On October 11, 2018, Assistant Attorney General Brian A. Benczkowski issued a memorandum to DOJ’s Criminal Division on the selection of corporate monitors, supplementing 2008 guidance on monitors in relation to deferred prosecution agreements (“DPAs”) and non-prosecution agreements (“NPAs”) with business organizations. The new memorandum states at the outset that while beneficial in some instances, the imposition of a monitorship will not be necessary in many corporate criminal resolutions, and should generally be favored “only where there is a demonstrated need for, and clear benefit to be derived” relative to expected costs and burdens. It further elaborates on factors to be considered when evaluating potential benefits of a monitor, including whether the misconduct involved manipulation of books and records or exploitation of inadequate controls, the pervasiveness of the misconduct and involvement of senior management, the adequacy and efficacy of remedial measures, changes in corporate leadership and culture, and unique risks and compliance challenges specific to the company’s operations. From a procedural standpoint, the memorandum provides for the creation of a Standing Committee on the Selection of Monitors and sets out the process by which monitor candidates are nominated, evaluated, and ultimately selected. Benczkowski’s memorandum emphasizes the need to “instill public confidence” in the selection process and to select monitors that are not only qualified and capable of carrying out proposed duties, but also free of actual, potential, or perceived conflicts of interest. The standards, policy, and procedures of the new memorandum apply to all Criminal Division determinations regarding the appropriateness of a monitorship, as well as any DPA, NPA, or plea agreement between the Criminal Division and a company that requires retention of a monitor.
AAG Benczkowski announced the new guidance in remarks at the NYU School of Law Program on Corporate Compliance and Enforcement Conference on October 12, emphasizing the “foundational principle” that monitorships should never be punitive and should be imposed only where necessary. He described DOJ as “a referee of sorts” and encouraged subject companies to approach DOJ if they have issues or concerns with their monitor. AAG Benczkowski’s remarks also highlighted the importance of robust corporate compliance programs in the context of recent corporate criminal resolutions related to alleged LIBOR manipulation, healthcare fraud, and anti-money laundering failures. He additionally described ongoing initiatives to increase the Criminal Division’s compliance-related expertise, to include development of more internal training and hiring more attorneys with prior compliance experience. These efforts, he suggested, should ultimately benefit companies and lead to “better and more just outcomes.”