The Institute for Legal Reform — part of the U.S. Chamber of Commerce — issued a paper last week with a harsh review of the Yates Memo, also known as the DOJ’s Individual Accountability Policy
The paper is called Enforcement Gone Amok: The Many Faces of Over-Enforcement in the United States. It was written for the U. S. Chamber by three lawyers from Skadden Arps — John Beisner, Geoffrey Wyatt, and Jordan Schwartz.
“Over-enforcement occurs when individual government agencies exercise unfettered discretion to rely on novel or expansive interpretations of laws to coerce settlements,” the report says.
The Yates Memo says, “To be eligible for any cooperation credit, corporations must provide to the [DOJ] all relevant facts about the individuals involved in corporate misconduct.”
That requirement, according to the U.S. Chamber report, has negative implications for companies.
They might choose not to cooperate. That could lead to enhanced penalties in the event of adverse findings.
Or the government “might determine not to give corporations credit for cooperating, on the basis that the corporation did not go far enough.”
“At bottom,” the report says, “the Yates Memo will likely accelerate — rather than curb — enforcement abuses at the federal level,” the report says.
In 2010, the U.S. Chamber’s Institute for Legal Reform released a paper criticizing the DOJ’s “overzealous enforcment of the FCPA.”
That paper was co-written by Andrew Weissmann when he was in private practice. He had been part of the DOJ’s Enron Task Force. He’s now back at the DOJ as chief of the fraud section.
In April, he authored the DOJ’s new Pilot Program, whereby companies that report early and cooperate will receive credit — up to a 50 percent reduction off the bottom end of the U.S. Sentencing Guidelines fine range.
In the paper Weissmann co-wrote in 2010 for the U.S. Chamber, he advocated changes to the FCPA, including a “good-faith” defense, a requirement for “willfulness” for corporate criminal liability, limiting successor liability for acquiring companies, and narrowing the definition of “foreign official.”
Yates Memo author Sally Yates said in a speech in New York in May that the notion that a cooperating company must relate facts about the conduct of individuals within the corporation is nothing new. “The U.S. Attorneys’ Manual has long provided that companies that want cooperation credit should identify who did what,” she said. And DOJ officials have repeated the message “over and over again for the last several years in just about every speech given on corporate fraud.”
“But despite all that,” Yates said, “we found that we still got passive voice, ‘Mistakes were made,’ presentations from defense counsel, without identifying who made what mistakes.”
The U.S. Chamber said it’s still too early to quantify the precise impact the Yates Memo will have on enforcement. But federal prosecutors now have “an official policy statement encouraging them to hold individuals criminally and civilly liable for alleged corporate wrongdoing.”
Even if the Yates Memo doesn’t result in increased criminal prosecution of individual employees, the U.S. Chamber said, “DOJ lawyers could take advantage of the leverage that potential individual liability creates to convince corporate decision-makers to agree to unduly large settlements on behalf of corporations.”
In her New York speech, Sally Yates said holding individuals accountable for corporate wrongdoing “has always been a priority for the Department of Justice, both for the leadership of the department and for the line prosecutors who work the cases.”
“We cannot have a different system of justice — or the perception of a different system of justice — for corporate executives than we do for everyone else,” Yates said.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He’ll be the keynote speaker at the FCPA Blog NYC Conference 2016.