Starting late Wednesday, September 9th, word began circulating on news sites that the Justice Department had issued a new memo calling for more prosecutions of individuals and not just the corporations for which they work. According to the New York Times:
The memo… tells civil and criminal investigators to focus on individual employees from the beginning. In settlement negotiations, companies will not be able to obtain credit for cooperating with the government unless they identify employees and turn over evidence against them, “regardless of their position, status or seniority.”
Deputy Attorney General Sally Yates, who is also the author of the memo, went on to tell the Times that simply giving the names of low level employees won’t be enough. “We’re not going to be accepting a company’s cooperation when they just offer up the vice president in charge of going to jail.”
For companies in the midst of an investigation, the impact is likely to be rather immediate. Settlement conversations may suddenly have a very different tone.
There is ample room to argue whether this is the right thing to do, both as a moral choice and as a practical effort to reduce wrongdoing. But as compliance professionals, that’s a debate for others to have, at least publicly. It falls to this community to deal with the implications of this change in policy. Here are some likely impacts.
- Leadership will likely become more focused on compliance. The specter of being prosecuted personally for something that they have done, or happened under their watch, is likely to be very chilling to many senior managers.
- It may become harder to get employees, especially senior ones, to talk during an internal investigation. With the greater likelihood of going to jail, many may not want to risk implicating themselves or someone they work with.
- Board interest in compliance will be heightened further. There’s a great deal of reputational damage when a company gets convicted. When its CEO is convicted, or worse imprisoned, the damage is far greater. That’s likely to attract a good deal of board attention.
There’s one other distinct possibility: not much will happen. As many analysts have noted, it can be very hard to point a finger at one individual.
What do you think will happen? And what should compliance officers be doing in the wake of the change? Let us know. And please, no political arguments.