Honesty is the best policy, especially when your company’s been dishonest.
That was the message delivered last Friday in Dallas by the assistant attorney general for the criminal division of the U.S. Department of Justice.
Kenneth A. Polite Jr. said corporations have every incentive to monitor for compliance with federal anti-corruption laws and to report violations by their executives as quickly and as openly as possible. Doing so, he said, will help ensure leniency from the government; failure to do so will likely result in criminal prosecution.
“Investing in and supporting effective compliance programs and internal controls systems is smart business, and the department will take notice,” Polite said.
“Invest, invest, invest in strong compliance and internal control measures that consistently, quickly, and effectively prevent, detect, report, and remediate wrongdoing.”
Polite was the keynote speaker at the eighth annual Government Enforcement Institute, a two-day forum for government lawyers, in-house counsel, certified public accountants and others who play key roles in investigating corporate misconduct.
The two-day institute, sponsored by UT Law CLE, the continuing legal education arm of the University of Texas at Austin School of Law, took place Thursday and Friday at Hotel ZaZa in Dallas. About 100 people attended, either in person or online.
“We cannot rely exclusively on prosecutions to ensure public safety or good corporate governance,” he said. “ Indeed, as with any area of criminality, our ultimate goal is to prevent corporate crime in the first instance.”
Before his appointment as head of the criminal division, Polite served as an assistant U.S. attorney in the Southern Division of New York from 2007 to 2010, and as U.S. attorney in New Orleans from 2013 to 2017. He is also a former vice president and chief compliance officer for Entergy, a New Orleans-based Fortune 500 company that provides electricity and natural gas to 3 million customers in Arkansas, Louisiana, Mississippi and Texas.
His keynote address came the day after the Department of Justice issued new guidelines on corporate criminal enforcement that became the chief topic of discussion among attendees at the Dallas institute. The guidelines, in the form of a 14-page memorandum to top federal prosecutors from Deputy Attorney General Lisa Monaco, mirrored what Polite said about the advantages to a company that comes clean quickly and early.
“The Department’s first priority in criminal matters is to hold accountable the individuals who commit and profit from corporate crime,” Monaco’s memo said. It added, “Absent the presence of aggravating factors, the Department will not seek a guilty plea where a corporation has voluntarily self-disclosed, fully cooperated, and timely and appropriately remediated the criminal conduct.”
Her memo went on: “To be eligible for any cooperation credit, corporations must disclose to the Department all relevant, non-privileged facts about individual misconduct. … If disclosures come too long after the misconduct in question, they reduce the likelihood that the government may be able to adequately investigate the matter in time to seek appropriate criminal charges against individuals.”
Elisha Kobre, a former federal prosecutor who is now a partner with Bradley Arant Boult Cummings in Dallas, said in a panel discussion at the Hotel Zaza event that he tries to convey to corporate clients that it’s best to come forward with information, even potentially damaging information.
“Co-operation in both the individual context and even the corporate context is beneficial,” he said.
Chad Meacham, the acting U.S. attorney in Dallas, said on the same panel that he’s repeatedly heard from corporate wrongdoers years after they were prosecuted that they wished they’d co-operated with federal authorities when they had the chance.
Unfortunately, he said, that doesn’t happen nearly as often as he and his fellow prosecutors wished it did.