DOJ New No-Piling-On Policy for Corporate Sanctions Moves US Closer to UK and French Authorities
On 9 May, Deputy Attorney General Rosenstein announced a new DOJ policy that “encourages coordination among Department components and other enforcement agencies when imposing multiple penalties for the same conduct.” This policy has already generated much debate. However, from the perspective of the UK and French government agencies, international cooperation has long been the established position – so is this policy really new?
In his speech announcing the new policy, Mr Rosenstein stated: “Our new policy discourages ‘piling on’ by instructing Department components to appropriately coordinate with one another and with other enforcement agencies in imposing multiple penalties on a company in relation to investigations of the same misconduct.” According to Mr Rosenstein, the goal of this policy is “to enhance relationships with our law enforcement partners in the United States and abroad, while avoiding unfair duplicative penalties.”
The policy itself has four components:
- First, it reminds DOJ personnel that in cases involving multiple US (including state and local) enforcers, that they have an ethical obligation not to use criminal enforcement to extract additional civil or administrative monetary payments.
- Second, in cases involving multiple DOJ components, those components should coordinate to avoid duplicative sanctions.
- Third, DOJ personnel should coordinate and consider the amount of sanctions paid to other “federal, state, local and foreign enforcement authorities” that are looking at the same misconduct.
- Finally, they should consider all relevant factors in determining whether coordination and apportionment makes sense. Those factors include:
- the egregiousness of the misconduct;
- statutory mandates with respect to sanctions;
- risk of delay in waiting to resolve;
- the adequacy and timeliness of the company’s disclosures; and cooperation with the DOJ.
We note that as to this last factor, Mr. Rosenstein emphasized that cooperation with other enforcement authorities simply was not the same as cooperation with the DOJ.
That the DOJ will recognize and account for payments made by a company in a foreign enforcement action is a laudable step. In some recent cases, the DOJ has given credit for payments made by the company to foreign enforcement authorities. This fosters international cooperation amongst prosecutors and continues the recent trend. Yet this policy is nothing new for the government enforcers and regulators in the UK and France.
In the UK, the importance of working closely with international agencies has long been established. The SFO and FCA have both publicly commented on increasing levels of cooperation with their counterparts in other jurisdictions. In recent years we have also seen a raft of coordinated global settlements in which UK authorities have been an active participant, including high profile corruption and financial services cases. One of the benefits of a global settlement should in theory be that the authorities in each jurisdiction take into account the impact of the penalties being imposed globally when determining the appropriate sanction in their own jurisdiction.
However, coordination is one thing, but stepping aside completely is quite another. It is fair to say that we are yet to see, at least publicly, a great willingness by UK authorities to cede jurisdiction to overseas authorities where they consider there is a UK nexus, even where that nexus is stronger in another jurisdiction. There is no reason in principle why authorities should not consider such an approach. The possibility is mooted by the FCA in its Handbook where it states: “where other regulatory authorities propose to take action in respect of the breach which is under consideration by the FCA, or one similar to it, the FCA will consider whether the other authority’s action would be adequate to address the FCA’s concerns, or whether it would be appropriate for the FCA to take its own action” (DEPP 6.2.1G). It is certainly an argument that can be deployed when facing regulatory enforcement action to refer to the disproportionate impact of imposing penalties on top of those being levied in other jurisdictions.
Coordination between domestic regulators in the UK is also an important feature of the regulatory landscape. Here, we do see authorities step aside and let others take the lead. Whilst the precise extent of cooperation is determined on a case by case basis, memoranda of understanding (“MoU”) between UK regulators will often govern which regulator will take the lead in investigations to avoid ‘piling on’ – for example, the MoU between the FCA and the Competition and Markets Authority (“CMA”) guides the approach to cases of suspected anti-competitive behavior where the FCA and CMA have concurrent powers.
To the extent that the DOJ announcement has any downward effect on the level of fines in the US, this may well have a knock-on effect in the UK. Historically, UK regulators have tended to use fines imposed by US regulators (unofficially) as a benchmark for their own enforcement action. A tail-off in US fines could therefore have an impact on both sides of the Atlantic.
In France, we have witnessed recently a call for international cooperation with foreign administrations, as France has itself enacted a strong anticorruption regulation to punish French companies in the hope that it will protect them from prosecution abroad. In this framework, the head of the new anticorruption agency (Agence française anticorruption), Mr Charles Duchaine, has publicly said he would try to “impose” international recognition of condemnations in France to avoid “piling up” sanctions.
However, French courts have not been inclined so far to adopt the same view. Indeed, in a very recent decision in the notorious Oil for Food case on 18 March 12018, France’s Cour de cassation rejected the argument made by the defence for certain of the companies involved, which had argued that they could not be condemned in France as they had been condemned in the USA for the same facts. The Cour de cassation ruled that the above-mentioned companies could be prosecuted in France for these facts.
As seen from the above discussion, each of these jurisdictions will take into account sanctions levied in other jurisdictions, but by no means do any of these three cede their right to review and punish completely. Even in announcing this “new” DOJ policy, Mr Rosenstein made it clear that:
“Cooperating with a different agency or a foreign government is not a substitute for cooperating with the Department of Justice. And we will not look kindly on companies that come to us after making inadequate disclosures to secure lenient penalties with other agencies or foreign governments. In those instances, the Department will act without hesitation to fully vindicate the interests of the United States.”
Thus, like the UK and France, the US does not want to take a back seat to any other country when it comes to enforcement of its laws.
BCLP’s Investigations, Financial Regulation and White Collar Team has substantial experience in advising client’s on complex cross-border investigations involving the DOJ and other government agencies and regulators in the US, UK and France, as well as many other jurisdictions. For questions in relation to the new DOJ policy or cross-border investigations more generally, please contact Mark Srere (Washington), Oran Gelb (London) or David Père (Paris).
This document provides a general summary and is for information/educational purposes only. It is not intended to be comprehensive, nor does it constitute legal advice. Specific legal advice should always be sought before taking or refraining from taking any action.