Corporate Enforcement Policy Tweaked Again

The Justice Department is relaxing its approach to corporate criminal enforcement yet again, this time giving companies a bit more breathing room for what counts as “self-disclosure” and “significant profit” — all to further entice companies to step forward and admit legal violations, so that those violations can be resolved more quickly.

Nicole Argentieri, deputy assistant attorney general and head of the Criminal Division, quietly announced the policy shifts on Friday in a post to the Justice Department’s blog. Argentieri also provided a wide-ranging review of the division’s Corporate Enforcement Policy and discussed how several recent cases fit into the Justice Department’s larger objectives for enforcing against corporate crime. Compliance officers and corporate defense lawyers would do well to give her words a close read, so let’s do exactly that.

For starters, the department has expanded its view of what qualifies as voluntary self-disclosure of corporate misconduct, to include companies that at least made a good-faith effort to self-disclose but didn’t precisely meet the criteria outlined in the Corporate Enforcement Policy. In Argentieri’s own words:

Specifically, where a company’s self-disclosure does not meet the definition of “voluntary self-disclosure” as articulated in the CEP, but the company has demonstrated that it acted in good faith to self-report the misconduct — and that it fully cooperated and timely and appropriately remediated — prosecutors will consider the company’s self-disclosure in determining the appropriate resolution, including the appropriate form, the appropriate monetary penalty, and the length of the term of the agreement.

In other words, coming close now only counts in horseshoes, hand grenades, and voluntary self-disclosure under the Corporate Enforcement Program.

To be fair, this policy shift isn’t unwarranted. Argentieri gave the example of Albemarle, which settled a huge FCPA enforcement case in 2023. The company discovered FCPA violations in Vietnam and conducted a thorough internal investigation, but it didn’t disclose its violations to the Justice Department for 16 months — too long to be considered a “prompt” self-disclosure under Justice Department guidelines. So Albemarle was automatically ineligible for a declination to prosecute, even though the company did everything else (full cooperation, extraordinary remediation) right. 

Still, Albemarle’s decision to self-disclose, tardy as it was, “factored heavily” into the department’s decision to award a 45 percent discount off the low end of the possible criminal penalty, Argentieri said. It was the biggest reduction ever given in an FCPA settlement, and near the maximum possible (50 percent) allowed under the Corporate Enforcement Program.

(And don’t forget ABB’s FCPA settlement from 2022; the company asked the Justice Department for a meeting where it planned to self-disclose, but between the time ABB placed a call and the actual meeting, South African media broke the story of corruption there. ABB’s chance at voluntary self-disclosure went poof.)

“Our revisions to the CEP now reflect our experience with Albemarle and reflect another incentive for companies to do the right thing,” Argentieri said. “Those that make good faith efforts to self-report, even if they do not qualify for a declination, could still receive substantial benefits.” 

Re-Calculating on ‘Significant Profits’

The Justice Department also removed “significant profits” as one of the aggravating circumstances that would make a company ineligible for a declination even if that company did voluntarily self-disclose and meet all other criteria. 

“We recognize that the amount of profits may not be known during the early stages of an investigation,” Argentieri said. “We don’t want companies to hesitate in coming forward out of fear that, down the line, we may determine that the amount of profits were significant. After all, even with a CEP declination, companies are required to disgorge their illicit profits, whatever they may be.”

The bigger picture here is that even today, after years of Justice Department officials preaching the benefits of voluntary self-disclosure, plenty of corporate defense lawyers will still argue that it can be wiser not to self-disclose; but rather to keep quiet, remediate whatever issues you have, and hope prosecutors never hear about your violations. 

Given the high probability that the incoming Trump Administration will either (a) gut the Justice Department’s enforcement capacity; or (b) re-assign prosecutors to more Trump-ish priorities like hunting down undocumented immigrants, one can see why the keep quiet crowd keeps carrying on. Because they have a point, as cynical as it may be. These latest amendments to the Corporate Enforcement Policy are meant to blunt that point, and tilt a corporation’s thinking back toward self-disclosure and remediation.

Will that strategy work? Ask me again in another 10 months or so, once we see the Trump Administration’s Justice Department in action and its various high-ranking leaders start giving speeches. 

A Word on Clawbacks

Argentieri also reviewed the Justice Department’s pilot program on clawbacks of executive compensation, first announced 18 months ago. That program offers a discount on the criminal penalties a company might incur as part of resolving a case; the more compensation you claw back from executives who never should have received it in the first place, the more you can deduct from the criminal penalties you’re supposed to pay. Companies also receive more favorable resolutions if they include compliance-related criteria into their incentive compensation programs going forward after the case is resolved.

That pilot program is supposed to last until March 2026, which means we’re halfway through it right now. So how’s the pilot gone so far? 

“In short, our Pilot Program has been a success,” Argentieri said. Quelle surprise.

That said, the department has adjusted its clawback program along the way. For example (and as some corporate lawyers warned), prosecutors did hear that some countries’ local laws make it exceedingly difficult to claw back compensation that’s already been paid. Therefore, Argentieri said, “we’ve made clear that we will award fine reductions not only to companies that recoup compensation from qualifying employees, but also to those that withhold the money from ever being paid in the first place.” 

(So have you amended your pay policies to include more deferred compensation or long-term performance criteria? Radical Compliance discussed all that in a podcast earlier this fall, you know.) 

All in all, it’s refreshing to see the Justice Department offer these status updates, which it is under no obligation to do. You can’t help but wonder, however, whether Argentieri is also trying to cement some of this enforcement progress into place before her Trump Administration successors show up and take a wrecking ball to the place. By striking a more accommodative posture now, and couching it in terms of transparency, rule of law, and cooperation to reach the right result, maybe all the department’s hard work will endure that much longer. 

Then again, we are talking about Donald Trump and his loyalists. Believe their commitment to rule of law only when you see it.