DOJ to companies: New compliance counsel provides a ‘reality check’

The Department of Justice Fraud Section said this month it has hired Hui Chen as a “full-time compliance expert.”

She comes to the DOJ with practical experience in anti-corruption and corporate compliance at Standard Chartered Bank, Pfizer, and Microsoft, along with prior enforcement experience as a federal prosecutor.

Underscoring the significance of the new role, Assistant Attorney General Leslie Caldwell said the DOJ’s decision to hire a compliance counsel “should be an indication to companies about just how seriously we take compliance.”

But what does this really mean for general counsel and compliance officers? AAG Caldwell made clear that the DOJ’s creation of the position does not mean it will recognize a “compliance defense” in corruption, money laundering, and similar cases. What it does mean, though, is that the DOJ — through this position — will develop and apply benchmarks for evaluating corporate compliance and remediation measures and will provide expert guidance for prosecutors and monitors where a Fraud Section case resolution involves on-going program assessments.

There is now an experienced, full time DOJ official actively focused on the “before” (benchmarking) and the “after” (guidance concerning company programs operating under DOJ oversight). Ms. Chen and her staff will have a uniquely informed view of what companies are doing to detect and prevent bribery and other forms of corruption, including where and how they are doing it.

The DOJ said Ms. Chen’s duties will include “communicating with stakeholders in setting . . . benchmarks.” Stakeholders and the DOJ will best benefit from these communications if they are two-way, occur regularly, and provide the opportunity to include exchanges about the tough, ambiguous issues — if only to underscore the honest difficulty that both the government and practitioners may have in dealing with them.

For example, how does one evaluate (much less measure) the existence and effectiveness of a given corporate culture and its impact (positive or negative) on an anti-corruption compliance program? All other things being equal, does the documented application of process (or organizational) maturity assessments to a compliance program (or components thereof) by a small or medium sized company provide greater weight towards a finding of an “effective compliance program” (using the U.S. Sentencing Guidelines definition) than would be the case with a large company? 

In her comments about the new DOJ position, AAG Caldwell said it will provide a “reality check” on compliance issues. The business community hopes that this will be a “reality” that is well-communicated, phased in over a reasonable time frame, and consistent with the U.S. Sentencing Guidelines’ acknowledgement that a company’s size has a direct bearing on the formality and scope of actions required for its compliance program.

In any case, compliance professionals need to recognize that staying abreast of information related to compliance and appropriately applying relevant new “leading practices” is quickly becoming more important than ever. The DOJ has raised the bar by retaining Ms. Hui. We will (hopefully) learn in the coming months how high that bar has been raised. 

Whatever that level may be, however, it is unlikely to remain static. There will undoubtedly be other future changes — some minor, some sector-specific and some that are nuanced but still important, among other ways to raise the bar still further. Stay tuned.

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Worth MacMurray is the U.S. General Counsel and Chief Compliance Officer at GAN Integrity Inc.

Melanie Reed is an Anti-corruption Consultant at GAN Integrity Inc.