On October 18, 2017, Kathleen McGovern, Senior Deputy Chief for the U.S. Department of Justice [“Department”] Criminal Division’s Fraud Section, spoke at the Association of Corporate Counsel annual meeting in Washington, DC. McGovern reiterated her view that companies must comply fully with government investigations to get credit for cooperation: “Does it have to be an all or nothing proposition? From a personal perspective, and I’ve spoken about this before, I think the answer is yes.”
The Department relies on companies to police themselves and to report any violation, if they have any hope of favorable consideration for reduced penalties or fines. To this end, it expects that corporations will conduct thorough internal investigations, and will report to federal investigators the results of those investigations, including any misconduct. McGovern reiterated that “just checking the box or doing a cursory review” will not suffice. “The worst thing is for an internal investigation to be conducted, [the Department] does its own investigation, and [it] uncover[s] conduct that in good conscience [it] think[s] could have been uncovered as a result of an internal [investigation.] That doesn’t bode well for the company in terms of cooperation.”
Any potential violations revealed during an investigation must be thoroughly probed, because flagging but failing to examine such conduct is “one of the situations you don’t want to be in,” said Hui Chen, a compliance consultant and former Department compliance counsel. Likewise, the Department continues to focus on whether corporate compliance programs are robust, or whether they are “paper programs” with no tested ability to ferret out misconduct. A “paper program” will not meet the Department’s high standards.
Companies must remain vigilant and must be proactive in all aspects of compliance, if they expect favorable treatment when cooperating with federal investigations.
For questions on complying with government investigations, conducting internal investigations and preparing compliance plans, contact the author of this alert.