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Should we expand the scope and frequency of corporate Miranda warnings?

The DOJ announced in mid-January it now expects “extraordinary cooperation” from companies with FCPA problems, not just “full cooperation.” My question: Does anyone outside law departments and compliance understand what that means for individuals?

Here’s the problem. In exchange for “extraordinary cooperation,” companies guilty of FCPA offenses may receive more leniency, primarily no requirement for a guilty plea and a fine reduction up to 75 percent instead of the old 50 percent. If they fail to provide “extraordinary cooperation,” they’ll suffer the consequences from the DOJ and probably face shareholder lawsuits.

What exactly is the DOJ expecting companies to do? Put the finger on anyone involved in or responsible for FCPA violations. In short, “extraordinary cooperation” means more prosecutorial pressure on individuals.

So, should those individuals be warned explicitly of their FCPA risk ahead of time, and if so, how and when?

I’m sensitive to this issue. A client once asked me to help them fire one of their bright young employees, a Singaporean based there. He had used a small amount of his own money to bribe an official in Malaysia to win work for the company. It shocked him when I explained how the company would cooperate with the DOJ, which might result in his prosecution. He never thought — and no one ever warned him — that a multinational company would side with the U.S. government against an employee.

That was some years ago. Today, with the latest iteration of the DOJ’s enforcement policy, the pressure on companies with FCPA problems to cooperate is even greater.

Have we reached the point when employees, agents, and even third-parties should receive some form of corporate Miranda warning during onboarding and periodically after that?

First, what’s a corporate Miranda warning?

Traditionally, when company counsel interviews employees during FCPA or other criminal investigations, interviewees receive a three-part warning along these lines:

1. Counsel represents the corporation and not the employee.

2. Communications between the employee and counsel will be privileged.

3. However, this privilege belongs to the corporation and the corporation alone can decide to exercise it or waive it.

I’d add two more elements:

4. If the corporation becomes aware of potential FCPA problems, it intends to cooperate with prosecutors.

5. The corporation’s cooperation with prosecutors increases the likelihood that individuals involved with or responsible for FCPA offenses will be prosecuted.

(Traditional corporate Miranda warnings are required by case law and Rule 1.13(a) of the ABA’s Model Rules of Professional Conduct. The rule, now adopted in most states, says, “A lawyer retained by an organization represents the organization acting through its duly authorized constituents.” A comment to the rule says, “There are times when the organization’s interest may be or become adverse to those of one or more of its constituents. In such circumstances the lawyer should advise any constituent . . . “)

Expanding corporate Miranda warnings’ coverage, scope, and frequency would recognize reality. During FCPA investigations, company counsel will act on behalf of both the company and the DOJ and be adverse to the individual.

Is what I’m suggesting necessary? It may not be legally necessary. But it seems morally and ethically necessary.

Individuals are FCPA priority targets. As Assistant AG Polite said when he announced the revised corporate enforcement policy, “Our number one goal in this area – as we have repeatedly emphasized – is individual accountability.”

How much are individuals at risk?

“Extraordinary cooperation” means naming everyone in the chain of command involved with or responsible for possible FCPA problems, along with particulars about potential witnesses who can provide relevant facts or evidence.

What are relevant facts and evidence? The DOJ lists four categories:

1) Facts gathered during the company’s independent internal investigation, if the company chooses to conduct one.

2) Attribution of facts to specific sources where such attribution does not violate the attorney-client privilege, rather than a general narrative of the facts.

3) Timely updates on the company’s internal investigation, if the company chooses to conduct one, including but not limited to rolling disclosures of information.

4) Identification of all individuals involved in or responsible for the misconduct at issue, regardless of their position, status, or seniority, including the company’s officers, employees, customers, competitors, or agents and third-parties, and all non-privileged information relating to the misconduct and involvement by those individuals.

As reflected in the DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy, cooperation must now be “proactive” rather than reactive. The company must disclose all relevant facts and evidence “even when not specifically asked to do so,” including opportunities to obtain relevant evidence not otherwise known to the DOJ nor in the company’s possession. That’s a heavy burden.

I’m not arguing against a high bar for companies who want the benefits of cooperation. Nor am I arguing against individual accountability for FCPA violations.

But I’m certain most people don’t understand how being part of a corporate organization can increase their risk of FCPA prosecution, not lower it. That’s knowledge they’re missing and entitled to have.

To fix that, law departments and compliance officers can expand the corporate Miranda warning and recite it during onboarding and periodic training of employees, agents, and even third-parties.

It seems only fair.

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