Complying with New Justice Dept. Guidance.

Author:Robbins, David
Position:Ethics Corner
 
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* In April, the Department of Justice Criminal Division updated its guidance document, "Evaluation of Corporate Compliance Programs," to help prosecutors evaluate a company's program at the time of an offense, and at the time of resolution, for the purpose of making charging and settlement decisions, as well as determining whether post-resolution compliance obligations are necessary. There is new substance and nuance that deserves specific attention from contractors and action in the near term.

The document is closely watched because it informs proactive operations of company ethics and compliance organizations, as well as reactive remediation efforts after problems arise.

There are several key action items for contractors arising out of the updated guidance.

Off-the-shelf compliance training is unlikely to satisfy prosecutors. Training needs to be well thought out, customized and specifically tailored to a company's risks. The Justice Department will analyze whether information is conveyed in a manner tailored to the audience's size, sophistication, or subject matter expertise.

Prosecutors will also question whether training provides practical advice or case studies to address real-life scenarios and how to obtain ethics advice on a case-by-case basis as needs arise. They will review whether training covers prior compliance incidents, and whether training is risk-based and tailored for specific job functions and roles. For example, higher risk jobs may need more training, and supervisors may need different training.

Contractors should review compliance training and consider whether it is specifically tailored to the company's risks and training needs. Make changes now, before problems arise, for prophylactic impact.

New categories of due diligence and new tracking schedules may be required for mergers and acquisitions. The guidance document announces that "[t]he extent to which a company subjects its acquisition targets to appropriate scrutiny is indicative of whether its compliance program is, as implemented, able to effectively enforce its internal controls and remediate misconduct at all levels of the organization." Justice lawyers will examine the due diligence process, asking who did the review, how it occurred, and whether and how misconduct was found.

Post-merger or acquisition integration will also be the subject of department review. Prosecutors will examine how the compliance function has been integrated into the new business...

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