The
U.S. Department of Justice's Criminal Division is now weighing how companies manage risk related to artificial intelligence and potentially stymie whistleblowers, one of several updates to the division's policies on evaluating corporate compliance programs announced by a senior official on Monday.
Nicole Argentieri, principal deputy assistant attorney general and head of the DOJ's Criminal Division, said in prepared remarks at a conference held by the
Society of Corporate Compliance and Ethics that prosecutors will evaluate how firms assess and manage the risks of new technology, including AI, "both in their business and in their compliance programs."
"Under the [Evaluation of Corporate Compliance Programs policy], prosecutors will consider the technology that a company and its employees use to conduct business, whether the company has conducted a risk assessment of the use of that technology, and whether the company has taken appropriate steps to mitigate any risk associated with the use of that technology," Argentieri said.
She added that the division also wants to know whether firms are monitoring and testing their technology to evaluate if it is functioning as intended and in line with the firm's code of conduct.
Argentieri said the Evaluation of Corporate Compliance Programs, or ECCP, was further updated to include questions on whether companies encourage their employees to speak up and report misconduct or "employ practices that chill reporting." Specifically, she noted that prosecutors will review firms' policies, training and treatment of employees who report misconduct.
The update comes less than two months after the DOJ formally launched its
pilot program to reward whistleblowers who alert prosecutors to significant corporate misconduct. Argentieri noted Monday that the division has received tips from more than 100 individuals so far, "with more coming in every day."
Among the other ECCP updates, Argentieri said prosecutors will assess whether corporate compliance programs have appropriate access to data, including information to assess their own effectiveness. That assessment includes "whether companies are putting the same resources and technology into gathering and leveraging data for compliance purposes that they are using in their business," she explained.
Argentieri also offered an update on the DOJ's three-year
compensation clawback pilot program, which offers fine reductions for companies that claw back compensation from lawbreaking executives and employees.
The program requires companies to include criteria related to compliance in their compensation and bonus systems as part of corporate resolutions. Argentieri said the requirement has been included in nine such resolutions since the program launched in March 2023, and added that those companies are "setting the tone for others in the marketplace."
"As a result of corporate cases brought by the Criminal Division, nine companies across five industries are upping their game in using their compensation systems to promote compliance," she said. "These companies — whether their core business is tech, finance, crypto, manufacturing, or energy — are considering how to align compensation not just with the company's financial performance, but with conducting business in an ethical manner."
She also noted that two companies so far have received fine reductions under the clawback pilot program, both in Foreign Corrupt Practices Act cases.
In one matter, North Carolina-based
Albemarle Corp.
agreed to pay more than $218 million to resolve allegations it bribed foreign officials for business at state-owned oil refineries. Argentieri noted that the chemical manufacturer "proactively implemented procedures to freeze future bonuses for those suspected of misconduct, who directly oversaw employees engaged in the misconduct, or who were aware of red flags but failed to prevent the misconduct."
The firm saw a reduction in its criminal penalty equal to the amount of bonuses withheld, and it also earned a 45% reduction from the low end of the applicable penalty range for its "substantial cooperation and significant remediation," Argentieri said.
In the other matter,
SAP SE agreed to pay more than $220 million to settle DOJ and
U.S. Securities and Exchange Commission investigations into allegations that it bribed government officials in South Africa and Indonesia. The Germany-based software company also withheld compensation from culpable employees, "defended the decision through litigation" and earned a 40% fine reduction, Argentieri noted.
"From our whistleblower and clawback pilot programs to our updated ECCP, we are using more tools than ever before to identify corporate misconduct and to encourage companies to be good corporate citizens," Argentieri said. "I hope today you'll take this message back to your companies: now is the time to make the necessary compliance investments to help prevent, detect, and remediate misconduct. And when you uncover misconduct: call us before we call you."
--Additional reporting by Stewart Bishop and Hayley Fowler. Editing by Alanna Weissman.
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