Possible reduction of monitoring mechanism in corporate criminal investigations by American legal authorities.
The US Department of Justice is pondering a significant alteration to a key tool that helps prevent companies from reoffending after breaking the law: monitor oversight. This potential change forms part of an initiative to soften corporate enforcement policies, including cases where companies have already agreed to take on monitors as a requirement of their government settlements[1].
The DOJ declined to comment on this development.
Notably, Raytheon, a prominent US defense contractor, was scheduled to commence a three-year monitorship as part of a settlement dealing with foreign bribery and overcharging the Pentagon. But, as prosecutors review their strategy, the monitorship has yet to begin[1].
Meanwhile, Swiss commodity trader Glencore, which admitted to foreign bribery charges in 2022, had its monitorship cut short by the justice department by fifteen months[1].
As the spectrum of corporate prosecutions expanded in the early 2000s, with cases like WorldCom and Enron, monitorships became a common component of corporate criminal resolutions. These arrangements involve companies hiring an external firm, such as law firms or consultancies, to investigate apparent violations, ensure compliance with their plea agreements, and report their findings[1].
Monitorships have been a source of controversy for corporate defendants, who often find them bothersome and expensive. As a result, a Defense lawyer familiar with the DOJ's review, states, "A priority for the DoJ is to re-evaluate all ongoing criminal division monitorships - and decide what to do across the board. Options could range from eliminating monitorships altogether, paring them back, or taking on a more hands-on supervisory role."
This reassessment comes as the Trump administration's DOJ appointees roll back the intensified crackdown on white-collar crime implemented by the Biden administration. Resources are being redirected from roles such as cryptocurrency and sanctions violations enforcement to tackle immigration and cross-border criminal organizations[1].
In a bold move, Trump in February halted the enforcement of the Foreign Corrupt Practices Act (FCPA), which forbids bribery of foreign officials. Many monitorships originated from FCPA cases[1].
If monitorships are indeed phased out, it would mark a considerable departure from the Biden administration's DOJ, which relied heavily on them, as seen in high-profile cases like the 2023 plea agreement struck with Binance, the world's biggest cryptocurrency exchange, and its founder Changpeng Zhao[1].
One anonymous source claimed that some companies that may benefit from this potential relief "are not the kind we trust". Critics argue that this move could undermine efforts to ensure corporate accountability[1].
Binance pleaded guilty to charges related to money laundering and violating international financial sanctions, agreeing to pay over $4.3bn in penalties. The crypto exchange, in a prepared statement, deemed the presence of two monitors "unprecedented, inefficient, and overburdensome"[1].
As the DOJ ponders its decision, it continues to oversee monitors in other cases such as Canada's TD Bank, which pleaded guilty to laundering money for drug traffickers in 2022. TD Bank declined to comment[1].
- The potential alteration to monitor oversight by the US Department of Justice could affect companies like Binance, the world's biggest cryptocurrency exchange, as it has agreed to take on monitors as part of a government settlement.
- The proposed change in corporate enforcement policies, including the possible phasing out of monitorships, may have significant implications for the finance and business sectors, particularly in light of recent high-profile cases involving cryptocurrency.
- The prosecution's review of corporate enforcement policies has put the commencement of Raytheon's three-year monitorship, part of a settlement dealing with foreign bribery and overcharging the Pentagon, on hold.
- Some companies, if monitorships are indeed phased out, could potentially benefit from this move, but critics argue that it could undermine efforts to ensure corporate accountability in politics and general-news.
- The DOJ's decision to reassess ongoing corporate monitorships could have far-reaching consequences for the economy, as the Trump administration's DOJ focuses resources on immigration and cross-border criminal organizations, diminishing the emphasis on cryptocurrency and sanctions violations enforcement.
