While the DOJ’s June 1, 2020 Corporate Compliance Program Guidance, is aimed at prosecutors, it is a source of practical advice for internal legal and compliance teams to help structure their programs. In order to ensure that a company’s compliance efforts meet the prosecution’s expectations and put it in the best position to reach positive decisions, a compliance committee should be established with the power to adapt policies and procedures to the specific risks of the company. Equally important is that a compliance committee, which keeps a record of its decision-making (in the form of minutes of meetings or otherwise), provides a company with valuable evidence that will be made available to the DOJ when the company’s compliance function is in the Connection with the resolution of an investigation.
Reduction of corporate debt
The guide instructs prosecutors to evaluate a company’s compliance program in the context of: (1) determining the form of resolution to be pursued (e.g.., Confession of Guilt, Deferred Prosecution Agreement (DPA), Non-Prosecution Agreement (NPA), rejection; (2) imposition of a fine; and (3) determining the compliance obligations to be issued in connection with a dissolution. (For more information on the guidelines, see our June 15, 2020 Customer Alert, “Key Takeaways from Updated DOJ Corporate Compliance Evaluation Guidance.”) Each happens as soon as the DOJ determines that a person in the company has violated a criminal law . At this point, the DOJ takes the position that it is able to blame the company for every person who committed the crime.
The DOJ’s analysis of a compliance program can be viewed as an analysis of whether the company has committed itself to ensuring compliance with the law in such a way that its guilt should be segregated from that of the individual malefactor. This could help the company get better results on resolutions with the DOJ – including a DPA, NPA, or, if the company has identified and resolved the wrongdoing, even a denial of law enforcement. If the DOJ sees the compliance program as strong, the fines can also be reduced and the company saved the cost of a monitor.
Companies wishing to bring their compliance programs in line with the guidelines should urgently consider setting up a compliance committee that meets regularly to review the institution’s compliance structure and record relevant decisions and their reasons. The guide makes it clear that setting up and maintaining a compliance program is a factual exercise. Employees within the company are best placed to make decisions about the structure of a program based on the information they have at their disposal, and the establishment of a dedicated committee provides a formal structure for reviewing and improving a program. The work of a compliance committee can also be helpful in an investigation when the DOJ is reviewing whether the compliance program is consistent with the company’s operations.
The guide is divided into three sections that ask the following questions: (1) “Is the company’s compliance program well designed?” (2) “Is the company’s compliance program adequately equipped and empowered to function effectively?” and (3) “Is the company’s compliance program working in practice?” Any of these questions could be effectively addressed by a compliance committee.
The work of a compliance committee can also be helpful in an investigation when the DOJ is reviewing whether the compliance program is consistent with the company’s operations.
A compliance committee and the company’s risk assessment records it produces will help determine whether a compliance program is well designed, as the guidelines direct prosecutors to consider the company’s risk assessment when making such a decision. A company under review by the DOJ wants evidence that it has performed a risk assessment, but companies do not always document their decision-making processes when setting up compliance programs, and compliance staff changes over time. If a program was developed several years before a solution was sought, the company could struggle to demonstrate to prosecutors that it performed a risk assessment and what that assessment revealed. A committee that takes minutes of meetings and records the decision-making regarding this process would provide the evidence needed to show a prosecutor that risks were identified, considered, and considered in the design and implementation of a company’s compliance program.
A compliance committee can also demonstrate that compliance is well resourced and empowered to function. Here the DOJ will look for evidence that the company’s management supports compliance efforts, that adequate autonomy and resources are in place to pursue them, and that compliance is considered in the creation of incentives and disciplinary measures. The establishment of a committee and its access to management or a board of directors via a reporting plan is evidence that management is committed to compliance. Indeed, companies should strongly consider engaging management on the committee. In addition, a compliance committee that meets regularly can ensure that compliance-related discipline and incentives are applied consistently across a large organization.
Finally, the guideline’s recommendation on whether a compliance program works in practice underscores the value of a compliance committee. It states that “[o]One of the hallmarks of an effective compliance program is its ability to improve and develop. ”The guidelines direct prosecutors to verify that the program is regularly tested and reviewed. Monitoring the results of regular tests, reviews and improvements would be one of the main tasks of the committee. His log would be strong evidence that this function is being performed.
A company can provide convincing evidence to prosecutors that it is sufficiently committed to compliance by having a dedicated committee that oversees tailored compliance efforts and manages relevant documentation. This can position the company for a cheaper solution – for example, a DPA or NPA, a lower penalty and no monitor, or even a rejection. Perhaps most importantly, a compliance committee and the strong compliance program it can create are useful in preventing wrongdoing in the first place, a shared goal of business and government.