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John Davis Discusses How the New Monaco Memo May Affect Decisions on Disclosures, the Impact of Previous Violations, and Deal Making in Anti-Corruption Report

"How the Revised Monaco Memo Alters Deal Making and Strategy"

Anti-Corruption Report

John Davis commented on the potential impact of the U.S Department of Justice's (DOJ) recent revisions to its corporate criminal enforcement policies, including the slowdown of resolutions despite speeding up investigations. In the new Monaco Memo, announced September 15, Deputy Attorney General Lisa Monaco maintained that delayed disclosure limits the DOJ's ability to proactively pursue leads and preserve evidence before it disappears. In light of the DOJ's current stance toward corporate crime, "counsel will likely want to engage companies very quickly at the start of any investigation about the pros and cons of disclosure and the timing and content of any such disclosure, given the DOJ's emphasis on speed and the risks that the DOJ might not see a disclosure as 'timely,'" Davis said. Since multi-jurisdiction investigations of potential corruption are becoming the norm, Davis noted that companies will need to assess the risks and benefits of disclosures not only to the DOJ, but also to other international enforcement authorities that may have jurisdiction: "Disclosures to such other authorities can increase costs, require the involvement of local counsel, and open the company to risks that may not be present in the U.S. legal context." 

In addition, the impact of previous violations in foreign jurisdiction on a company's "frequent flyer" status seem unclear. Davis said "[n]either the new Monaco memorandum nor the related DOJ speeches further elaborate on the continuing inclusion of prior international 'criminal, civil, or regulatory enforcement actions' against the company or any of its affiliates as a factor, including as to the weight given." Davis further noted that "[i]n theory, such prior resolutions could make a significant impact on the overall assessment, as that language substantially expands the universe of a company's 'record' of behavior under consideration to include actions taken by foreign governments related to laws different in substance from those in the United States or under legal systems that do not grant the same due process or other considerations to companies that are the subjects of those actions."  

Finally, as to corporate acquisitions, Davis stated, "[t]he DOJ is acknowledging – rightly, in my view – that an acquiring company that efficiently integrates a purchased company into an effective compliance program and performs other appropriate remediation is reducing future risks of non-compliant behaviour by the acquired company," He added, "[that] approach gives appropriate agency to the company that will bear the potential effects of any disposition – the acquiror."