Footnote Fodder: DOJ’s Modified FCPA Guidance Includes Footnote That Appears to be Responding to Criticism
Last week, the DOJ updated its guidance to the Foreign Corrupt Practices Act (“FCPA”) and in doing so tweaked its de-confliction advice. “De-confliction” is the practice of asking corporate counsel to delay interviewing an employee in an internal investigation to allow the DOJ to speak with the employee first. In a footnote, the DOJ added the following guidance:
Although the Department may, where appropriate, request that a company refrain from taking a specific action for a limited period of time for de-confliction purposes, the Department will not take any steps to affirmatively direct a company’s internal investigation efforts.
This addition is likely a response to recent push back from courts following arguments by individual defendants that the DOJ is too heavy-handed in its approach to attorneys conducting corporate internal investigations.
One example, as we have detailed in previous posts, is U.S. v. Connolly. In that case, the DOJ alleged that two former Deutsche Bank employees engaged in fraud in the setting of the London Interbank Operating Rate (“LIBOR”). One of the defendants argued that the DOJ had effectively deputized Deutsche Bank and its outside counsels by playing an overactive role in the company’s internal investigation, yielding what the defendant alleged was compelled testimony.1 The government mooted that issue by declining to call the relevant witness in the case.
The district court, however, appeared sympathetic to the defendant’s argument, and has continued to express concern about the government’s role in Deutsche Bank’s internal investigation. In December 2018, the district court tasked the DOJ with explaining its investigative steps, separate and apart from Deutsche Bank’s. Notably, in its response, the DOJ declined the district court’s invitation, stating that it “will not seek to supplement the record” because the issue of whether the government “outsourced” its investigation “is not relevant or necessary to deny” Black’s motion.2
The DOJ’s new addition to its guidance shows that the Department is taking the scrutiny of its role in internal investigations seriously. The guidance also underscores for corporate counsel that engage in their own internal investigations, or hires outside counsel to conduct such investigations, that they must exercise care when cooperating with the government — especially regarding directives from government agents about how an investigation should proceed. These government requests can often put companies in a bind as the government often mentions in the same breath companies’ obligations to cooperate to receive leniency in the final outcome of an investigation. On the other hand, a district court finding that the government outsourced its investigation to a company’s inhouse or external counsel could result in the company being saddled with the constitutional obligations of the government, including, for example, searching for exculpatory material for individual defendants.
For more on what steps corporate counsel and outside counsel can take to fend off allegations of being a government actor, please see V&E’s previous publications on the topic.
1 See Defendant Gavin Campbell Black’s Individual Motions In Limine, Dkt. No. 232, U.S. v. Connolly, No. 1:16-cr-00370-CM; Letter to Hon. Colleen McMahon from U.S. Dept. of Justice Re: Additional Garrity Law and Analysis, Dkt. No. 333, U.S. v. Connolly, No. 1:16-cr-00370-CM.
2 See United States’ Response to Defendant Gavin Black’s Motion for Kastigar Relief, Dkt. No. 409, U.S. v. Connolly, No. 1:16-cr-00370-CM.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.