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From Securities Regulation Daily, November 30, 2016

DOJ’s Yates touts agency focus on individuals’ roles in corruption

In remarks on the Foreign Corrupt Practices Act, Deputy Attorney General Sally Yates addressed the role and responsibility of individuals in corruption. The DOJ is focusing more concretely on individuals and doing so earlier on in investigations and, to deter wrongdoing, she explained that enforcement officials must change the risk/reward balance for those making the ultimate decision to engage in misconduct. "The damage caused by corruption is just as real in Angola and Azerbaijan as it is in Atlanta and Albuquerque," and it is our obligation to send a clear message that corrupt conduct will not be tolerated, particularly in connection with developing countries, the official said.

With regard to the FCPA, the official explained, most speak in terms of companies’ alleged illegal activity abroad. However, behind every act of corruption are individuals who knew what they were doing, Yates stressed, whether those people include executives authorizing or ignoring the existence of illicit payments or employees or agents operating without supervisory approval. The most effective way to deter individual misconduct is raising the stakes for participation in acts of corruption, particularly with the threat of jail time, she opined.

The official noted that, last year, the DOJ issued a new policy describing additional steps taken to ensure that individual wrongdoers are held accountable. The Yates Memo was not designed to lead to a specific increase in individual prosecutions or "to instruct our prosecutors to bring us the heads of certain corporate executives," she said. Instead, Yates explained, the goal was to ensure effective investigation and prosecution of corporate cases and to secure a focus on individual wrongdoers as early as possible in proceedings. In working toward this goal, the DOJ made clear that information about individual wrongdoers is essential for any corporate cooperation credit and encouraged civil charges where warranted, even if the individual may not be able to pay a judgment, the official noted. In addition, she explained, the DOJ increased the difference between credit for voluntary self-disclosure and credit for failing to act before government involvement.

Companies are cooperating by providing information about who is involved in alleged wrongdoing and in what capacity and are being credited for their cooperation, Yates noted. "We’re placing the focus and emphasis where it needs to be. And while that doesn’t, and shouldn’t, mean that every case will result in an indictment of the CEO, it does mean that our people are reviewing evidence against individuals up and down the corporate ladder," according to the official. Fraud and corruption distort market balance, and the DOJ is committed to ensuring a level playing field, she stated.

In the near future, a new team will be running the DOJ, but Yates is optimistic that many policies will continue in force. "Holding individuals accountable for corporate wrongdoing isn’t ideological; it’s good law enforcement," she concluded.

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