US DOJ Revises Export Control and Sanctions Enforcement Policy

/ Global Compliance Solutions Group LLC/

On December 13, 2019 the US Department of Justice (“DOJ”) re-issued a revised Voluntary Self-Disclosure Policy(1) (“VSD Policy”) for export control and sanctions violations. The revised VSD Policy is effective December 13, 2019 and it supersedes prior guidance issued by the US DOJ’s National Security Division in October 2016. The updated VSD Policy will be incorporated into the Justice Manual(2). Three changes from the prior guidance include(3):

  • Provides more clarity on the benefits available to companies that voluntarily self-disclose violations, fully cooperate with the DOJ, and timely and properly re-mediate the issues;

  • Clarifies that disclosures of willful conduct to regulatory agencies and not to DOJ will not qualify for the benefits provided under the VSD Policy; and

  • The definitions(1) of “Voluntary Self-Disclosure”, “Full Cooperation”, and “Timely and Appropriate Remediation” were modified to more closely align with the Departments FCPA Corporate Enforcement Policy.

References

  1. US DOJ - “Export Control and Sanctions Enforcement Policy for Business Organizations” - December 13, 2019

  2. US DOJ - “Justice Manual”

  3. US DOJ Press Release - “Department of Justice Revises and Re-Issues Export Control and Sanctions Enforcement Policy for Business Organizations” - December 13, 2019

US DOJ Antitrust Division Announces New Policy to Incentivize Compliance

/ Global Compliance Solutions Group LLC/

On Thursday, July 11 the US Department of Justice - Antitrust Division(1) announced(2) a new policy that will incentivize companies to implement antitrust compliance programs. The new policy allows prosecutors to consider compliance during the charging and sentencing stage in a criminal antitrust investigation.

The Justice Manual(3) previously stated that “credit should not be given at the charging stage for a (antitrust) compliance program.” The Division has now revised it’s manual and published a guidance document(4) that outlines what prosecutors should look for when they evaluate antitrust compliance programs.

Guidance Document Summary

  • The guidance document focuses on “the evaluation of compliance programs in the context of criminal violations of the Sherman Act such as price fixing, bid rigging, and market allocation”.(4)

  • The guidance was developed based on the Antitrust Division’s own experience and expertise, other resources within the DOJ, the Criminal Division’s guidance on Corporate Compliance Programs(5), and the US Sentencing Guidelines(6) evaluation of effective compliance programs (U.S.S.G. § 8B2.1).

  • The guidance document states that “a truly effective antitrust compliance program gives a company the best chance to obtain the significant benefits available under the Division’s Corporate Leniency program(7).”(4)

  • The evaluation of a company’s compliance program is only one of many other important factors that are considered during charging and sentencing. When prosecutors decide whether to bring criminal charges they must consider the Principles of Federal Prosecution and the Principles of Federal Prosecution of Business Organizations(8).

  • Division prosecutors recognize that the size of the company affects the resources that can be allocated to antitrust compliance and the extent of their antitrust compliance program.

Key Questions

There are three overarching questions prosecutors will ask themselves, when evaluating the effectiveness of a compliance program, at the time of an offense and at the time of a charging decision(4,8):

  • Is the program well designed?

  • Is the program effectively implemented (or applied earnestly and in good faith)?

  • Does the compliance program actually work in practice?

Preliminary questions that a prosecutor will ask when evaluating the effectiveness of a corporations antitrust compliance program include:

  • Does the company’s compliance program address and prohibit criminal antitrust violations?

  • Did the antitrust compliance program detect and facilitate prompt reporting of the violation?

  • To what extent was a company’s senior management involved in the violation?

Elements of an Effective Compliance Program

Factors that prosecutors should consider when evaluating the effectiveness of an antitrust compliance program include (click here to access the guidance document to read all questions evaluated for each factor listed below):

  • The design and comprehensiveness of the program

    • The Justice Manual requires prosecutors to evaluate whether or not a compliance program is a paper program or one that has been effectively implemented.

  • The culture of compliance within the company

  • Responsibility for, and resources dedicated to, antitrust compliance

    • Are there compliance personnel dedicated to compliance responsibilities?

  • Antitrust risk assessment techniques

    • What information or metrics has the company collected and used to help detect antitrust violations?

  • Compliance training and communication to employees

    • How has the company communicated its antitrust policies and procedures to all employees?

    • Are antitrust policies and procedures included in the company’s Code of Conduct?

  • Monitoring and auditing techniques, including continued review, evaluation, and revision of the compliance program

    • “An effective compliance program includes monitoring and auditing functions to ensure that employees follow the compliance program.”(4)

    • What monitoring or auditing mechanisms does the company have in place to detect antitrust violations?

  • Reporting mechanisms

    • Is there a publicized system in place whereby employees may report or seek guidance about potentially illegal conduct?

  • Compliance incentives and discipline

    • “Also relevant to an antitrust compliance program’s effectiveness are the systems of incentives and discipline that ensure the compliance program is well-integrated into the company’s operations and workforce.”(4)

  • Remediation methods

    • “Early detection and self-policing are hallmarks of an effective compliance program and frequently will enable a company to be the first applicant for leniency under the Division’s Corporate Leniency Policy.”(4)

Contact us to learn more about the Antitrust Divisions guidance and to find out how GCSG’s Advisory and Audit teams can guide and partner with you to reduce your antitrust compliance risk and help to protect your company’s bottom line and reputation.

References

New DOJ Corporate Compliance Program Guidance

/ Global Compliance Solutions Group LLC/

The US Department of Justice - Criminal Division (“USDOJ”) announced(1) on April 30 the release of a new guidance document(2) on the evaluation of corporate compliance programs.

“Effective compliance programs play a critical role in preventing misconduct, facilitating investigations, and informing fair resolutions.”(1) - Assistant Attorney General Brian A. Benczkowski

Part I of the document discusses the elements of a “well-designed” compliance program and Part II discusses the features of what an effectively implemented compliance program looks like.

There are three overarching questions prosecutors will ask themselves, when evaluating the effectiveness of a compliance program, at the time of an offense and at the time of a charging decision(2,3):

  • Is the program well designed?

  • Is the program effectively implemented (or applied earnestly and in good faith)?

  • Does the compliance program actually work in practice?

According to the USDOJ’s guidance, the elements of a “Well-Designed” Compliance Program include:

  • Risk Assessment - “Prosecutors should consider whether the program is appropriately designed to detect the particular types of misconduct most likely to occur in a particular corporation’s line of business” and “the manner in which the company’s compliance program has been tailored based on that risk assessment”

  • Policies and Procedures - “Prosecutors should examine whether the company has a code of conduct that sets forth, among other things, the company’s commitment to full compliance with relevant Federal laws that is accessible and applicable to all company employees” and “whether the company has established policies and procedures that incorporate the culture of compliance into it’s day-to-day operations.”

  • Training and Communications - “Prosecutors should assess the steps taken by the company to ensure that policies and procedures have been integrated into the organization, including through periodic training and certification for all directors, officers, relevant employees, and where appropriate, agents and business partners.”

  • Confidential Reporting Structure and Investigation Process - “Prosecutors should assess whether the company’s complaint-handling process includes pro-active measures to create a workplace atmosphere without fear of retaliation, appropriate processes for the submission of complaints, and processes to protect whistleblowers” and “assess the company’s processes for handling investigations of such complaints…”

  • Third-Party Management - “Prosecutors should also assess whether the company knows its third-party partners’ reputations and relationships, if any, with foreign officials, and the business rationale for needing the third party in the transaction” and “assess whether the company engaged in ongoing monitoring of the third-party relationships"…”

  • M&A Due Diligence - “A well-designed compliance program should include comprehensive due diligence of any acquisition targets.”

“Today’s guidance document is part of our broader efforts in training, hiring, and enforcement to help promote corporate behaviors that benefit the American public and ensure that prosecutors evaluate the effectiveness of compliance in a rigorous and transparent manner.”(1) - Assistant Attorney General Brian A. Benczkowski

DOJ prosecutors are encouraged to review whether or not a compliance program is a “paper program” or one that has actually been “implemented” and is periodically reviewed and revised when appropriate. According to DOJ guidance some elements of an effectively implemented program include:

  • Commitment by Senior and Middle Management

    • Does the company leadership demonstrate high level commitment to implement a culture of compliance?

  • Autonomy and Resources

    • Is the program adequately resourced with sufficient personnel and funding?

    • Are compliance personnel in senior positions and do they have adequate autonomy?

  • Incentives and Disciplinary Measures - “Prosecutors should assess whether the company has clear disciplinary procedures in place, enforces them consistently across the organization, and ensures that the procedures are commensurate with the violations.”

  • Continuous Improvement, Periodic Testing, and Review - “Prosecutors should likewise look to whether a company has taken reasonable steps to ensure that the organization’s compliance and ethics program is followed, including monitoring and auditing to detect criminal conduct.”

  • Investigation of Misconduct

    • Is there a well-functioning and appropriately funded mechanism for the timely and thorough investigation of any allegations or suspicions of misconduct by the company, its employees, or agents?

  • Analysis and Remediation of Any Underlying Misconduct - “Prosecutors should consider any remedial actions taken by the corporation…”

Contact GCSG Advisory and Audit Professionals today for assistance:

  • In developing a Risk Profile for your business;

  • Evaluating the effectiveness of your existing compliance program;

  • Implementing a compliance program;

  • Providing third-party due diligence; and

  • Providing in-depth compliance audits to detect potential wrongdoing.

References

DOJ Launches New FCPA Prosecutorial Guidance Pilot Program

/ Global Compliance Solutions Group LLC/

On April 5, 2016 the Department of Justice (DOJ) Criminal Division announced a new one-year pilot program within the Fraud Section's FCPA Unit.  The pilot program provides guidance to DOJ prosecutors for resolutions in FCPA cases.  The program was designed to assist companies with their decision making process as to whether they should voluntarily self-disclose FCPA violations, cooperate with the Fraud Section, and when appropriate, correct gaps in their controls and compliance programs. 

The program describes what is meant by "voluntary self-disclosure", "full cooperation", and "timely and appropriate remediation".  The guidance states that when a company cooperates, remediates, and voluntarily self-discloses violations, it will be eligible for the full range of mitigation credit.  In the event a criminal resolution is warranted, a company may be granted a reduction of up to 50 percent below the low end of the applicable U.S. Sentencing Guidelines range.  In addition the company would generally not require the appointment of a monitor.

What are the reader's thoughts on the value of this pilot program?   

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