On October 28, 2021, U.S. Deputy Attorney General Lisa O. Monaco (“Monaco”) gave the keynote address at the American Bar Association’s 36th National Institute on White Collar Crime. Deputy Attorney General Monaco addressed the U.S. Department of Justice’s (“DOJ”) renewed focus on corporate crimes in the department’s mission to “enforce the criminal law that govern corporations, executives, officers and others, in order to protect jobs, guard, savings and to maintain [their] collective faith in the economic engine that fuels [the] economy.”
Deputy Attorney General Monaco listed three (3) actions the DOJ is taking to strengthen enforcement and the department’s response such crimes. First, the DOJ’s main priority will remain individual accountability. The DOJ will mandate that for a corporation to receive any cooperation credit, the company must provide “all non-privileged information about individuals,” regardless of their position, status or seniority, involved and/or responsible for the misconduct. So that DOJ can know the “cast of characters” and will not allow the corporation to control which individuals are investigated and/or charged.
Second, Deputy Attorney General Monaco has confirmed that there is an intense focus on a company’s prior misconduct, which will guide and affect the DOJ’s charging decisions. The DOJ has issued new guidance for prosecutors highlighting that any past misconduct of a company should be considered, including not only prior criminal history, but also the civil and regulatory records of a company, when deciding what type of resolution is appropriate. DOJ prosecutors are to take a “holistic approach” and consider all misconduct by a corporation, including the corporation’s “parent, divisions, affiliates, subsidiaries, and other entities within the corporate family.” Deputy Attorney General Monaco stated that, “[t]aking the broader view of companies’ historical misconduct will harmonize the way [the DOJ] treat[s] corporate and individual criminal histories, as well as ensure that we do not unnecessarily look past important history in evaluating the proper form of resolution.” For shipping companies that are held out in the commercial market as part of a group or large fleet, this focus by DOJ will undoubtedly lead to expansive and comprehensive investigation(s) of the fleet and any affiliated owners or operators (even if owned by different stakeholders and/or trading under a separate Document of Compliance).
Finally, Deputy Attorney General Monaco confirmed that the standards, policies, and procedures for evaluating corporate monitors has been revised to ensure uniformity and clarity in post-judgment monitoring of corporate compliance after an incident. The DOJ will assess the need for corporate monitors on a case-by-case basis and consider (1) the potential benefits of the corporate monitor; and (2) the cost of monitor and its impact on the corporation’s operations. As the shipping industry is very familiar, the DOJ Environmental Crimes Section has long utilized a comprehensive Environmental Compliance Plan (“ECP”) as part of negotiated plea agreements which is implemented during probation by an Independent Consultant/Third Party Auditor and overseen by a Court Appointed Monitor. These roles are filled by third-parties which must be paid for by the corporate defendant(s). The cost of successfully implementing the required ECP can easily reach $25,000 – $50,000 per ship, per year.
The announced policies and focus are unlikely to materially change the DOJ’s investigation and prosecution of foreign-flagged shipping companies for alleged violations of the Act to Prevent Pollution from Ships, 33 U.S.C. § 1901, et seq. (i.e. the U.S. implementation of MARPOL 73/78). However, it is reasonable to expect that these announced actions, especially the demand for assistance in investigating individuals and the DOJ’s inquiry into group or affiliate company activities, will be utilized to pressure companies into making quick and expensive plea agreements, as well as the extraction of heavy fines and even more onerous ECPs.
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