If required, a monitor is engaged by a corporate defendant to review the company’s compliance with the terms of a deferred prosecution or non-prosecution agreement and to evaluate the company’s compliance practices, among other obligations. The Department of Justice has issued guidance relating to the use of independent corporate monitors in connection with deferred prosecution agreements and non-prosecution agreements. This guidance includes the following ten principles of monitor-related provisions in agreements, which we summarize here:How can Finch McCranie LLP Assist a Company That is Required to Engage a Corporate Monitor?
Finch McCranie LLP is uniquely qualified to meet the demands of a corporate monitorship.
The firm’s Larry D. Thompson currently serves as the Independent Compliance Monitor and Auditor for Volkswagen AG. Partner Michael A. Sullivan serves on the Senior Leadership Team of the Monitorship, and is counsel to Mr. Thompson with responsibilities that include coordinating with counsel across the globe to advise on legal requirements of countries in Europe, Asia, North America, and South America.
Mr. Thompson has the rare background of having served as U.S. Attorney for the Northern District of Georgia, as U.S. Deputy Attorney General, as General Counsel of a major corporation, and as a partner in an international law firm representing companies as outside counsel in criminal investigations. He is also currently Chairman of the Board of Directors of the Ethics Research Center (ERC), the research arm of the Ethics and Compliance Initiative (ECI). His experience in each position establishes the public confidence required of a monitor. During his tenure as Deputy Attorney General from 2001-2003, President Bush named him the leader of the government-wide Corporate Fraud Task Force. Mr. Thompson was then appointed by U.S. Attorney General John Ashcroft to head the Justice Department’s National Security Coordination Council.
After serving as Deputy Attorney General in 2004, Mr. Thompson joined PepsiCo as Executive Vice President for Government Affairs, General Counsel, and Corporate Secretary. Over the next decade he led the corporation’s worldwide legal department, global government affairs and public policy group and its global citizenship and sustainability team. As a result, Mr. Thompson can help guide and assist companies that are required to retain a monitor with his hands-on, practical advice.
Our firm thus brings unique insights to a company that finds itself the subject of a corporate monitor, given our experience in advising companies, directing internal investigations, and defending individuals and businesses after serving as federal prosecutors.Skilled and Competent Support
Other Finch McCranie LLP lawyers complement Mr. Thompson’s breadth of experience. Each of Finch McCranie LLP’s partners has served as a federal prosecutor under Mr. Thompson’s leadership. Richard W. Hendrix and Steven R. Wisebram served as Assistant U.S. Attorneys during Mr. Thompson’s tenure as U.S. Attorney in Atlanta in the 1980s. In addition to serving on the Senior Leadership Team of the VW Monitorship, Michael A. Sullivan served as Associate Independent Counsel when Mr. Thompson served as Independent Counsel in the investigation of the Department of Housing and Urban Development in 1995-1998. Since then, our partners also have worked with Mr. Thompson in representing clients in private practice over the years. Finch McCranie LLP’s other partners have conducted internal investigations and have advised organizations on compliance issues.
With the guidance of its skilled counsel and in partnership with an outside team assembled to meet the needs of a given client, Finch McCranie LLP can assess and oversee a company’s compliance with applicable laws relevant to its operations. Our attorneys can help ensure that the company and its employees operate legally and ethically, thereby minimizing or eliminating recurring liability.Some background on Monitorships
- Before beginning the process of selecting a monitor in connection with deferred prosecution agreements and non-prosecution agreements, the corporation and the government should discuss the necessary qualifications for a monitor based on the facts and circumstances of the case. The monitor must be selected based on the merits. The selection process must, at a minimum, be designed to: (1) select a highly qualified and respected person or entity based on suitability for the assignment and all of the circumstances; (2) avoid potential and actual conflicts of interests, and (3) otherwise instill public confidence by implementing the steps set forth in this principle.
- A monitor is an independent third-party, not an employee or agent of the corporation or of the government.
- A monitor’s primary responsibility should be to assess and monitor a corporation’s compliance with those terms of the agreement that are specifically designed to address and reduce the risk of recurrence of the corporation’s misconduct, including, in most cases, evaluating (and where appropriate proposing) internal controls and corporate ethics and compliance programs.
- In carrying out his or her duties, a monitor will often need to understand the full scope of the corporation’s misconduct covered by the agreement, but the monitor’s responsibilities are essentially to address and reduce the risk of recurrence of the corporation’s misconduct.
- Communication among the government, the corporation, and the monitor is in the interest of all the parties. Depending on the facts and circumstances, it may be appropriate for the monitor to make periodic written reports to both the government and the corporation.
- If the corporation chooses not to adopt recommendations made by the monitor within a reasonable time, either the monitor or the corporation, or both, should report that fact to the government, along with the corporation’s reasons. The government may consider this conduct when evaluating whether the corporation has fulfilled its obligations under the agreement.
- The agreement should clearly identify any types of previously undisclosed or new misconduct that the monitor will be required to report directly to the government. The agreement should also provide that, as to evidence of other such misconduct, the monitor will have the discretion to report this misconduct to the government or the corporation or both.
- The duration of the agreement should be tailored to the problems that have been found to exist and the types of remedial measures needed for the monitor to satisfy his or her mandate.
- In most cases, an agreement may provide for an extension of the monitor provision(s) at the discretion of the government in the event that the corporation has not successfully satisfied its obligations under the agreement. Conversely, in most cases, an agreement may provide for early termination if the corporation can demonstrate to the government that there exists a change in circumstances sufficient to eliminate the need for a monitor.
- A deferred prosecution or non-prosecution agreement that involves the use of a corporate monitor should explain what role the Justice Department could play in resolving any disputes between the monitor and the corporation, given the facts and circumstances of the case. The policy behind this principle is said to help to instill public confidence in the Justice Department’s use of monitors, including the Department’s mindfulness of the costs of a monitor and their impact on a corporation’s operations, as well as the accountability of monitors in performing their duties.