This past April, the U.S. Department of Justice updated its guidance document setting forth policies and examples to assist federal prosecutors in evaluating compliance programs. As those within highly regulated industries like government contracting and health care already know, the fact that a company has a well-designed and effective compliance program is an important factor for such prosecutors in the conduct of an investigation, the determination of whether to bring charges, and the negotiation of a plea or other disposition. The guidance, which is titled “Evaluation of Corporate Compliance Programs” is available online and provides an inside look at how prosecutors look at such programs, and how their observations inform their decision-making about charging and resolving criminal cases.
The guidance notes that it is intended to help prosecutors make informed decisions as to whether and what extent a company’s compliance program was effective at the time of an offense, and is effective at the time of a charging decision or resolution. This information is highly relevant to decision-making about the form of a prosecution and/or resolution, the assessment of a monetary penalty, if any, and the compliance obligations (such as monitorship or reporting) to be imposed on the company as part of a resolution.
The guidance quotes from the Justice Manual (formerly known as the United States Attorneys’ Manual) three questions that prosecutors should ask: (1) Is the corporation’s compliance program well designed?; (2) Is the program being applied earnestly and in good faith—that is, is it being implemented effectively?; and (3) Does the corporation’s compliance program work in practice? The document then discusses each of these questions and the factors that form part of a prosecutor’s consideration of them.
The revision of the guidance does not include any highly significant additions or changes from the last version put out in 2017. But a review of the document serves as a sound reminder to businesses in regulated industries of the potential costs of cutting corners and failing to institute and maintain a robust and effective compliance program. You can read more about the importance of maintaining a system of organization and controls that ultimately ensures the success of the company in its performance of its contractual obligations here.
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