When the Government launches an investigation into a company, the role of the Compliance Officer (CCO) is central. The COO may be familiar with conducting internal investigations, however, depending on the scope and subject of a Government investigation a CCO may lack the knowledge and capabilities to effectively handle the matters that are in question. The initial step is to analyze the allegation and determine the seriousness of the issues involved. If it is determined that there will be legal and/or financial implications, the assistance of in house and outside counsel will be imperative. Secondary is locating and locking down documentation. There is likely to be a request for communications, reports and documents. Having access to servers and email files will be critical. The US Department of Justice (USDOJ) released a manual in April 2019 titled Evaluation of Corporate Compliance Programs designed for Prosecutors and Government Agencies to implement during investigations. It offers three questions to be asked. From the manual it reads: "As the Justice Manual notes, there are three "fundamental questions" a prosecutor should ask during an investigation:" 1. "Is the corporation's compliance program well designed?" 2. "Is the program being applied earnestly and in good faith?" In other words, is the program being implemented effectively? 3. "Does the corporation's compliance program work" in practice? While the responses and supporting documents relating to these questions will most certainty fall under the umbrella of Compliance Officers duties day-to-day duties, it may be imperative to retain legal counsel with specialized knowledge to both navigate Government entities and protect the rights the COO and other Officers. Dealing with Government entities can be overwhelming and intimidating. Counsel can assist in navigating you and/or your company through the investigation. Attorney General Jeff Sessions recently announced the deployment of resources to investigated pharmaceutical companies and distributors in fighting the opioid epidemic. This initiative has and will continue to involve the investigation of companies involved in the selling and distribution of these and other controlled substances. Unfortunately COO's have found themselves the target of criminal investigations. Recently two executives of Miami-Luken, a pharmaceutical distributor, were charged with "conspiring to distribute controlled substances". From the DOJ:
"A federal grand jury has charged a pharmaceutical distributor, two of its former officials and two pharmacists with conspiring to distribute controlled substances in an indictment returned here yesterday. Four individuals have been charged, including Miami-Luken's former president and compliance officer and two West Virginia pharmacists."
Knowing the role and rights of a Compliance Office is critical to handling Government inquiries and investigation as smoothly as possible. Consulting with legal counsel may be the best course of action.
The U.S. Department of Justice (DOJ) Criminal Division recently released a guidance document entitled "The Evaluation of Corporate Compliance Programs," an updated version of the guidance the DOJ's Fraud Section had released in February 2017. The 2019 guidance "seeks to better harmonize the guidance with other Department guidance and standards while providing additional context to the multifactor analysis of a company's compliance program," and was compiled with the input from various DOJ components, including the Office of the Assistant General, Fraud Section, and the Money Laundering and Asset Recovery Section.
A U.S. District Court for the Southern District of New York ruling in United States v. Connolly (16-CR-370) recently held that the government improperly "outsourced" its investigation of LIBOR manipulation to Deutsche Bank and its outside law firm and the law firm's actions were consequently "fairly attributable" to the government. The judge found a Fifth Amendment violation because the government had outsourced, relied on, and directed the bank's internal investigation, which involved compelling the defendant, a Deutsche Bank trader, to submit to an interview and cooperate with the Bank's investigation or alternatively be fired.