Sending corrupt corporate officials to prison 'most effective deterrence,' Rosenstein says

11 March 2019 1:48pm

7 March 2019. By Robert Thomason.

Punishing corrupt corporate employees is the most effective form of deterrence against bribery and is a key element of the US Justice Department's Foreign Corrupt Practices Act enforcement policy, said Deputy Attorney General Rod Rosenstein.

"The deterrent impact on the individual people responsible for wrongdoing is sometimes attenuated in corporate prosecutions," said Rosenstein said at an FCPA conference*. "The most effective deterrent to corporate criminal misconduct is identifying the people who commit crimes and sending them to prison."

Rosenstein said a major goal of a DOJ corporate enforcement policy in FCPA cases is to incentivize companies to identify culpable individuals.

That corporate enforcement policy holds forth to a firm a presumption of declination of prosecution if it self-reports possible FCPA violations, cooperates fully and takes remedial action to improve compliance. DOJ declinations to prosecute often also require the company to disgorge profit derived from bribery.

Rosenstein said companies that would try to apply a cost-benefit analysis of the corporate program, simply trying to treat disgorgement as a cost of doing business, wouldn't be able to take advantage of the corporate accountability's potential to decline prosecution.

Corporations seeking this declination are expected under the policy, which was updated and included in the US Attorneys Manual in 2017, to do more than simply write a check, he said. Rosenstein said DOJ expects the companies to identify the individuals who were engaged in the misconduct and to cooperate with any investigation or prosecution of those individuals.

"When there is a low risk of detection and enforcement against the company, and a minimal risk of punishing individuals, that does not deter corporate officers from pursuing their own personal profit through criminal activity," Rosenstein said. "We aim to incentivize companies to report crimes, disgorge illegal proceeds, take remedial actions, and identify accountable officials so we can prosecute them, and do it all promptly.

"Our goal is to make it more likely that people will get caught," he said.

— International cooperation —

Rosenstein said companies that violate the FCPA are multinational and this requires a high degree of cooperation with foreign jurisdictions.

He said sending a mutual legal treaty assistance request for evidence can take years. A better approach, he said, is to have the phone number of a foreign counterpart who can provide the information quickly.

DOJ has also increased its international assistance staff to handle requests from foreign governments to DOJ, saying that if the US expects to get cooperation from foreign countries, it should reciprocate.

— Rosenstein's next move —

Rosenstein will be retiring from DOJ this month after 29 years with the agency.  He told Alexandra Wrage, who interviewed Rosenstein after his speech, that he plans to take time off after leaving DOJ and then look for work. Wrage is president of TRACE, the organization that organized the conference.

He said that although it's legal for DOJ employees to look for work while still employed with the agency, it's a time-consuming process.

* 15th Annual TRACE Forum, Washington, DC, March 7, 2019

	Eliot Gao