DOJ Issues New Voluntary Self-Disclosure Policies, and Some Provide Less Certainty and Offer Fewer Benefits than Others

April 5, 2023, Covington Alert

Summary

What You Need to Know:

Between late February and early March 2023, several DOJ components announced new or updated voluntary self-disclosure policies. These announcements are part of a broader DOJ effort, covered in our previous alerts, to incentivize companies to voluntarily self-disclose misconduct, fully cooperate in DOJ investigations, and timely and appropriately remediate misconduct. Specifically, the latest announcements respond to the directive, issued by Deputy Attorney General Lisa Monaco in her September 2022 memorandum (the “Monaco Memo”), that all DOJ components prosecuting corporate crime publish or revise written policies on voluntary self-disclosure to meet certain minimum standards including that, “absent the presence of aggravating factors, the Department will not seek a guilty plea where a corporation has voluntarily self-disclosed, fully cooperated, and timely and appropriately remediated the criminal conduct.”
DOJ’s Criminal Division was the first component to announce its own Corporate Enforcement and Voluntary Self-Disclosure Policy (the “Criminal Division Policy”) in response to the Monaco Memo directive. As we described in our previous alert, compared to previous Criminal Division policy, the new Criminal Division Policy significantly enhanced the benefits available to companies that meet the Criminal Division’s expectations and continued to position the Criminal Division as offering companies significantly more than the baseline benefits provided by the Monaco Memo.
The Criminal Division’s announcement was followed by policy announcements from five other DOJ components (together, the “New Component Policies”):
- The U.S. Attorneys’ Offices (“USAOs”) announced a policy (the “USAO Policy”), applicable to all 93 U.S. Attorney’s Offices, on February 22, 2023.
- The Civil Division’s Consumer Protection Branch (“CPB”), which has criminal enforcement authority over certain offenses, announced its policy (the “CPB Policy”) on February 28, 2023.
- The National Security Division (“NSD”) announced its policy (the “NSD Policy”), which was an update to its 2019 voluntary self-disclosure policy, on March 1, 2023.
- The Tax Division also announced its policy (the “Tax Division Policy”) on March 1, 2023.
- The Environment and Natural Resources Division (“ENRD”) announced its policy (the “ENRD Policy”), an update to its 1991 policy, on March 1, 2023.
There are several key takeaways regarding the New Component Policies:
- Generally, the New Component Policies offer less certainty than the Criminal Division Policy. Several of the New Component Policies include the possibility that companies satisfying the component’s voluntary self-disclosure requirements will receive more than the Monaco Memo’s minimum benefit of no guilty plea and no imposition of a monitor. However, as compared to the Criminal Division Policy, the New Component Policies provide companies with less clarity regarding the benefits they will receive at the time of resolution if they meet the voluntary self-disclosure requirements, particularly when an aggravating factor is present. The New Component Policies, in contrast to the Criminal Division Policy, also are silent on resolution scenarios for companies that have not voluntarily disclosed but have fully cooperated and remediated.
- The USAO Policy, in particular, presents potential for additional uncertainty. Because the USAO Policy leaves much to the discretion of individual offices, it is possible (perhaps even likely) that each of the 93 U.S. Attorneys’ Offices will approach and implement the policy differently in practice. As a result, it is uncertain that companies will receive the same treatment and benefits nationwide under that policy—one of its stated goals.
- The descriptions of aggravating factors in several of the New Component Policies raise questions about how they will be considered. Several of the New Component Policies include non-exhaustive lists of aggravating factors encompassing a wide range of misconduct, leaving companies to speculate how those components will interpret and apply the factors. Whether an aggravating factor is at play in any given case is a crucial inquiry because it can be the difference between a guilty plea or a more favorable outcome.
Looking ahead, the Department has an interesting challenge. The Office of the Deputy Attorney General (“ODAG”) appears eager to encourage more voluntary self-disclosures, which it knows will come only if companies determine that the “carrots” are meaningful and predictable enough to justify incurring the very real hard and soft costs that often accompany self-disclosures. Over time, these carrots have steadily increased in the formulation of Criminal Division policy, culminating in the new Criminal Division Policy, with its recognition that even cases with aggravating factors can qualify for a declination with disgorgement in appropriate circumstances. The Criminal Division, however, has been formulating and tweaking its corporate enforcement policies for years, while most of the other components were directed by the Monaco Memo to develop their corporate enforcement policies for the very first time. As a result, corporate enforcement policies across the Department are at different stages of maturity in their implementation, which risks inconsistency, unpredictability, and, ultimately, uncertainty. And, as Department policymakers know, uncertainty can deter even the most compliant companies from making self-disclosures. We will be watching to see how the Department—and particularly ODAG—manages this dynamic in the years ahead.
Leaving these complicated dynamics aside, the New Component Policies are a step in the direction of promoting consistency, which was stated to be a significant goal behind the Monaco Memo. The New Component Policies also reinforce the notion that companies should arm their legal and compliance departments with the tools needed to detect misconduct at the earliest opportunity, which will in turn allow for thoughtful consideration of the benefits and consequences of voluntary self-disclosure.

This chart summarizes the potential resolution outcomes under the New Component Policies, and the Criminal Division Policy, respectively.

The New Component Policies Provide Less Certainty and Offer Fewer Benefits to Companies than the Recently Announced Criminal Division Policy

In recent years, and even more so over the last several months, DOJ has made a push to encourage corporate voluntary self-disclosure. In September 2022, Deputy Attorney General Lisa Monaco issued the Monaco Memo, a memorandum providing new and expanded policy guidance on corporate criminal enforcement. As we explained in a prior alert, among other things, the Monaco Memo emphasized the importance of ensuring that “the benefits of voluntary self-disclosure are clear and predictable” and directed all DOJ components that prosecute corporate crime to publish or revise written policies on voluntary self-disclosure. The Monaco Memo further instructed DOJ components that such polices must offer at least certain baseline benefits to companies that voluntarily self-disclose, including that, “absent the presence of aggravating factors, the Department will not seek a guilty plea where a corporation has voluntarily self-disclosed, fully cooperated, and timely and appropriately remediated the criminal conduct.”

On January 17, 2023, DOJ’s Criminal Division became the first DOJ component to respond to this directive, announcing the revamped Criminal Division Policy. As covered in a previous alert, this policy significantly sweetened the pot by boosting the benefits available to companies that voluntarily self-disclose misconduct, fully cooperate in DOJ investigations, and timely and appropriately remediate, going well beyond the baseline benefits required by the Monaco Memo. We noted in our January alert that we would watch to see whether other DOJ components adopted a similar approach to the Criminal Division. The New Component Policies are now in, and the answer is: not entirely.

Between February 22 and March 2, 2023, five other DOJ components—USAO, CPB, NSD, the Tax Division, and ENRD—released their own policies, in some cases updating prior policies. With respect to defining voluntary self-disclosures, the New Component Policies take their cues from the Monaco Memo and legacy DOJ policy on the topic, and do not meaningfully differ from the Criminal Division Policy. With respect to crediting voluntary self-disclosures, the Criminal Division Policy offers benefits that exceed those mandated by the Monaco Memo—(i) a commitment not to seek guilty pleas against companies that voluntarily self-disclose, fully cooperate, and timely and appropriately remediate; and (ii) a commitment not to impose independent compliance monitors on such companies if they have an effective compliance program at the time of resolution—but nearly all of the New Component Policies offer fewer carrots than the Criminal Division Policy.

We describe below key takeaways associated with the New Component Policies, including how they stack up against the Criminal Division Policy and what they might mean for companies evaluating voluntary self-disclosure to a Department component.

1. The New Component Policies Are Substantially Similar with Respect to Eligibility Criteria for Companies that Voluntarily Self-Disclose

The Monaco Memo required that each DOJ component’s voluntary self-disclosure policy “set forth the component’s expectations of what constitutes a voluntary self-disclosure,” including expectations about the timing and substance of such disclosures. The subtle differences between policies identified below are unlikely to have practical significance for companies, but we will keep an eye on how the policies are implemented in practice.

Defining Voluntary Self-Disclosure. The New Component Policies take a similar approach to defining voluntary self-disclosure, and none broke significant new ground in that regard. Under each policy, the disclosure must be truly voluntary. That is, the company cannot have a pre-existing obligation to disclose the misconduct, such as pursuant to regulation, contract, or prior DOJ resolution, and the disclosure must occur “prior to an imminent threat of disclosure or government investigation” and within a prompt time after companies become aware of the misconduct. Most of the New Component Policies further require that disclosure occur “prior to the misconduct being publicly disclosed or otherwise known to the government.” The importance, if any, of this additional language not found in the Criminal Division Policy remains to be seen.

While the definition of voluntariness may be more of the same when applied in many contexts, there is a question about when a disclosure to ENRD can be considered voluntary. While companies generally are not under an obligation to disclose criminal misconduct to DOJ, much of the environmental regulatory regime relies on mandated disclosures to the government regarding environmental non-compliance or pursuant to permits or other obligations. This raises the question—in what circumstances is there space for a company to receive credit for voluntarily self-disclosing an environmental issue? Or does the ENRD Policy’s requirement that, to qualify, disclosure cannot be part of “a preexisting obligation to disclose, such as pursuant to law, regulation, permit, contract, or prior resolution,” make voluntary self-disclosure an illusory carrot in many circumstances? There certainly should be space for at least some disclosures to ENRD to be considered voluntary, and a careful environmental regulatory analysis should be performed to inform any environmental self-disclosure decisions. However, only time will tell how ENRD applies this requirement in practice.

What Must be Disclosed. As to the substance of the disclosure, there are subtle differences between several of the new policies: the Criminal Division Policy and the NSD Policy specifically require disclosure of “relevant, non-privileged facts,” while others require disclosure of “all relevant facts,” without reference to a carve out for privileged materials. And most of the New Component Policies require a company to include in its disclosure information about relevant individuals, while the USAO Policy does not contain this specific requirement.

Notwithstanding these, and other, subtle distinctions, there is reason to believe that these differences may be unimportant in practice. The background principles of the Justice Manual, the policies that guide federal prosecutors, which each of the New Component Policies repeatedly cite, require prosecutors to respect the attorney-client privilege and require cooperating companies to help identify involved individuals. At bottom, we expect that under each policy, prosecutors would expect fulsome disclosure of all non-privileged facts known about the misconduct and the individuals involved.

Cooperation Requirements. As set out by the Monaco Memo, several of the New Component Policies require full cooperation and timely and appropriate remediation to obtain the benefits afforded under each policy. In a prior alert, we observed that DOJ had become increasingly demanding in its cooperation and remediation expectations, and the Criminal Division Policy continued that trend. The Criminal Division Policy set out specific actions that a company is required to take to qualify for full cooperation credit, “in addition to the provisions contained in [the Justice Manual] to satisfy the threshold for any cooperation credit.” Similarly, the Criminal Division Policy set out specific requirements for companies to receive full credit for timely and appropriate remediation “beyond the credit available under the [U.S. Sentencing Guidelines (“USSG”)].” In contrast, none of the New Component Policies weigh in with their own enhanced cooperation and remediation mandates. Instead, several of the New Component Policies generally point to “operative provisions of the Justice Manual and Department policy” when describing how those divisions will evaluate cooperation and remediation efforts.

Notably, what constitutes sufficient cooperation in order to receive credit, at least within the Department’s FCPA Unit, remains a “subjective” exercise, according to David Last, Chief of DOJ’s FCPA Unit. Last made this observation during remarks at an ABA Conference on March 2, 2023, in which he made clear that there is no “recipe” for earning cooperation credit from DOJ. We take Last at his word, but note that this subjectivity calls into question the Department’s stated goal of achieving consistency across components.

2. Several of the New Component Policies Provide More Generous Benefits than Those Mandated by the Monaco Memo, but Generally Offer Less Certainty and Fewer Favorable Outcomes than the Criminal Division Policy

The Monaco Memo required that each DOJ component’s voluntary self-disclosure policy “lay out the benefits that corporations can expect to receive if they meet the standards for voluntary self-disclosure under that component’s policy.” The Monaco Memo also required that such policies must, at a minimum, commit the component to: (i) not seek a guilty plea where a company has voluntarily self-disclosed misconduct, fully cooperated, and timely and appropriately remediated, absent aggravating circumstances; and (ii) not impose an independent compliance monitor on companies that voluntarily self-disclose and implement an effective compliance program by the time of resolution.

Although several of the New Component Policies offer certain benefits beyond the Monaco Memo’s mandate, they otherwise leave much to the discretion of prosecutors—both whether the requirements of the policies are met, and what the resolution outcome should be—and, as described below, they fail to offer the enhanced predictability and more beneficial outcomes that are available under the Criminal Division Policy.

A. All of the New Component Policies Provide at Least the Baseline Benefits Mandated by the Monaco Memo, with Some Offering Additional Carrots

All of the New Component Policies meet the above requirements and most exceed the Monaco Memo’s mandate in certain circumstances. The USAO Policy and the Tax Division Policy, for example, go beyond the baseline benefits mandated by the Monaco Memo, offering discounts on criminal penalties in certain circumstances. In particular, where companies fully meet the requirements of the USAO Policy and the Tax Division Policy, those components will not impose a criminal penalty greater than 50% below the low end of the USSG, and they “may choose” not to impose a criminal penalty at all. In addition, where a guilty plea is warranted, USAOs and the Tax Division will recommend at least a 50%, and up to a 75%, reduction off the low end of the USSG penalty range.

In contrast to the USAO Policy and the Tax Division Policy, the ENRD Policy explains, in a footnote, that it does not specify percentage discounts on criminal penalties under any scenario, as the fine guidelines in § 8C2.2 through § 8C2.9 of the USSG, which generally apply to penalizing business organizations, do not apply to environmental offenses. The ENRD Policy, however, offers an alternative possible favorable outcome not explicitly adopted by the other New Component Policies: referral for civil or administrative enforcement in lieu of criminal prosecution. Under what circumstances a company might access this alternative, however, is not clearly set out by the ENRD Policy, although ENRD has previously expressed views in its 2016 Parallel Proceedings Policy regarding when criminal as opposed to civil action might be appropriate.

B. Unlike the Criminal Division Policy, Several of the New Component Policies Do Not Provide for a Presumptive Declination or a Clear Path to a Discretionary Declination in the Presence of Aggravating Circumstances

The New Component Policies differ most meaningfully from the Criminal Division Policy in their approach to declinations.

Under the Criminal Division Policy, a company that meets the voluntary self-disclosure, cooperation, and remediation requirements and has no aggravating circumstances will presumptively receive a declination with disgorgement. In contrast, none of the New Component Policies make declinations the presumptive outcome for companies that meet their requirements, even absent any aggravating factors. Instead, most of the New Component Policies merely take guilty pleas off the table for such companies. The NSD Policy comes closest to the Criminal Division Policy in offering favorable outcomes, offering a presumption for a non-prosecution agreement (“NPA”) for companies that, in the absence of aggravating factors, voluntarily self-disclose, cooperate, and remediate, and noting that NSD has the discretion to issue a declination. Somewhat similarly, the USAO Policy notes that “the resolution could include a declination, non-prosecution agreement, or deferred prosecution agreement,” with no preference expressed for, or commitment to, any particular outcome. And the ENRD Policy provides less clarity, as it does not enumerate the specific types of non-guilty-plea resolutions available to companies that satisfy all voluntary self-disclosure and other criteria set out in the policy. Rather, the ENRD Policy notes only that beneficial treatment may include: “reductions in charges, penalties or conditions of probation, referral for civil or administrative enforcement in lieu of criminal prosecution,” and, “in certain cases, non-prosecution,” without explicit reference to declinations, deferred prosecution agreements (“DPAs”), or NPAs.

Thus, under the exact same set of facts, taking each policy on its stated terms, a company could safely rely on a declination if it voluntarily self-disclosed to the Criminal Division and otherwise met the Criminal Division Policy requirements but could face a criminal resolution (a DPA or an NPA) if it self-disclosed to another division (or USAO) and otherwise met the relevant policy requirements.

Relatedly, unlike the Criminal Division Policy, none of the New Component Policies explicitly offers a path to a declination where an aggravating factor is present. For example, the USAO Policy and the Tax Division Policy state only that “the presence of an aggravating factor does not necessarily mean that a guilty plea will be required” and that “the [Division] will assess the relevant facts and circumstances to determine the appropriate resolution” (emphasis added). The ENRD Policy’s language on this point is even less permissive, seemingly indicating that, in the presence of an aggravating factor, a guilty plea will most likely be warranted. In those instances, companies may instead be eligible for “a reduction in the number and type of charges the company must plead guilty to,” and/or a more lenient recommendation to the sentencing court (e.g., a more lenient fine, a more lenient period of probation, and/or more lenient conditions of probation). By contrast, the Criminal Division Policy creates a path to declination even where aggravating circumstances are present, albeit only for companies that meet heightened disclosure, cooperation, remediation, and compliance standards, as described in our prior alert.

Overall, while the Criminal Division Policy leans on declinations to incentivize voluntary self-disclosure, the New Component Policies generally lean on a mix of reduced penalties and potential “non-prosecution.” Only the ENRD Policy offers civil or administrative proceedings as an alternative resolution, which may reflect the robust civil statutory frameworks governing environmental offenses and their enforcement.

All of this begs the question: what policy prerogatives are served by offering these different carrots, which sometimes are quite nuanced and difficult to discern between policies? The answer may be tied to what the New Component Policies offer in terms of benefits relative to the enforcement outcomes previously typically pursued by individual components. For example, ENRD has historically resolved corporate criminal enforcement actions through guilty pleas, so the availability of non-prosecution (in the form of NPAs or DPAs) represents a significant new benefit in the environmental space that ENRD may believe will encourage companies to voluntarily self-disclose, despite the ENRD Policy lacking a clear path to declination. In contrast, the Criminal Division has often pursued criminal enforcement through DPAs and NPAs, so emphasizing presumptive declinations may serve to further encourage voluntary self-disclosure in that context.

C. Most of the New Component Policies Do Not Adopt the Criminal Division Policy’s General Commitment to Avoiding Guilty Pleas in Most Instances

The Criminal Division Policy reflects a broad commitment to avoiding guilty pleas where companies voluntarily self-disclose, fully cooperate, and timely and appropriately remediate, even in the presence of aggravating circumstances warranting criminal resolutions. Under the Criminal Division Policy, a company meeting the voluntary self-disclosure, cooperation, and remediation requirements will “generally” not be required to plead guilty, absent “particularly egregious or multiple aggravating circumstances.” Among the New Component Policies, only the NSD Policy is aligned with the Criminal Division in generally seeking to avoid guilty pleas in all but the above-referenced circumstances.

The other New Component Policies stand in contrast. The USAO Policy, the Tax Division Policy, and the ENRD Policy remove the specter of a guilty plea only when there are no aggravating circumstances at all. All three policies preserve the ability to seek a guilty plea if even a single aggravating factor is present. The CPB Policy appears not to be as strict, but makes clear that CPB will not seek a guilty plea “[a]bsent the presence of aggravating factors.” To be sure, the USAO Policy and the Tax Division Policy both state that “the presence of an aggravating factor does not necessarily mean that a guilty plea will be required,” leaving the ultimate resolution determination to the relevant component’s assessment of “relevant facts and circumstances” (emphasis added). The ENRD Policy’s language likewise indicates a preference for guilty pleas where an aggravating factor is present.

We further note that the Criminal Division Policy characterizes its non-exhaustive list of aggravating circumstances as those possibly “warrant[ing] a criminal resolution,” whereas the USAO Policy, in particular, describes its non-exhaustive list of aggravating factors as possibly “warrant[ing] the USAO seeking a guilty plea” (emphasis added). Likewise, the ENRD Policy describes its non-exhaustive list of aggravating factors as possibly “warrant[ing] prosecution notwithstanding a [voluntary self-disclosure]” (emphasis added). We will be watching to see how the New Component Policies are applied in practice when aggravating factors are present.

D. Nearly All of the New Component Policies Do Not Address Resolution Outcomes for Companies that Do Not Voluntarily Self-Disclose but Fully Cooperate and Timely and Appropriately Remediate

Although all of the New Component Policies, on their terms, are directed towards outlining the benefits of voluntary self-disclosure, the Criminal Division Policy offers substantial benefits, in the form of significant discounts on criminal penalties, to companies that fully cooperate and timely and appropriately remediate, even if they do not voluntarily self-disclose. The Tax Division Policy tracks the Criminal Division in this regard.

In contrast, the remaining New Component Policies make no mention of—and offer no affirmative benefits to—companies that do not meet their voluntary self-disclosure requirements, whether or not they later fully cooperate and timely and appropriately remediate. We do not necessarily take this to mean that discounts on criminal penalties will not be available to companies that do not self-disclose in USAO, ENRD, CPB or NSD enforcement actions, but these policies offer considerably less certainty to companies as an additional incentive to cooperate and remediate. As always, there will be benefits that can be obtained for cooperation and remediation under the USSG and other DOJ policies, such as the Principles of Federal Prosecution of Business Organizations (commonly referred to as the Filip Factors), but the absence of enumerated benefits under the USAO Policy, the ENRD Policy, CPB Policy, and NSD Policy, which otherwise seek to encourage cooperation and remediation, is notable.

E. In Some Limited Circumstances, the USAO Policy and the Tax Division Policy Could Hypothetically Allow for Larger Discounts on Criminal Penalties than the Criminal Division Policy and Other New Component Policies

There is one way in which the USAO Policy and the Tax Division Policy might be more favorable for a company than the Criminal Division Policy, and other New Component Policies. Where companies fully meet the requirements of the USAO Policy or the Tax Division Policy, USAO or Tax Division prosecutors may choose not to impose a criminal penalty at all, and will not impose a criminal penalty that is greater than 50% below the low end of the USSG. That is, the criminal penalty imposed, if any, will be discounted by at least 50% from the low end of the USSG range, with no (explicit) cap on the possible reduction available. In contrast, the Criminal Division provides companies facing a criminal resolution with a reduction of at least 50% and at most 75% off the low end of the USSG range (or from a higher point for criminal recidivists). Thus, a company that fully meets the USAO Policy or the Tax Division Policy requirements but enters a DPA or an NPA with a USAO or the Tax Division is eligible for a potential discount, theoretically, of between 50% and 100%. The same company entering a DPA or an NPA with the Criminal Division is eligible for a minimum reduction of 50% and a maximum reduction of 75%.

The hypothetical difference between criminal penalties could be even greater if the company is a recidivist, at least under the USAO Policy. Unlike the Criminal Division Policy, the USAO Policy does not explicitly, by its terms, consider whether a company is a recidivist when determining the starting point for reducing any applicable criminal penalty. That said, it seems exceedingly unlikely that recidivist companies would actually receive discounts of greater than 75% off the low end of the USSG range. We will be watching to see how recidivist companies are treated under the USAO Policy, particularly when it comes to resolution outcomes, over which USAOs will retain considerable discretion.

3. Differences Between the New Component Policies Suggest Different Outcomes for the Same Reported Conduct

If one purpose of DOJ’s recent policy updates is, as DOJ stated, to promote consistency and transparency for corporate defendants contemplating voluntary self-disclosure, the differences among the New Component Policies, and between the New Component Policies and the Criminal Division Policy, may interfere with that objective.

As we noted above, depending on the conduct at issue and the relevant facts, a corporation may find itself facing different potential outcomes based on which voluntary self-disclosure policy is applied:

For instance, where Company A, a distributor of medical devices, contemplates voluntarily self-disclosing criminal misconduct involving its executive management team and relating to the company’s device distribution, Company A could face a different outcome depending on whether it self-discloses to the Criminal Division (which, under the circumstances, would consider a declination, pursuant to the Criminal Division Policy) or whether the company self-discloses to CPB (which, under the circumstances, would not consider a declination, pursuant to the CPB Policy).
And in a scenario in which Company B chose not to voluntarily self-disclose criminal tax-related misconduct, but now intends to fully cooperate with an ensuing government investigation jointly undertaken by a USAO and the Tax Division, it is unclear whether Company B could expect a 50% reduction in its criminal penalty (pursuant to the Tax Division Policy) or not (as the USAO Policy does not address the benefits of cooperation absent a voluntary self-disclosure).

The above examples illustrate how companies might experience disparate outcomes on the same set of facts, depending on which component’s voluntary self-disclosure policy applies. Thus, the ODAG may well have an important role to play in promoting consistency across the voluntary self-disclosure policies of the different components. Only time will tell whether future ODAGs will place a heightened emphasis on consistency, as has been the case under the current Deputy Attorney General, and we will be watching to see how this ODAG promotes consistency in the application of the New Component Policies. We also will be keeping an eye on whether and how the New Component Policies might mature over time as the relevant DOJ components gain experience in applying the New Component Policies.

Looking Ahead

The New Component Policies are a step in the right direction, as they provide at least some additional clarity for companies contemplating voluntarily self-disclosing misconduct to the relevant Department components. However, several of the New Component Policies give companies less certainty and fewer explicit paths to favorable outcomes than the Criminal Division Policy. Companies ultimately should assess the impact of these new policies not only in how they are written but in how they are applied.

In addition to the issues discussed above, we will be keeping an eye on the following:

How the USAOs and other DOJ components will resolve differences between their voluntary self-disclosure policies where more than one may apply, such as in jointly prosecuted cases. Presently, only the USAO Policy contains language explaining which voluntary self-disclosure policy might apply in such a situation: a USAO “may choose to apply any provision of an alternate [voluntary self-disclosure] policy in addition to, or in place of, any provision of [the USAO Policy].” We have scant guidance as to how the other DOJ components and the Criminal Division are going to reconcile competing policies when more than one component is involved in a case and when different statutory provisions are implicated, some of which may be reserved for enforcement by particular components of the Department. In particular, given the volume of corporate cases that flow through the Criminal Division, we wonder whether the Criminal Division Policy—with its enhanced benefits and more certain outcomes—will ultimately take precedence over the New Component Policies.
Whether companies will weigh in favor of disclosing to the Criminal Division given the Criminal Division Policy’s seemingly more predictable and favorable provisions. As noted above, under the exact same set of facts, a company could reasonably rely on declination if it voluntarily self-disclosed to the Criminal Division, but could still face a criminal resolution if it self-disclosed to a USAO or other Department component. And absent egregious or multiple aggravating circumstances, a company is all but certain to avoid a guilty plea if reporting to the Criminal Division; not so with other components. Will differences like these between the USAO Policy and the Criminal Division Policy encourage a sort of forum-shopping among DOJ components?
Most of the new voluntary self-disclosure policies will be applied by a Department component under more or less centralized control. In contrast, the USAO Policy, which aims to standardize how voluntary self-disclosures are defined and credited by USAOs nationwide, will be applied by 93 semi-autonomous USAOs implementing a policy that provides relatively loose guidelines for prosecutorial decision-making. Can companies actually “rely on receiving the same treatment and benefits for voluntarily disclosing criminal conduct to a U.S. Attorney’s Office” regardless of where they operate in the country, as the U.S. Attorney for the Eastern District of New York stated during the announcement of the USAO Policy?
How will recidivists be treated under the New Component Policies? Several of the New Component Policies make little mention of recidivism: all but the Tax Division Policy and the NSD Policy omit recidivism from their respective lists of aggravating factors that may warrant a guilty plea and do not explicitly instruct prosecutors to consider whether a company is a recidivist when determining the starting point for reducing a criminal penalty. The general inattention to recidivism is somewhat surprising given their otherwise close tracking of the Monaco Memo, which threatens to impose guilty pleas on repeat offenders and warns that “[m]ultiple non-prosecution or deferred prosecution agreements are generally disfavored.” It is not yet clear whether these omissions will have any implication in practice. They may not. We note that the New Component Policies explicitly describe their aggravating factors lists as non-exhaustive. And, in a footnote, the USAO Policy states that the entire Policy “applies to all companies, including those that have been the subject of prior resolutions” and that “prosecutors will weigh and appropriately credit all [voluntary self-disclosures] on a case-by-case basis.”
How, if at all, will the New Component Policies influence companies’ decision-making on voluntary self-disclosure? The Criminal Division apparently reasoned that the benefits available under the legacy FCPA Corporate Enforcement Policy, which generally provided benefits beyond those found in the Criminal Division Policy and the New Component Policies, did not do enough to encourage companies to voluntarily self-disclose. Will the New Component Policies, all of which offer little more than the baseline benefits captured in the Monaco Memo—well short of the benefits under the legacy FCPA Corporate Enforcement Policy, let alone the Criminal Division Policy—be enough to induce companies to self-report? As practitioners know, decisions around voluntary self-disclosure are extraordinarily difficult for companies because they must weigh the relatively unpredictable and uncertain potential benefits and much more certain costs associated with disclosure, and it remains to be seen whether the New Component Policies will move the needle.

Conclusion

However they are applied in practice, the New Component Policies and the Criminal Division Policy make clear that DOJ continues to focus on white collar and corporate criminal enforcement actions. In light of this Departmental focus, companies would be wise to bolster their legal and compliance departments to enable the earliest possible detection of misconduct, so that the benefits and consequences of voluntary self-disclosure can be considered.

If you have any questions concerning the material discussed in this client alert, please contact the members of our White Collar Defense and Investigations practice.