Remarks as prepared for delivery
Good afternoon. Thank you Josh for that kind introduction.
I am very happy to be with you here at the 4th annual
Bloomberg Law Leadership Forum.
I was here just two weeks ago to speak to the New York City
Bar Association and the American Conference Institute. It is refreshing to get out of
Washington. New York may be the city
that never sleeps, but it seems restful to me.
The Department of Justice ordinarily has Senate-confirmed
officials leading our Criminal Division and our Civil Division, which are the
Department components most responsible for overseeing federal cases involving
your corporate clients and employers. Unfortunately, the distinguished nominees
for those jobs, Brian Benczkowski and Jody Hunt, are still awaiting
confirmation by the United States Senate.
Remarkably, only two of the seven litigating components in Main Justice
have Senate-confirmed leaders.
Three of our outstanding nominees have spent 12 months
pending before the Senate, after spending several months completing the
interview process, filling out voluminous paperwork, undergoing an FBI
background investigation and withstanding an Office of Government Ethics
review. It is a long runway for a job
that lasts for only a few years.
Fortunately, we assembled a superb team to serve as acting
leaders of the Justice Department’s key components. We will keep moving forward, although the
vacancies obligate me to give more speeches than I anticipated.
The marketing blurb for this event says, “Rapid changes in
policy from Washington mean outcomes are more difficult than ever to
forecast.” Policies may change. But in the Department of Justice, one of our
goals is to enhance the predictability and consistency of the law.
The great Justice Antonin Scalia joked that one of Emperor
Nero’s worst practices was to post his edicts high on a column, so they would
be harder to read and easier to transgress.
That is not an ideal model for law enforcement.
President Trump issued a Law Day proclamation on May 1. The President said, “Law Day recognizes that
we govern ourselves in accordance with the rule of law rather [than] according
to the whims of an elite few or the dictates of collective will. Through law, we have ensured liberty.”
The rule of law is essential to commerce. It allows businesses to enter contracts, make
investments, and project revenue with some assurance about the future. It establishes a mechanism to resolve
disputes, and it provides protection from arbitrary government action.
Americans have always understood that government should
support private enterprise. The American
Revolution in 1776 was not just a political revolution. It was also an economic revolution. The movement included mercantilists, farmers,
shopkeepers, and other ordinary men and women who banded together, primarily to
protest excessive governmental regulation.
The colonists were angry about burdensome tax laws. They were upset about restrictions on their
ability to settle and develop the western frontier. They were concerned about unfair trade
policies.
Creating a favorable environment for business to flourish
and spur economic growth is one of the priorities of the Trump
Administration. President Trump is
mindful about the importance of promoting entrepreneurialism and avoiding
unnecessary regulation. And under the
leadership of Attorney General Jeff Sessions, the Department of Justice is
doing its part to promote an environment where businesses can thrive.
White collar crime undermines the rule of law, defrauds
victims, and disrupts the marketplace. Our
goal is to deter crime, and we can only do that by holding accountable the
perpetrators who break the law to gain a competitive advantage.
Our Department is committed to building strong relationships
with enforcement authorities and law-abiding businesses. That is reflected in a series of policies
announced by the Department over the past year.
You will continue to see it reflected in the faithful execution of those
policies.
When I started my first supervisory job in 2001, one of the
most popular management books was “Who Moved My Cheese?” It is a fable about how to manage change.
The story involves two men who live in a maze. There is a place in the maze where they can
always find cheese.
But one day, the cheese stops showing up in the usual spot. One man chooses to adapt to the new
challenge. He ventures through the maze in search of the cheese. The other man sticks with his routine and
refuses to change.
The adaptable man learns that the cheese is always
moving. He constantly explores the maze,
altering his pattern to prevent complacency from setting in.
The complacent man goes hungry.
That simple lesson is a reminder about the need to evolve to
meet changing circumstances. Renowned
management consultant Peter Drucker put it this way: “The greatest danger in
times of turbulence is not the turbulence; it is to act with yesterday’s
logic.” If the cheese moves, you need to
move, too.
Philosopher Nassim Nicholas Taleb coined the term
“anti-fragile” to describe the most successful business model. According to
Taleb, the opposite of fragile is not merely “robust” or “resilient,” as most
people assume. Things that are robust or
resilient are non-fragile, but they merely resist breaking when placed under
stress. Things that are anti-fragile grow
stronger with stress, like muscles.
Risk and randomness cannot be eliminated, so Taleb
recommends embracing them. Organizations
that seek to avoid stress are quickly defeated when they inevitably experience
unforeseeable events. Anti-fragile
organizations welcome risk and are prepared to flourish when the unexpected
occurs.
The point is that external factors are always changing, so
whatever business you are in, you sometimes need to realign your practices to
achieve your goals. The movie Moneyball,
based on Michael Lewis’s book, summarizes the lesson in three words borrowed
from Charles Darwin: “Adapt or die.”
At the Department of Justice, we do not change our
principles, but we should regularly evaluate our policies to determine whether
they accomplish our goals.
We made several recent changes to our corporate enforcement
policies. One of our goals is to provide
greater clarity and certainty to companies that want to do the right
thing. Law enforcement efforts are most
effective when we build bridges with law-abiding businesses.
One of America's best crime-fighting weapons is the
ingenuity and integrity of its people.
Good corporate citizens play a critical role in upholding the rule of
law.
The Department should reward companies that try in good
faith to deter crime. That means
developing corporate compliance programs that help to prevent problems, and
that detect any wrongdoing quickly. It
also means investigating misconduct, voluntarily reporting it, cooperating
fully in investigations, and implementing appropriate remedies.
One of our significant changes is a process point. For many decades, former Deputy Attorneys
General have lived on through corporate fraud memoranda bearing their names. We followed the Holder Memo, the Thompson
Memo, the McNulty memo, the Filip Memo, and the Yates Memo, to name a few. One of my goals in taking this job was to
make sure there would be no Rosenstein memo.
It is difficult to keep track of all the Department of
Justice memos, particularly for busy prosecutors. By formally incorporating our policies into
our U.S. Attorneys’ Manual, we make it clear that the policies apply to
everyone in the Department, we make them more accessible to employees, we provide
greater transparency for stakeholders, and we promote greater consistency in
federal investigations.
As part of the effort to consolidate and streamline our
policies, we initiated a comprehensive review and update to the manual, for the
first time in at least 20 years. We are
reviewing the entire manual, a total of approximately 11,000 pages. Our goals are to identify redundancies,
clarify ambiguities, eliminate surplusage, and incorporate constructive
additions.
I hope these efforts will encourage future Department
leaders to write fewer memos, and instead to put policy changes directly into
the manual.
Last June, Attorney General Sessions announced that the
Department would end the practice of directing third-party settlement payments
to non-governmental entities that were not harmed by a defendant’s conduct.
In November, the Attorney General announced a new policy to
prohibit improper reliance on agency guidance documents.
Also in November, we announced the Department’s Foreign
Corrupt Practices Act Corporate Enforcement Policy. It promotes greater clarity and consistency
in FCPA enforcement efforts, and it provides stronger incentives for companies
to voluntarily disclose misconduct, fully cooperate, and remediate any harm.
We announced the first corporate declination under the new
FCPA Policy last month. The company
demonstrated responsible corporate conduct after discovering a violation. It satisfied the rigorous requirements of our
policy, and the Department gave the company credit for its disgorgement in a
related SEC administrative proceeding.
Two weeks ago, we announced a new Department policy that
encourages coordination with Department components and other enforcement
agencies when imposing multiple penalties for the same conduct.
Our new policy discourages “piling on” by instructing
Department components to appropriately coordinate with one another and with
other enforcement agencies seeking to impose penalties on a company for the
same misconduct.
Let me pause to make a confession. When I announced the new policy a few weeks
ago, I explained that the term “piling on” refers to a football player jumping
on a pile of other players after the opponent is already tackled. I played football about 40 years ago, so I
used that metaphor.
But last night, I learned that the Merriam-Webster
dictionary uses a different meaning. The
dictionary defines “piling on” as joining other people in criticizing someone,
usually in an unfair way. I also have
experience with that. So I am definitely
against piling on, no matter what definition you use.
The goal of our new policy is to enhance relationships with
our law enforcement partners in the United States and abroad, while avoiding
unfair duplicative penalties.
It is important for us to be aggressive in pursuing
wrongdoers. But we should discourage
disproportionate enforcement of laws by multiple authorities.
The conference organizers sent me some of your
questions. Many of them relate to the
new coordination policy. The questions
ask how the Department will calculate penalties and offsets, and how we will
interact with other entities in determining penalties.
Our policy encourages Department attorneys to coordinate
with any federal, state, local, and foreign enforcement authorities that want
to settle with a company for the same misconduct. I cannot offer a mechanical formula that will
apply in every instance. And I am always
careful to point out that our internal policies are not legally
enforceable. You cannot challenge them
in court. But putting this policy into
the U.S. Attorneys’ Manual has consequences.
It will guide our attorneys and supervisors.
Last month, the Department’s Criminal Division and the FBI
announced a deferred prosecution agreement with the subsidiary of a
multinational electronics company. The
company made improper payments to consultants and sales agents in the Middle
East and Asia.
The Department accepted a criminal penalty of more than $137
million, and recognized that the company had agreed to pay $143 million to the
SEC to disgorge ill-gotten gains from the same misconduct. The SEC agreed to forgo penalties, given the
company’s penalty payment to the Department.
Under the new FCPA policy, the company received a 20 percent
discount off the low end of the Sentencing Guidelines fine range because of its
cooperation and remediation.
In another case, in February, the Criminal Division and the
U.S. Attorney’s Office for the Southern District of California worked with
Immigration and Customs Enforcement and the IRS, in parallel with the Office of
the Comptroller of the Currency and the Financial Crimes Enforcement
Network. We charged an international
bank for concealing deficiencies in its anti-money laundering program and obstructing
the OCC’s examination. The Department
accepted a plea agreement in which the bank agreed to forfeit almost $370
million, and stipulated that $50 million of that obligation was satisfied by
the payment of civil penalties to the OCC in a separate administrative action.
I want to caution you that cooperating with a different
agency or a foreign government is not a substitute for cooperating with the
Department of Justice. And companies
that make partial disclosures or secure lenient penalties from other agencies
or foreign governments before consulting the Department of Justice may not
qualify. Companies that are candid and
cooperative, however, will be eligible for greater leniency.
The new coordination policy rewards good conduct, builds
partnerships with other enforcement authorities, and promotes finality for
companies.
This is another step towards greater transparency and
consistency in corporate enforcement. To
reduce white collar crime, we need to encourage companies to report suspected wrongdoing
to law enforcement and to resolve their liability expeditiously.
Every corporate fraud policy change we make will reflect our
resolve to hold individuals accountable for corporate wrongdoing. That commitment is evident in many of our
recent cases.
Last month, an executive at one of the world’s largest
financial institutions was sentenced in the Eastern District of New York to
serve 24 months in prison for participating in a “front-running” scheme. The executive fraudulently used confidential
client information to benefit his employer at the expense of the client.
Last July, we announced the largest health care fraud
enforcement action in history, with charges against 412 individual defendants.
One hundred twenty of them were prosecuted for unlawfully distributing opioids
and other narcotics. Fifteen were
charged in federal courts here in New York.
In another example, last week, the U.S. Attorney’s Office
here in the Southern District of New York announced an indictment charging
three individuals for a securities fraud scheme. They allegedly persuaded victims to invest
millions of dollars of digital funds to purchase fraudulent digital currency
tokens.
Our prosecutors and civil enforcement attorneys encouraged
us to adopt a formal coordination policy and seek to achieve reasonable and
proportionate outcomes in major corporate investigations. Our attorneys prize the Department’s
reputation for fairness. They understand the importance of protecting our
brand.
Speaking of our brand, I visited the FBI’s New York Field
Office this morning. One of the things that sometimes gets lost in the endless
commentary about law enforcement is that some of the most patriotic and
public-spirited American citizens work in the Department of Justice.
Our agents and attorneys possess superb academic credentials
and demonstrate exceptional character.
They pass rigorous screening interviews and face thorough background
checks every few years. Our agents even
take polygraph examinations.
We instill a culture of ethical conduct from the first day
employees take the oath of office – an oath to support and defend the
Constitution, to bear true faith and allegiance, and to well and faithfully
execute the duties of their office.
If you walk into any branch of the Department of Justice
anywhere in the country, you will find some of the most decent, ethical,
honorable and admirable people you could ever hope to meet. As Attorney General
John Ashcroft used to say, our name represents a moral value, and we aspire to
live up to it.
That is not to say that everybody in our Department is
flawless. No organization with 115,000 employees is error-free. But we are
committed to correcting mistakes and punishing wrongdoers.
We have a Professional Responsibility Advisory Office at
Main Justice, to provide nationwide guidance to our attorneys about their
ethical responsibilities, and we designate at least one Professional
Responsibility Officer in every U.S. Attorney’s Office. Everybody in the Department participates in
many hours of annual training, including ethics training.
We also have serious, professional, nonpartisan internal
watchdogs. There are Offices of Professional Responsibility in Main Justice and
each of our law enforcement agencies, and an Office of the Inspector General
(OIG) with 475 employees and jurisdiction over the entire department.
The Inspector General’s federal agents, attorneys, and other
officials are governed by executive branch confidentiality rules. Federal
statutes allow them to review material that is not appropriate for disclosure
outside the Department and prohibit them from leaking.
The Inspector General has criminal investigative authority –
equivalent to the FBI – as well as administrative authority. If an investigation involving any past or
present Department employee requires criminal process, the Inspector General’s
sworn and armed federal agents work with U.S. Attorneys to obtain grand jury
subpoenas and search warrants, just like FBI agents.
Unlike the FBI, the Inspector General produces public
reports about wrongdoing and makes programmatic recommendations to deter waste,
fraud and abuse. The office is led by a
Senate-confirmed presidential appointee.
Most importantly, as you know well, Department of Justice
employees develop the discipline required by the need, when we make an
allegation of wrongdoing, to prove it beyond any reasonable doubt to a judge
and jury with credible, admissible evidence. That gives us a very powerful incentive to
seek the truth, and only the truth, wherever it may lead us.
Robert Jackson was one of our nation’s most respected
Attorneys General. In a 1940 speech, Jackson said that a prosecutor should seek
the truth, serve the law, and always stay humble and kind.
Our exercise of discretion is always guided by our
overriding commitment to the rule of law.
In 1942, amidst the uncertainty of World War II, Jackson described law
as “something that manages to serve both the stability of our society and its
capacity for improvement.”
Jackson told a story about three stonecutters who were asked
to describe their work. “The first
workman gave the uninspiring, but very practical reply, ‘I am earning a
living’; the second workman, without lifting his eyes from his immediate work,
said, ‘I am cutting this stone’; but the face of the third lighted up as he
said, ‘I am building a cathedral.’”
The point of the parable is that you should focus not just
on how best to perform individual tasks, but also on the collective legacy you
are helping to create.
Jackson concluded his speech with this advice for lawyers:
“We, too, whether or not we are aware of it, do more than earn livings; we do
more than carry on particular cases. We
are building the legal structure that will protect the altars of human liberty
– the structure that will express man’s faith in his worthiness and capacity to
be free.”
At the Department of Justice, our employees understand that
we are building a cathedral. It is not
always an easy task, but each generation must strive to protect the cathedral
of justice and leave it stronger than we found it.
I hope you will do your part to help.
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