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The Usual Corporate Suspects

Justice Department’s Pledge of “No Tolerance” For Corporate Repeat Offenders Means 20 Major Corporations Receiving Leniency May Now Face Scrutiny from Prosecutors

The Justice Department is ramping up its efforts to fight corporate crime, and 20 major corporations may face additional scrutiny from federal prosecutors due to the department’s new policies. All 20 are bound by DOJ leniency agreements, having faced federal criminal investigations in recent years and resolved these investigations by inking special agreements that allow the companies to avoid prosecution and a potential trial.

In a welcome about-face from years of neglect of corporate crime, the DOJ has pledged to make sure corporations that were permitted to end criminal investigations through leniency agreements abide by the terms of these agreements. The department refers to these leniency agreements deferred and non-prosecution agreements, or DPAs and NPAs. Now the DOJ says it will make the sure companies that avoided criminal prosecution in exchange for promising not to reoffend are actually keeping their promise.

“We will hold accountable any company that breaches the terms of its DPA or NPA,” Deputy Attorney General Lisa Monaco warned an audience of white-collar defense lawyers in October. “[T]here will be serious consequences for violating their terms.”

Public Citizen’s list of companies found by DOJ leniency agreements includes some of the largest and most powerful companies in the world, including Walmart, Boeing, JPMorgan, Monsanto and Novartis (see Table 1).

Table 1: Twenty Corporations Currently Bound by DOJ Leniency Agreements

Corporation Bound by AgreementParent CorporationOffenseAgreement TypeAgreement DateTerm (Years)Expiration Date
MonsantoBayerHazardous waste violationsDPA11/21/2019211/21/2021
Walmartn/aFCPA violationsNPA6/20/201936/20/2022
Merrill Lynch Commodities, Inc.Bank of AmericaFraudNPA6/25/201936/25/2022
Microsoft (Hungarian subsidiary)MicrosoftFCPA violationsNPA7/22/201937/22/2022
HSBC Private Bank (Suisse) SAHSBCTax evasionDPA12/10/2019312/10/2022
Airbusn/aFCPA violationsDPA1/31/202031/31/2023
Wells Fargon/aFraudDPA2/26/202032/26/2023
SandozNovartisAntitrust violationsDPA3/2/202033/2/2023
Chipotle Mexican Grilln/aFood safety violationsDPA4/21/202034/21/2023
Novartis Hellas S.A.C.I.NovartisFCPA violationsDPA6/25/202036/25/2023
Herbalife Nutritionn/aFCPA violationsDPA9/1/202039/1/2023
JPMorgan Chasen/aFraudDPA9/25/202039/25/2023
Goldman Sachs Groupn/aFCPA violationsDPA10/22/2020310/22/2023
Beam SuntorySuntory HoldingsFCPA violationsDPA10/23/2020310/23/2023
TicketMasterLive Nation EntertainmentFraud, cybercrimeDPA12/29/2020312/29/2023
Deutsche Bankn/aFCPA violationsDPA1/8/202131/8/2024
United AirlinesUnited Airlines HoldingsFraudNPA2/25/202132/25/2024
Credit Suissen/aFraudDPA10/19/2021310/19/2024

Data Source: Duke/University of Virginia Corporate Prosecution Registry

Two corporations that are bound by leniency agreements with federal prosecutors have already been notified that the DOJ has found them to be in breach of their agreements. The most significant consequence of breaching these agreements is criminal prosecution. The most significant consequence of breaching these agreements is criminal prosecution. In the past this is something the DOJ rarely has done. But the times may well be changing.

A 2019 Public Citizen report found only seven occasions – about 1% of the time – when the department held a corporation accountable for breaking its promise not to violate the law. In only three instances (out of more than 500) agreements did the DOJ prosecute companies for violating a leniency agreement. Monaco’s speech suggests an overdue shift away from this hands-off approach – and the nearly unprecedented breach notifications to Ericsson and NatWest Group show the DOJ is backing up its words with actions.

Another component of the DOJ’s new corporate crime-fighting effort is the instruction to prosecutors to consider a company’s full history of past violations when determining the severity of penalties a corporate offender should face. If previous penalties proved insufficient to deter further lawbreaking, then penalties for subsequent offenses should significantly increase. Crime shouldn’t pay – increasing penalties can make sure it doesn’t.

Monaco’s corporate crime enforcement policy memo elaborates:

“A corporation’s record of past misconduct – including violations of criminal laws, civil laws, or regulatory rules – may be indicative of whether the company lacks the appropriate internal controls and corporate culture to disincentivize criminal activity, and whether any proposed remediation or compliance programs, if implemented, will succeed. Prosecutors must therefore take a holistic approach when considering a company’s characteristics, including its history of corporate misconduct, without limiting their consideration to whether past misconduct is similar to the instant offense.”

Most of the corporations listed in this report faced federal criminal investigations prior to the investigations that resulted in their current leniency agreements, and all faced civil enforcement actions from federal regulatory agencies such as the Federal Trade Commission, Environmental Protection Agency, and the Securities and Exchange Commission, according to Public Citizen’s analysis of data obtained from Good Jobs First’s Violation Tracker (see Table 2).

Table 2: Tally of Prior Federal Enforcement Actions Against 20 Corporations Currently Bound by DOJ Leniency Agreements

CorporationParentPrior Federal Enforcement Actions Against Parent
MonsantoBayerDOJ criminal: 1
EPA: 6
Labor: 3
SEC: 2
Other: 3
Walmartn/aDOJ civil: 7
DOJ criminal: 1
EPA: 25
Labor: 292
Other: 5
Merrill Lynch Commodities, Inc.Bank of AmericaDOJ civil: 7
DOJ criminal: 1
Consumer: 6
Financial regs: 24
Labor: 23
SEC: 35
Other: 1
Microsoft Magyarorszag Szamitastechnikai Szolgaltato es Kereskedelmi Kft.MicrosoftLabor: 2
SEC: 1
HSBC Private Bank (Suisse) SAHSBCDOJ civil: 5
DOJ criminal: 3
EPA: 1
Financial regs: 19
Labor: 8
SEC: 3
Airbusn/aFAA: 4
Other: 1
Wells Fargon/aDOJ civil: 9
DOJ criminal: 2
Consumer: 6
Financial regs: 30
Labor: 21
SEC: 24
SandozNovartisDOJ civil: 4
DOJ criminal: 2
EPA: 3
Health regs: 2
Labor: 4
SEC: 2
Other: 1
Chipotle Mexican Grilln/aLabor: 13
Novartis Hellas S.A.C.I.NovartisDOJ civil: 4
DOJ criminal: 2
EPA: 3
Health regs: 2
Labor: 4
SEC: 2
Other: 1
Herbalife Nutritionn/aConsumer: 1
Labor: 1
SEC: 2
JPMorgan Chasen/aDOJ civil: 5
DOJ criminal: 5
Consumer: 6
Financial regs: 37
Labor: 14
SEC: 23
Other: 2
Goldman Sachs Groupn/aDOJ civil: 1
Financial regs: 11
Labor: 3
SEC: 19
Other: 4
Beam SuntorySuntory HoldingsLabor: 7
SEC: 1
Other: 3
TicketMasterLive Nation EntertainmentLabor: 8
Boeing n/aDOJ civil: 14
DOJ criminal: 1
FAA: 34
Labor: 27
Other: 8
Deutsche Bank n/aDOJ civil: 3
DOJ criminal: 4
Financial regs: 17
Labor: 1
SEC: 16
United AirlinesUnited Airlines HoldingsDOJ civil: 2
DOJ criminal: 1
EPA: 5
FAA: 464
Labor: 35
Transportation: 24
Other: 2
FirstEnergyn/aDOJ civil: 1
DOJ criminal: 1
EPA: 6
Labor: 22
Other: 2
Credit Suissen/aDOJ civil: 1
DOJ criminal: 2
Financial regs: 5
SEC: 14

Data Source: Violation Tracker (produced by the Corporate Research Project of Good Jobs First)

The DOJ’s next steps, according to the policy memo, will be guided by a Corporate Crime Advisory Group that department is internally assembling.

The shift in tone from the Justice Department is a welcome change. Law enforcement officials under the Trump  administration referred to the corporations under their jurisdiction as “partners” or “customers” while allowing corporate crime enforcement to plunge to a quarter-century low. The challenge of reining in corporate criminals after so many years of corporate lawlessness – and not just from the previous administration – will be great. Taking on an appropriately adversarial posture against the profit-driven violators whose offenses cause widespread harm in the U.S. and around the world is just the first step. The proof will be the prosecutions, if and when they come.