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Joseph Spinelli on the Yates Memo: Expect DOJ investigations to become very personal

Last week Kroll and the Ethisphere Institute released their 2016 Anti-Bribery and Corruption Benchmarking Report: The Year of Global Expansion and Enforcement.

You can download the report here.

One somewhat startling finding was that only 29% of the respondents indicated that they were more concerned with personal liability than in prior years.

In September 2015, the DOJ issued a policy memorandum indicating an increased focus on investigating individuals potentially involved in corporate crimes. These crimes could include efforts to bribe government officials for favorable consideration in the award of contracts or to hire third parties who are not properly vetted that engage in corrupt activity.

The Yates Memo, as the policy memorandum is known, sends a clear message to individuals and to the C-suite that prosecutors will be targeting individual corporate executives for criminal prosecution and civil fines. 

Assistant Attorney General Leslie Caldwell emphasized this policy in a recent speech when she said, “[i]f you choose to cooperate with us, we expect that you will provide us with those facts, be they good or bad.  Importantly, that includes facts about individuals responsible for the misconduct, no matter how high their risk may be.”

The Yates Memo specifies six “key steps” to enable DOJ prosecutors “to most effectively pursue the individuals responsible for corporate wrongs.”

Those steps are:

  • Corporations will only be eligible for cooperation credit if they provide DOJ with all relevant facts about the individuals involved in the corporate misconduct.
  • Criminal and civil DOJ investigations should focus on investigating potentially culpable individuals from the inception of the investigation.
  • Criminal and civil attorneys handling corporate investigations should be in routine communication with one another.
  • Absent extraordinary circumstances, DOJ should not grant a corporate resolution that provides protection to culpable individuals.
  • DOJ should have a “clear path” to resolve investigations of individuals when the case against the corporation is resolved.
  • Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring a claim against an individual based on considerations beyond that individual’s ability to pay.

A possible consequence of the Yates Memo could be the DOJ seeking more cooperation deals with lower level employees in order to strengthen their case against executives guilty of wrongdoing.

This in turn could result in less cooperation during internal investigations from executives who fear they may implicate themselves in suspected misconduct. Likewise, corporations may decline to offer their senior leaders and other personnel, electing instead to compel the government to prove its case.

In light of the Yates Memo, a proactive response for corporations and their executives may include:

  • Design and implementation of an effective compliance program, coupled with employee training for all senior corporate executives - including members of the board
  • Management support of those compliance efforts including adequate resources and active oversight by senior management and board members
  • Immediate management response to potential corporate fraud issues brought to their attention
  • Illustrating evidence that senior management and the board are committed to zero tolerance for corruption and are dedicated to operating their corporation in an ethical manner.

The Yates Memo should send a sobering message: government investigations will likely become very personal for all the individuals involved.


Joseph Spinelli, is a Senior Managing Director at Kroll, based in New York City. He was the first Inspector General for New York State and was previously a Special Agent of the FBI. He has enjoyed a career spanning more than 30 years in private and public service across many fields, including in FCPA, anti-bribery and corruption, monitorships and white collar investigations. He can be contacted here.

Reader Comments (1)

Actions speak much louder than words. Having read and reread the NYT articles and all the supporting documentation that is public about Walmart's adventures in Mexico, and having read everything that I could find on the Tyson Mexico case, what is the basis for believing that a new memo is going to produce a new world of FCPA enforcement? When is the DOJ going to act on the internal Walmart emails? Is the Yates memo being applied to the Walmart investigation to focus on individual accountability? Or is the Yates memo just meant for the owners and managers of small companies who cannot afford a scorched-earth defense?
March 17, 2016 | Unregistered CommenterHJH
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