One of the major recent changes in US prosecutors' policy towards wrongdoing at banks and other corporations, especially as regards the Foreign Corrupt Practices Act 1977 and the Libor saga, has been a partial revocation of the inflexible doctrine found in the Department of Justice's Yates Memorandum of 2015.

Some of the largest FCPA enforcement settlements in history occurred in 2018. Petrobras signed a non-prosecution agreement with the DoJ that included the largest FCPA penalty of all time (penalties given to the DoJ and the Securities and Exchange Commission, plus 'disgorgement' of ill-gotten gains, amounted to US$1.78 billion) and the DoJ also settled with Société Générale when imposing one of the top 10 largest FCPA criminal penalties. SocGen had to pay out $860 million (€755 million) in all, including $275 million (€241½ million) for violations arising from its manipulation of the London InterBank Offered Rate or Libor.

The Yates Memorandum, sent to US attorneys by Deputy Attorney General Sally Yates in 2015, enumerates "steps that should be taken in any investigation of corporate misconduct" and is therefore a guide to the ways in which banks under investigation ought to behave if they want to minimise their liabilities. The first and most important order that the memo gives to prosecutors says: "In order for a company to receive any consideration for co-operation under the Principles of Federal Prosecution of Business Organisations, the company must completely disclose to the department all relevant facts about individual misconduct. Companies cannot pick and choose what facts to disclose." This became known as the "all or nothing" approach to co-operation.

The memo also says that both criminal and civil attorneys should focus on individual wrongdoing from the outset of any investigation of corporate misconduct; that no corporate resolution (any agreement that the DoJ reaches with a bank/corporation before it has moved on to deal with the misdeeds of people) will provide protection from criminal or civil liability for any individuals; and that civil attorneys should consistently focus on individuals as well as the company and evaluate whether to sue an individual on the basis of considerations beyond his ability to pay.

Justice Manual America

Now, in section 9-28.700 of the DoJ's new Justice Manual, which is entitled The Value of Co-operation, the DoJ says: "If the company is unable to identify all relevant individuals or provide complete factual information despite its good faith efforts to cooperate fully, the organisation may still be eligible for co-operation credit. The co-operation to be measured is the cooperation of the organization itself, not the cooperation of individuals within the organisation. [T]he company seeking [leniency in return for] co-operation will bear the burden of explaining the restrictions it is facing to the prosecutor."

The DoJ goes on: "Department attorneys should strive to obtain from the company as much information as possible about responsible individuals before resolving the corporate case.  In addition, the company’s continued cooperation with respect to individuals may be necessary post-resolution.  If so, the corporate resolution agreement should include a provision that requires the company to provide information about all individuals substantially involved in or responsible for the misconduct, and that is explicit enough so that a failure to provide the information results in specific consequences, such as stipulated penalties and/or a material breach."

Policy speech

At the end of November, Deputy Attorney General Rod Rosenstein backed this up by saying: "The notion that companies should be required to locate and report to the Government every person involved in alleged misconduct in any way, regardless of their role, may sound reasonable...but consider cases in which the government alleges that routine activities of many employees of a large corporation were part of an illegal scheme. When the government alleges violations that involved activities throughout the company over a long period of time, it is not practical to require the company to identify every employee who played any role in the conduct. That is particularly challenging when the company and the Government want to resolve the matter even though they disagree about the scope of the misconduct. In fact, we learnt that the policy was not strictly enforced in some cases because it would have impeded resolutions and wasted resources. Our policies need to work in the real world of limited investigative resources."