, implement, and monitor an effective corporate compliance program.

In contrast to the 2017 Guidance—which listed dozens of questions to consider in evaluating a compliance program without providing much context—the Updated Guidance employs a more holistic approach. It focuses on three fundamental questions drawn from the Justice Manual:

  • Is the corporation’s compliance program well designed?
  • Is the program implemented effectively?
  • Does the program work in practice?[2]

Continue reading

How are non-trial enforcement mechanisms facilitating the resolution of foreign bribery cases?

by Sandrine Hannedouche-Leric, Elisabeth Danon, and Brooks Hickman

A new Study on Resolving Foreign Bribery Cases with Non-Trial Resolutions builds a typology of non-trial resolutions available to the Parties to the OECD Anti-Bribery Convention and takes stock of how these resolutions have been used to resolve foreign bribery cases in recent years.

The Study focuses on key legal, procedural and institutional challenges attached to the use of non-trial resolutions to conclude foreign bribery cases. It provides data demonstrating a clear trend to resolve these cases outside the court room. In particular, it shows that nearly 80% of foreign bribery cases concluded since the OECD Anti-Bribery Convention entered into force 20 years ago have been resolved with a non-trial enforcement vehicle. Relying on data and case examples, it analyses how these instruments have driven the enforcement of foreign bribery laws. In some countries, non-trial resolutions have provided the exclusive means for sanctioning legal persons, while other countries have used non-trial resolutions to impose sanctions in their first-ever foreign bribery resolutions. Continue reading

DOJ Updates FCPA Corporate Enforcement Policy

By Jonathan S. Kolodner, Lisa Vicens, and Lorena Michelen

In a recent speech at the annual ABA White Collar Crime Conference in New Orleans, Assistant Attorney General Brian Benczkowski of the Criminal Division of the Department of Justice (“DOJ”) announced certain changes to the FCPA Corporate Enforcement Policy (“the Enforcement Policy” or “Policy”) to address issues that the DOJ had identified since its implementation.[1]  These and other recent updates have since been codified in a revised Enforcement Policy in the Justice Manual.[2] 

The Enforcement Policy, first announced by the DOJ in November 2017, was initially applicable only to violations of the FCPA, but was subsequently extended to all white collar matters handled by the Criminal Division.[3]  The Policy was designed to encourage companies to voluntary self-disclose misconduct by providing more transparency as to the credit a company could receive for self-reporting and fully cooperating with the DOJ.  Among other things, the Enforcement Policy provides a presumption that the DOJ will decline to prosecute companies that meet the DOJ’s requirement of “voluntary self-disclosure,” “full cooperation,” and “timely and appropriate remediation,” absent “aggravating circumstances” – i.e. relating to the seriousness or frequency of the violation.  For more information on the Enforcement Policy, read our blog post explaining it

The most significant recent changes to the Enforcement Policy include eliminating the prohibition on a company’s usage of ephemeral instant messaging applications to receive full credit for “timely and appropriate remediation.”  Additionally, the modified Enforcement Policy (1) now makes clear that one requirement of cooperation, de-confliction of witness interviews, should not interfere with a company’s internal investigation; (2) confirms based on an earlier announcement, that the Policy applies in the context of a merger and acquisition (“M&A”), if an acquiring company discovers and self-discloses misconduct in a target; and (3) implements a change announced months before by the Deputy Attorney General that a company only needed to provide information about individuals “substantially involved” in the offense.  These changes are discussed in greater detail below. Continue reading

In Precedent-Setting Case, Two Senior Corporate Executives Indicted for Failure to Report Under the Consumer Product Safety Act

by Jonathan J. Rusch

On March 29, the U.S. Department of Justice announced that on March 28, a federal grand jury in the Central District of California indicted two senior corporate executives with two corporations on multiple counts for their roles in a scheme involving defective and dangerous dehumidifiers made in China.  Simon Chu and Charley Loh, who served respectively as part owners, chief administrative officer, and chief executive officer of the same two corporations in California, were charged with (1) conspiracy (a) to commit wire fraud, (b) to fail to furnish information under the Consumer Product Safety Act (CPSA), and (c) to defraud the U.S. Consumer Product Safety Commission (CPSC); (2) wire fraud; and (3) failure to furnish information under the CPSA.  The Department indicated this was the first time that any individual had been criminally charged for failure to report under the CPSA. Continue reading

The Enforcement of Financial Market Crimes: A Comparative Case Study of Canada and the United Kingdom

by Anita Indira Anand

Strong enforcement of the law governing financial markets improves investment, reduces information asymmetries among corporations and investors, and prevents adverse selection. It has proven to be a deterrent, signaling to potential wrongdoers that criminal activity has serious consequences. It can also provide victims of crime with compensation for their losses. Despite these benefits, developed market economies struggle to develop comprehensive systems which allow for the successful prosecution of financial crimes. Indeed, the law of financial market crime is perhaps the most poorly-enforced branch of criminal law.

While there is no universally-accepted definition of “financial market crime,” the term typically refers to “any non-violent crime that generally results in a financial loss.”[1] In my comparative analysis of the enforcement of financial market crimes in Canada and the United Kingdom (UK), I argue that financial market crimes have low enforcement rates for a multiplicity of reasons common to both jurisdictions. To begin, financial market crimes have historically been relatively low priority for law enforcement officials who are required to devote increasing resources to violent crimes. In addition, and perhaps relatedly, law enforcement infrastructure lacks financial resources, which undermines the investigation and prosecution of financial market crime and fraud cases. Furthermore, technology, especially the prevalence of social media, has allowed new types of fraud to develop, with insufficient tools and financial resources to deal with them. Finally, past treatment of financial market criminals as pillars of the community who have merely had a fall from grace has weakened public perceptions of the harm caused by these crimes.

In both the UK and Canada, there is a lack of coordination among enforcement agencies when these crimes are investigated and prosecuted. While market regulation is more centralized in the UK, both countries rely on multiple agencies – and require those agencies to work together for the system to properly function. Theoretically, this integrated approach to financial market crime enforcement should work. Yet, in both countries, problems have arisen as regulators struggle to determine which agency (or agencies) should be responsible for tackling a specific financial crime, and handle issues of information sharing between national and local law enforcement teams. This lack of proper coordination has hampered officials in both countries as they attempt to prosecute and prevent financial market crime. In light of these issues, I propose three main reforms. Continue reading