The US Department of Justice (DOJ) is changing its focus to make sure companies create and implement strong regulatory compliance programs. The Department has actually hired a special lawyer whose title will be the Compliance Counsel, Hui Chen. Her job, according to the DOJ, will be to go out and to test the validity of the company’s claims about its regulatory compliance programs to make sure they are not just window dressing.
Chen was selected because of her substantial in-house compliance experience across diverse industries, including the financial, pharmaceutical and software technology sectors. Chen most recently headed Standard Chartered Bank’s global anti-bribery and corruption program. She previously served as an Assistant US Attorney in Brooklyn, New York.
The DOJ is no longer willing to accept a company’s representations about the strength of its compliance program. The Compliance Counsel’s assessment is expected to influence the DOJ’s charging decisions as well as any remedial measures the DOJ may require a company to undertake, including whether to impose a compliance monitor.
Specifically, the Compliance Counsel will examine whether:
- The board and senior management have a visible and strong commitment to the program that is communicated throughout the organization;
- The individual responsible for compliance holds a position of stature and has adequate resources and funding to implement an effective program;
- Policies and procedures are accessible, easy to understand and translated into all necessary languages;
- Employees receive periodic training on policies and procedures, including information on how and where they can seek guidance and/or report concerns;
- The program is dynamic and evolves as risks change, such as when the company acquires other companies or enters new territories;
- Incentives for ethical behavior and disciplinary measures are evenly applied across all levels of management and employees; and
- The company has procedures in place to ensure that its vendors, consultants, and other third parties comply with the company’s policies and the law. Companies are expected to terminate business relationships with third parties that demonstrate a lack of adherence to laws and policies. Boilerplate contractual representations regarding the third party’s compliance with applicable laws and audit rights that are never exercised are insufficient.
Interestingly and importantly, the Compliance Counsel’s responsibilities will also include helping criminal prosecutors better understand the role of corporate compliance programs and evaluate the effectiveness of remediation efforts when deficiencies are discovered. The Compliance Counsel will also be tasked with assessing whether the compliance monitors placed within companies as part of a settlement agreement with the DOJ are effective.