Federal Agency Vows Pursuit of Individual Execs in Probes

By Tom Schoenberg | December 5, 2018

The U.S. Justice Department will make executive accountability a part of every investigation of corporate wrongdoing, Deputy Attorney General Rod Rosenstein said.

“Under our revised policy, pursuing individuals responsible for wrongdoing will be a top priority in every corporate investigation,” Rosenstein said during remarks Thursday at a conference on foreign bribery in Maryland.

Rosenstein described a series of policy changes the he characterized as expanding an Obama-era mandate to hold individuals and not just companies responsible for crimes. Notably, he said that most corporate settlements would no longer shield individuals from liability.

The changes announced by the Justice Department’s No. 2 official amount to modifications of the so-called Yates memo, issued in 2016 by former Deputy Attorney General Sally Yates. It required companies to develop evidence against their employees and turn over possible suspects in order to win leniency.

Some defense lawyers, however, said the changes appeared to be less extensive than the Justice Department portrayed them to be – noting that some of what Rosenstein described as new were actually minor tweaks to policies that were already in place.

“Pursuing individual accountability for corporate wrongdoing already was a high priority for the Justice Department, so other than in tone and emphasis, that aspect of the revised policy really doesn’t break new ground,” said David Laufman, a white collar defense lawyer in Washington who recently served as a senior Justice Department official.

The announcement comes after a yearlong review of the Yates memo by the department with an eye toward investigating corporate cases more quickly, Rosenstein said.

“In response to concerns raised about the inefficiency of requiring companies to identify every employee involved regardless of relative culpability, however, we now make clear that investigations should not be delayed merely to collect information about individuals whose involvement was not substantial, and who are not likely to be prosecuted,” Rosenstein said.

The new approach also loosens several aspects of the memo. It calls for requiring companies under civil investigation to disclose senior wrongdoers, rather than any wrongdoers, and for considering an individual’s ability to pay when levying financial penalties. The Justice Department has been criticized in the past for imposing fines that were too onerous.

Companies caught hiding evidence of wrongdoing by executives will be unable to win leniency, he said.

“For companies facing criminal investigations, the new policy is helpful in providing a limiting rule over when to provide evidence to DOJ,” said Nathaniel Edmonds, a partner at Paul Hastings LLP in Washington. Defense lawyers must now figure out how to interpret the new standard when conducting internal investigations or providing evidence to the government, he said.

(A previous version was corrected to say that an individual’s ability to pay will be considered when levying penalties.)

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