Compliance &Ethics - Society of Corporate Compliance and Ethics

The prosecutors’ perspectiveThe Thompson MemorandumThe federal Department of Justice (DOJ) in2003 indicated how it intended to respond incases in which reliance on a corporate codeof conduct was an intricate part of the cultureof a company suspected of having violatedthe law. The DOJ statement—known as theThompson Memorandum, after the deputyattorney general over whose signature it wasreleased—lists nine considerations that federalprosecutors should take into account in decidingwhether to investigate, charge, or negotiatea plea with the organization. Three of the considerationsrelate to codes of conduct:1. The corporation’s timely and voluntarydisclosure of wrongdoing and its willingnessto cooperate in the investigation of itsagents, including, if necessary, the waiverof corporate attorney-client and workproduct protection;2. The existence and adequacy of the corporation’scompliance program; and3. The corporation’s remedial actions,including any effort to implement aneffective corporate compliance programor to improve an existing one, to replaceresponsible management, to discipline orterminate wrongdoers, to pay restitution,and to cooperate with the relevant governmentagencies. 24The Thompson Memorandum spelledout in some detail the ingredients of a corporatecode of conduct that should be takeninto account when determining the dispositionof a case. The critical factors, it declared,are “whether the program is adequatelydesigned for maximum effectiveness inpreventing and detecting wrongdoing byemployees and whether corporate managementis enforcing the program or is tacitlyencouraging or pressuring employees toengage in conduct to achieve business objectives.”The Memorandum repeated that pointin other words as well: the aim would be todetermine whether compliance rules weremerely a “paper program” or whether they“were designed in and implemented in aneffective manner.”The fact that an infraction had presumablyoccurred which brought the companyto the attention of the authorities could, ofcourse, challenge any claim of effective designand implementation. Besides, the words“adequately” and “maximum effectiveness”leave a good deal to be desired in regard topreciseness.The McNulty MemorandumThe emphasis on waiving attorney-clientprivilege and work project privilege aroused astorm of protest from business organizationsand the defense bar. In late 2006, in an updateof the Thompson Memorandum, assistantattorney general Paul McNulty added threeelements to the clause in response to criticismsof the guideline undercutting the traditionalattorney privileges. These were:1. A corporation can cooperate withoutwaiving its privilege if it can provide thenecessary information through other means.2. Waiver requests should be made only ifthere is a “legitimate need,” defined as “acareful balancing of important policy considerationsunderlying the attorney-clientprivilege and the work project doctrineand the law enforcements needs of thegovernment’s ‘s investigation.”3. Waiver requests require high-level supervisoryapproval, which varies dependingon the sensitivity of the information beingsought. 25It is, at best, arguable whether theMcNulty Memorandum will do much to keepCompliance & Ethics Professional May/June 2012+1 952 933 4977 or 888 277 4977 | www.corporatecompliance.org 61