In addition to criminal and civil fines, the DOJ and SEC sometimes require a company settling an FCPA matter to retain an independent compliance monitor. An independent compliance monitor is an independent person appointed by a company, or in some instances the government, to assess the sufficiency and effectiveness of the company’s FCPA compliance program and adherence to the terms of settlement.
The scope and terms of a monitorship depend on the severity of the conduct at issue and the state of the company’s compliance program. The “Morford Memo” instructs prosecutors to consider the following factors in determining the duration of a monitorship: (i) the nature of the misconduct; (ii) the degree of involvement of senior management; (iii) past history of misconduct in the company; (iv) corporate culture; (v) the extent of necessary remedial measures; and (vi) the extent to which remedial measures are already underway.1
On October 11, 2018, the DOJ supplemented this guidance, stating that the benefits of a monitorship should be weighed against the potential costs of such a monitorship. In addition to the costs and benefits, the DOJ should consider whether the proposed scope of the monitorship is appropriately tailored.2
Often a monitor will have the authority to review policies, procedures, and internal controls and conduct field work to test the implementation of the compliance program. The monitor will likely be required to submit periodic reports to the government regarding the company’s compliance program and the effectiveness of the company’s policies and procedures. In some circumstances a company settling an FCPA matter may be required to “self-monitor” and report to the DOJ and SEC.
In the UK, the SFO may also require that a company appoint an independent monitor whether as part of a DPA or following a corporate conviction.
In France, the criminal courts may impose monitorships on legal entities that have been found guilty of corruption or influence peddling, regardless of the size of the legal entity. This involves the mandatory implementation of an effective anticorruption program at the company’s expense and under the supervision of both the Public Prosecutor (indirect supervision) and the AFA (direct supervision) for a maximum period of 5 years. In supervising, the AFA may use independent legal, financial, tax, and accounting experts.
This criminal penalty is distinct—even if similar in practice—from the general affirmative obligation applicable to large companies to prevent corruption through the implementation of anticorruption compliance programs.
Failure by the company’s corporate bodies or representatives to comply with such a monitorship is punishable by imprisonment for up to 2 years and a fine of up to EUR 50,000 for individuals. For companies it is punishable by a fine of up to EUR 250,000 or, alternatively, up to the amount of the fine imposed on the company based on the underlying corruption or influence peddling offense, as well as ancillary sanctions.
1 Mem. from Craig S. Morford, Acting Deputy Att’y Gen., to Heads of Dep’t Components U.S. Attorneys 7 (Mar. 7, 2008), available here.
2 Mem. from Brian A. Benczkowski, Assistant Att’y Gen, to All Criminal Div. Personnel 2 (Oct. 11, 2018), available here.