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The Department of Justice updated guidance for evaluating Corporate Compliance Programs

In April 2019, Assistant Attorney General Brian Benczkowski, of the Criminal Division of the Department of Justice (the “DOJ”), announced the latest update of the evaluating Corporate Compliance Program Guidance for “white-collar” prosecutors.  The update, which complements those made in March, July and October 2018, aims to promote predictability and transparency in connection with this type of cases.  Therefore, the update seeks to clarify the benefits that companies could obtain by applying a robust and effective corporate compliance program.

1. Purpose

The guidance, which was presented as an update of its latest version, aims to reveal the benefits that companies may obtain when effective compliance programs are implemented.  The update guidance is structured around three key questions concerning the design, implementation and function of a compliance program:

1.1. Is the corporation’s compliance program well designed? 

Prosecutors must consider the “comprehensiveness” of the compliance program.  In that order, prosecutors should evaluate whether the program is adequately designed for maximum effectiveness in preventing and detecting malpractices by employees and whether corporate management is enforcing the program.  On the other hand, there must be a clear message ensuring that misconduct is not tolerated and finally, the compliance program must be well integrated into the company´s operation and workforce.

Prosecutors must evaluate the following points within the compliance program: (i) risk assessment; (ii) policies and procedures; (iii) training and communications; (iv) confidential reporting structure and investigation process; (v) third party management; and (vi) M&A matters.

1.2. Is the corporation’s compliance program being implemented effectively?

Prosecutors must assess whether the compliance program implementation is lax or ineffective.  Also, prosecutors should consider the following points to determine whether the compliance program can be considered a “paper program” or one “implemented, reviewed, and revised as appropriate, in an effective manner”: (i) commitment by senior and middle management, (ii) autonomy and resources, and (iii) incentives and disciplinary measures.

1.3. Does the corporation’s compliance program work in practice?

Prosecutors must assess the adequacy and effectiveness of the corporation´s compliance program at the time of the misconduct as well as at the time of a charging decision or resolution.  Prosecutors should consider the following: (i) continuous improvement, periodic testing, and review; (ii) investigation of misconduct; and (iii) analysis and remediation of any underlying misconduct.

Through these questions and the updated guidance itself, prosecutors can determine the appropriate: (i) form of any resolution or prosecution, (ii) monetary penalty, if any, and (iii) compliance obligations contained in any corporate criminal resolution (eg. monitorship or reporting obligations).

Therefore, the updated guidance prepared by the DOJ establishes in its content a range of categories and key questions through which prosecutors can evaluate the factors that companies should have considered in the implementation of their compliance programs.  Among these criteria, the latest updated guidance establishes the need to update compliance programs, specifically, to incorporate the “lessons learned” in the past into the respective compliance programs.  It also includes, as a criterion for prosecutors to evaluate, data-driven decision in order to assess how information or metrics informed the company´s compliance program.

As a consequence, through the inclusion of these two evaluation parameters the DOJ seeks on one hand to make the inclusion of “lessons learned” a criterion for the construction and evaluation of compliance programs structured in companies, and the other hand, to make data-driven decision making a key factor when evaluating how effective a company's compliance program is according to its specific profile.  Thus, the conservation of information, the periodic review and recalibration of compliance programs, and in general, the evaluation of how decisions are made in an informed way and based on the history and profile of the company, are established as important circumstances to be taken into account by prosecutors in their respective evaluation.

2. What’s the message?

All in all, the DOJ sent a clear message to the community informing that the good structuring of corporate compliance programs may have an impact on charging decisions, especially, to the extent of penalties and compliance obligations imposed in any corporate resolution.

On the other hand, in its speech, Benczkowski announced that the implementation of compliance programs is an eligibility precondition to access to the FCPA Corporate Enforcement Policy (the “Policy”).  Under this Policy[1], in order to be able to apply for the program contained therein, which aims to provide reductions on penalties when there has been self-disclosure and cooperation, as well as timely and proper remediation and reparation, the implementation of a compliance program sets out as a key factor to be considered by prosecutors.

In conclusion, the new update comes to complement, specifically through the inclusion of new evaluation criteria by prosecutors, the guidance that has long served the authority to assess the adequacy or inadequacy of compliance programs established by companies.  The updated guidance will help companies in the event of a DOJ investigation and, more importantly, should be taken as an opportunity to improve and review internal compliance programs.

[1] See FCPA Corporate Enforcement Policy Section 3(c).

Authors

Daniel Rodríguez
Daniel Rodríguez, LL.M.
Partner
Bogotá
María Lucía Amador
María Lucía Amador, LL.M.
Associate
Bogotá
Paula Gutiérrez-CMS-Colombia
Paula Andrea Gutiérrez
Associate
Bogotá
Laura Roldán
Laura Roldán
Isabella Quintero
Isabella Quintero
Daniel-Molano-CMS-Colombia
Daniel Molano
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