Policy updates the US Department of Justice (DOJ) has instituted regarding its approach to corporate enforcement have been widely discussed in recent legal and business news. Going back to October 2021, opens new tab, Deputy Attorney General (DAG) Lisa Monaco and those in her chain of command have implemented a series of changes illuminating DOJ's evolving strategy for addressing corporate misconduct across its components, according to Reuters.
One aspect of the modernized policy initiative is becoming clear. DOJ's enforcement approach seeks a culture of corporate compliance that includes increased vigilance related to US national security interests. The risks are significant for companies failing to heed warnings highlighted by the revised policy announcements, remarks by DOJ officials, and recent enforcement actions.
DOJ's revitalized corporate enforcement policy emphasizes growing concerns about national security threats. DAG Monaco and leaders on her staff have repeatedly advised that, now more than ever, US national security interests intersect with DOJ's corporate citizenship expectations.
With attention fixed on national security amid increasing global tensions, DOJ expects companies to engage in robust compliance controls, self-disclose misconduct timely, cooperate with law enforcement, and demonstrate they have taken appropriate remedial measures. General counsels, board members, and executives are wise to pay close attention to this intersection as DOJ's corporate criminal enforcement net expands.
Recent US enforcement activity against global building material manufacturer Lafarge S.A., multinational British America Tobacco company, and ship chartering company Suez Rajan Limited bring the national security aspect of DOJ's approach into focus while underscoring the need for businesses to carefully examine US national security compliance risks as part of their compliance program structure.
The Lafarge case, announced Oct. 18, 2022, opens new tab, represents DOJ's first corporate prosecution for material support of terrorism. Lafarge S.A. (Lafarge) was a French-based global cement manufacturer with a subsidiary, Lafarge Cement Syria (LCS), headquartered in Syria. Lafarge and its subsidiary, via their plea agreement , opens new tabwith DOJ, admitted to making payments to the Islamic State of Iraq and al-Sham (ISIS) and al-Nusrah Front (ANF) to protect company profits and gain market share.
Lafarge and LCS were convicted of conspiring to provide material support to designated foreign terrorist organizations, sentenced to probation by a US district judge in the Eastern District of New York, and subsequently ordered to pay over $777 million in financial penalties that included both fines and forfeiture.
Notably, the plea agreement filed with the court indicates that another company ultimately acquired Lafarge and LCS after the misconduct occurred but did not conduct post-acquisition due diligence into the business activities in Syria and, even after learning of the misconduct and conducting an internal investigation, the plea agreement indicates that the acquiring company did not self-disclose or timely cooperate with DOJ.
A tobacco company was the subject of another action brought by DOJ. Based in the United Kingdom, British America Tobacco (BAT) is one of the largest tobacco product manufacturers in the world. According to an April 2023, opens new tab DOJ press release, BAT and its subsidiary, BAT Marketing Singapore (BATMS), engaged in tobacco sales to entities in North Korea from 2007 to 2017 that were designed to circumvent sanctions using a third-party company to disguise the sales.
In the same press release, DOJ announced that BAT had entered into a deferred prosecution agreement (DPA) while BATMS entered a plea of guilty to conspiring to commit bank fraud and for violating the International Emergency Economic Powers Act (IEEPA). Significantly, per the DPA and plea agreement, linked to a related DOJ press release, opens new tab, BAT and BATMS agreed to pay a total of $629 million in penalties and fines.
BAT received the benefit of a DPA due, in part, to DOJ's consideration of its cooperation and remedial activities. DOJ noted in its press materials that this resolution is the largest North Korean sanctions penalty obtained in the Justice Department's history.
Moving on to September 2023, DOJ signaled another first, opens new tab. Marshall Islands-based shipping charterer Suez Rajan Limited and DOJ reached a resolution whereby Suez Rajan Limited entered a plea of guilty for conspiring to violate the IEEPA by facilitating the transport and sale of Iranian crude oil worth millions of dollars to a customer abroad on behalf of the Islamic Revolutionary Guard Corps (IRGC), a designated foreign terrorist organization.
Suez Rajan Limited received a three-year probated sentence and agreed to pay a $2.5 million fine. DOJ advised, opens new tab that the tanker operator, Empire Navigation, Inc. (Empire), obtained a DPA by cooperating with DOJ, accepting joint liability for the fine against Suez Rajan Limited, and agreeing to transport the 980,000 barrels of contraband oil to a US location where DOJ executed a seizure warrant for the oil. DOJ noted that Empire's due diligence, remediation efforts, and planned overhaul of its US sanctions compliance program were relevant considerations for the DPA, which provides Empire the opportunity to avoid a criminal conviction for its role in the matter.
DOJ's corporate enforcement initiatives and recent publicized criminal resolutions demonstrate an aggressive posture on behalf of US prosecutors that will capitalize on the combined efforts of DOJ components such as the Criminal Division, National Security Division, and relevant US Attorney's Offices. Further, in a recent speech, opens new tab , DAG Monaco's Principal Associate Deputy, Marshall Miller, advised the International White Collar Crime Symposium in New York that DOJ is adding more than 25 corporate crime prosecutors to its National Security Division and increasing the number of prosecutors who will pursue sanctions and Bank Secrecy Act matters by a remarkable 40 per cent.
Companies engaged in international business subject to the reach of US law enforcement authorities should take notice and strengthen due diligence efforts. Importantly, they should consult with legal counsel to carefully review and update their compliance programs, ensuring they are sufficiently prepared for DOJ's amplified enforcement actions that have a heightened connection to US national security concerns.
© 2024 - All Rights with The Financial Express
