Study: CCOs Put DOJ Guidance to Use

A study released this week finds that most chief compliance officers are aware of, and appreciate, the guidance on effective corporate compliance programs that the Justice Department has churned out in recent years — although CCOs would like more examples from the department of decisions not to prosecute a company based on its compliance efforts. 

The study comes from the Ethics and Compliance Initiative, which surveyed nearly 250 chief compliance officers earlier this fall to ask their opinion about the guidance. CCOs were most familiar with the Justice Department’s guidelines for evaluating the effectiveness of compliance programs, last updated in 2020; and least familiar with similar guidance for compliance with the False Claims Act. 

Most compliance officers also found the Justice Department guidance helpful, too. For example, 76 percent of respondents said they used the guidance on evaluating corporate compliance programs to revamp their own programs; and 90 percent said they used the material to explain the importance of corporate compliance programs to their board, employees, and other stakeholders in the enterprise.

On the other hand, 63 percent said they weren’t sure that the Justice Department really is declining to prosecute corporations or giving cooperation credit in accordance with the department’s guidance. And without that certainty, respondents said, companies still hesitate to self-disclose corporate misconduct — even though voluntary self-disclosure is perhaps the most important point that the Justice Department emphasizes.

“It’s clear from the study that the Department of Justice has a significant impact on corporate compliance practices,” Patricia Harned, ECI’s chief executive officer, said in a statement. “Respondents overwhelmingly agree that reforms demonstrative of a cooperative approach rather than a punitive approach by the DOJ would incentivize improved corporate compliance in organizations.”

The ECI plans to host a webinar at 2 p.m. ET on Wednesday to discuss its findings, and the value of Justice Department compliance guidance generally. 

Guidance vs. Guidance

The ECI asked compliance officers what they thought of four specific pieces of Justice Department guidance:

• Its guidelines to evaluate the effectiveness of corporate compliance programs, last updated in June 2020; 
• Guidelines for taking disclosure, cooperation, and remediation into account for False Claims Act matters, released in 2019;
• The FCPA Resource Guide, most recently updated in July 2020;
• Guidance to evaluate corporate compliance programs in criminal antitrust matters, issued in 2019.

So how familiar were compliance officers with each piece of guidance? Figure 1, below, tells the tale.

 

 

Those numbers, however, really just tell us how often you read Radical Compliance or the legal bulletins that outside counsel sends you via email. More interesting are the numbers on how useful those pieces of guidance are. Across the board, compliance officers found all pieces of guidance helpful. See Figure 2. 

 

 

Moreover, a solid majority of compliance officers revised their programs to align them with major themes in the guidance. Exactly what changes did CCOs make? Figure 3, below, shows the changes that CCOs typically made based on the Justice Department guidelines for evaluating corporate compliance programs.

 

 

One interesting point is that “more access to data” is not among the answers here. Maybe it’s bundled into the item about monitoring, auditing, and testing; maybe it’s included in risk assessment procedures — or maybe compliance officers aren’t getting more expansive access to data. That would be troubling, since the department has said multiple times that greater access to data is crucial for compliance officers to adjust their programs to changing risks. 

Regardless, this data shows that compliance officers do value the guidance and other statements the Justice Department publishes, and that compliance officers take the advice to heart. So here’s hoping that the department continues its outreach.

Speaking of Outreach…

The bad news is that a majority of compliance officers remain skeptical that the Justice Department will respond favorably, with declinations and lower monetary penalties, to corporate offenders trying to live up to the spirit of the guidance. Compliance officers want to see specific examples of those benefits. 

For example, 57 percent of respondents say they’re unsure whether prosecutors really decline prosecutions or negotiate plea agreements based on the criteria in the guidelines to evaluate compliance programs. Fifty-three percent say the same for the FCPA Resource Guide, and 70 percent say it for the False Claims Act guidance. (This, despite the Justice Department now publishing declination decisions and routinely explaining the calculations in monetary penalties for FCPA settlements.)

So what could the Justice Department do to win over the skeptics? The ECI had a few recommendations:

• Be consistent in content and application of guidance and policies across different governmental regulatory agencies; 
• Provide illustrative specifics; for example, best practices and metrics to help measure success; 
• Provide evidence of the department’s efforts that recognize and accommodate organizations’ unique characteristics and conditions when making enforcement determinations.

I don’t know whether the department will embrace any of those ideas, but here’s hoping that deputy attorney general Lisa Monaco reads this post and the ECI report, and gives the suggestions some thought.