Legal Limbo: Seeking Clarity in How and When the Department of Justice Declines to Prosecute

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October 24, 2012

This paper addresses the need for change and improvement in the process by which the Department of Justice (“DOJ” or “the Department”) notifies subjects of its investigations that matters have been closed with no prosecution and in how the Department documents publicly the generic reasons behind these decisions. We respectfully submit that the recommended changes in policy and procedure will benefit both the Department and the business community in seeking to conform business operations to the requirements of the law. After all, a recent survey showed that nearly two thirds of North American businesses had either abandoned or modified overseas deals due to legal risks and uncertainty associated with the Foreign Corrupt Practices Act (“FCPA”) or other anticorruption considerations.2 While the cases DOJ elects to prosecute are well known, better understanding of the parameters of its decisions to forego prosecution can add significantly to the body of guidance available to the business community. In addition, fundamental fairness dictates that decisions not to prosecute be communicated to affected parties as soon as possible.

  • First, this paper proposes that notice of declinations be issued presumptively, rather than permissively following a declination decision. This practice could be subject to clearly-stated and narrowly defined exceptions that are necessary to protect the Department’s interests in ongoing investigations.
  • Second, we propose that the Department publish an annual report summarizing the circumstances or key factors underlying major declination decisions. Such a report should be drafted with the goal of providing maximum guidance as to the factors underlying the Department’s declination determinations by case category, while also protecting the identities of those who had been investigated. Such a reform could be presented in a categorical fashion so that companies facing investigations are provided a better understanding of the types of conduct leading to a declination decision.


With so many matters in the white collar arena resolved directly with DOJ without formal charge or adjudication, understanding of enforcement parameters will be enhanced through greater insight into what the Department does and does not pursue. More insight into the bases for DOJ declination decisions would be an invaluable tool to help guide corporate compliance. With such guidance, companies will be better able to expend compliance resources efficiently and effectively, while still remaining active market participants, especially when information regarding DOJ’s declination decision-making is added to the already available reporting of charging decisions and other affirmative enforcement resolutions. The availability of this additional information will serve to reinforce the types of behavior the Department seeks to encourage from the business community. Thus, if guidance over time makes clear that the Department consistently declines to pursue criminal charges where management promptly investigates, reports and corrects noncompliant conduct, the overall objectives of the DOJ enforcement program will be enhanced through encouragement of more corporate self-policing, voluntary reporting and strong remedial actions where warranted. After all, the government has as strong an interest in preventing unlawful corporate conduct— and, by extension, promoting compliant behavior—on the front end as it does in investigating and prosecuting unlawful conduct after the fact. Put more plainly, improved guidance serves the goal of allowing the Department of Justice to better communicate its expectations of lawful conduct to the individuals and business community it regulates.

 
10/24/2012