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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

What is the General Counsel’s role in CEO and CCO compliance certifications?

The DOJ recently announced a policy that requires CEO and CCO certifications with FCPA settlements. A purpose of the new requirement is to empower CCOs. Unless the General Counsel is also the CCO, the General Counsel’s importance to compliance matters is not the focus. Yet several practical implications of this certification ensure General Counsels will continue to have a central, essential role in a company’s response to compliance matters.

In the first settlement implementing this new policy, the CEO and CCO are to certify 30 days before the expiration of the deferred prosecution agreement that, based on their “review and understanding,” their company has “implemented” a compliance program that is “reasonably designed to detect and prevent violations” of applicable anti-corruption laws. This is no small matter: the mandated language includes a self-acknowledgment by the signatories that the certifications are “a material statement and representation” with potential U.S. criminal liability.

The implications for the General Counsel arise from the choice of reasonableness as the touchstone of the certification. It is expressly an element of the program-design certification and is an implicit element of the review and implementation certifications.

Reasonableness is a legal, not a factual, determination. Reasonableness is a legal construct through which the law attempts to evaluate (retroactively) subjective decision-making against an objective standard of what a reasonably prudent person in the same situation would have done.

While the CCO’s subjective view at the time of the certification is relevant, it might not be conclusive. For example, in the context of a material false statements prosecution under 18 U.S.C. § 1001, the DOJ would have to prove that a CCO made a false certification knowingly and willfully. However, a defendant “is not relieved of the consequences of a material misrepresentation by lack of knowledge when the means of ascertaining truthfulness are available.” (U.S. DOJ, Justice Manual, Criminal Resource Manual § 910)

Whether such means were then-available would be a decision for the jury to make after a trial; long before that, it would be for the prosecutors to make in determining whether to investigate, and whether to prosecute, the CCO. This view would be taken some time after the certification is made, potentially by different prosecutors than those who monitored compliance with the terms of the FCPA resolution, and with a hindsight view obstructed by an event of sufficient seriousness to prompt the inquiry.

In this context, the CEO and CCO would be ill-advised to certify solely on their personal knowledge and self-assessment of a legal conclusion—indeed, the certification is to be based on a “review.”

The practical implications for the General Counsel are several.

First, the General Counsel should anticipate that the certifying officers might request from the General Counsel a sub-certification, as is common in financial reporting certifications. The General Counsel would then have to consider on what basis to make the sub-certification.

Second, the General Counsel should expect requests from the CEO and CCO for legal advice, from the General Counsel or external counsel, about their obligations and how to make the required legal determinations.

Third, the General Counsel should anticipate corporate governance and potential conflicts of interest, questions from the client—the company—related to providing these officers with legal advice, and the consequences if conflicts arise.

Finally, the General Counsel should ensure that records related to these certifications are maintained with an eye towards potential future litigation, should the DOJ ever allege that either officer provided a false certification. To the extent such officers relied on company personnel for sub-certifications and internal or external advisors for legal advice, in any prosecution the factual record (and legal advice received) will be critical both to the prosecution and the defending officer(s), potentially leading to discovery litigation or even exposing the company to liability.

The General Counsel is not the focus of the DOJ’s new policy. But the policy’s practical implications engage the role and responsibilities of the General Counsel in critical respects, reaffirming the importance of the General Counsel in compliance matters.

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