New Policy Brings Corporate Behavior Changes: Yates
Deputy attorney general Sally Yates, who drafted the Individual Accountability Policy that has become known as the “Yates Memo,” says that implementation of the policy has already had the desired effect of changing corporate behavior. Speaking to the 5/10 New York City Bar Association White Collar Crime conference, Yates said that after the policy was announced, it was the threshold cooperation credit requirements that received the most attention. (The policy says that a company is required to provide all the facts about individual conduct to qualify for any cooperation credit.)
“The notion that a cooperating company must relate facts about the conduct of individuals within the corporation is nothing new,” she declared. “That concept has been repeated by department officials over and over again for the last several years in just about every speech given on corporate fraud. But despite all that, we found that we still got passive voice, ‘Mistakes were made’ presentations from defense counsel, without identifying who made what mistakes. Companies were still expecting to get cooperation credit, even though they hadn’t really advanced the ball at all in determining who did what. And sometimes, companies still got credit for cooperation even though they hadn’t provided what is most valuable to us — the facts about individuals. So we decided to make that information a threshold factor. While the requirement to provide all facts about individuals isn’t new, what has changed is the consequence of not doing it.”
Yates pointed out that the change in policy does not mean that companies are required to conduct overly broad investigations or embark on a years-long, multi-million-dollar investigation every time they learn of misconduct. “On the contrary,” she said, “we expect companies to carry out a thorough investigation tailored to the scope of the wrongdoing. Nor will a company be disqualified from receiving cooperation credit simply because it didn’t have all the facts lined up on the first day it began talking with us. Rather, we expect that cooperating companies will continue to turn over the information to the prosecutor as they receive it.”
She advised that when a company’s lawyers have questions about the scope of an inquiry, they should do what many defense lawyers do now and contact the prosecutor to talk about it. “Already, based on reports on the ground, firms are doing just that,” she added.
Yates also rejected the notion that counsel for a company is required to serve up someone to take the fall (“the vice president for going to jail”) for the company to get cooperation credit. “Our goal is not to collect corporate heads,” she said. “Our goal is to get to the bottom of who did what and if there are culpable individuals, hold them accountable.”
She also emphasized that there is nothing in the policy that requires companies to waive attorney-client privilege or in any way rolls back protections already in place.
While there have been predictions that as a result of the policy companies will no longer cooperate with the government, Yates said that she is not aware of that happening in any case. “On the contrary,” she said, “… companies are not only continuing to cooperate, they are making real and tangible efforts to adhere to our requirement that they identify facts about individual conduct, right down to providing what I’m told are called ‘Yates binders,’ an unnecessary term if you ask me, that contain relevant e-mails of individuals being interviewed by the government. Moreover, to my knowledge, no one has told us that they will be forced to waive privilege to comply with the policy.”
She also said that Justice Department officials have been hearing that the new approach is causing positive change within companies. She said that compliance officers have said that the focus on individuals has helped them steer officers and employees within their organizations toward best practices and higher standards.
Yates concluded that “change is hard…. I know that what both prosecutors and defense attorneys crave is certainty. It’s easier to interact with one another when everyone agrees on the rules of the road. And I get that our Individual Accountability Policy has changed those rules, slightly in some places and more significantly in others. I also understand those changes may result in some temporary uncertainty, as both prosecutors and defense attorneys adjust to the new expectations. But equilibrium will return. A new normal will exist. And with it, I expect that both the reality, and the perception, of how the Justice Department treats individual corporate wrongdoers will have been strengthened.”