Recent DPA Breaches Reflect Increased DOJ Oversight and Scrutiny

In October 2021, U.S. Deputy Attorney General Lisa Monaco, in a speech at the American Bar Association’s 36th National Institute on White Collar Crime, discussed new actions the Department of Justice would take to strengthen the way DOJ responds to corporate crime.^[1]  Monaco explained that DOJ has “no tolerance for companies that take advantage of pre-trial diversion by going on to continue to commit crimes, particularly if they then compound their wrongdoing by knowingly hiding it from the government.” Monaco further committed that DOJ “will hold accountable any company that breaches the terms of its [Deferred Prosecution Agreement or Non-Prosecution Agreement].”

Recent actions by DOJ in two FCPA cases illustrate that the Department is staying true to these pronouncements and has increased scrutiny of compliance with corporate settlement requirements:

• In October 2021, Telefonaktiebolaget LM Ericsson announced that it had received correspondence from DOJ stating that the Department determined the company had breached the terms of its 2019 DPA by “failing to provide certain documents and factual information.”^[2] In March 2022, Ericsson announced that DOJ separately determined the company had failed to sufficiently disclose the details of a pre-settlement investigation in Iraq and again breached its DPA by failing to make related disclosures post-DPA.^[3]
• In March 2022, Deutsche Bank announced that it had agreed with DOJ to extend an existing monitorship following DOJ’s determination that the bank had violated its 2021 DPA due to “untimely reporting by the Bank of certain allegations relating to environmental, social and governance (ESG)-related information” at a bank subsidiary.^[4]

These examples show that failures to report to DOJ any evidence or allegations of violations of relevant laws can cause companies to run afoul of their DPA/NPA obligations. Companies that violated federal law after finalizing a DPA/NPA or failed to implement required compliance enhancements have faced more stringent government scrutiny or found themselves facing monitorship extensions.

In light of DOJ’s focus on compliance with DPA/NPA requirements, companies with post-settlement obligations should implement robust reporting and oversight mechanisms to help ensure identification and timely disclosure of issues to authorities. Companies also should implement and monitor compliance program enhancements to prevent repeat violations and to satisfy compliance undertakings specified in the settlement agreement. As these recent cases have shown, not doing so can result in additional and costly compliance obligations and could even lead to criminal prosecution.

Deputy Attorney General Monaco made DOJ’s view on this issue clear: “DPAs and NPAs are not a free pass, and there will be serious consequences for violating their terms.”^[5]