UNITED STATES ATTORNEYS
|FROM:||Gary G. Grindler
Acting Deputy Attorney General
|SUBJECT:||Additional Guidance on the Use of Monitors in Deferred Prosecution
Agreements and Non-Prosecution Agreements with Corporations
On March 7,2008, then-Acting Deputy Attorney General Craig S. Morford issued
guidance relating to the use of independent corporate monitors in connection with deferred
prosecution agreements and non-prosecution agreements (hereinafter referred to collectively as
"agreements")1 with corporations. The Morford Memorandum set forth nine basic principles for
drafting monitor-related provisions in agreements, but did not purport to address all provisions
concerning monitors that could appropriately be included in agreements. The purpose of this
memorandum is to supplement the guidance in the Morford Memorandum by adding a tenth
basic principle to guide prosecutors in drafting agreements: namely, that an agreement should
explain what role the Department could play in resolving any disputes between the monitor and
the corporation, given the facts and circumstances of the case.
This memorandum provides only internal Department of Justice guidance. In addition,
this memorandum applies only to criminal matters and does not apply to agencies other than the
Department of Justice. It is not intended to, does not, and may not be relied upon to create any
rights, substantive or procedural,, enforceable at law by any party in any matter civil or criminal..
Nor are any limitations hereby placed on otherwise lawful litigative prerogatives of the
Department of Justice.
II. ROLE OF THE DEPARTMENT IN RESOLVING DISPUTES
Principle: An agreement should explain what role the Department could play in
resolving disputes that may arise between the monitor and the corporation, given the facts
and circumstances of the case.
Comment: The adoption of this principle is based on the Department's experience with
the use of corporate monitors over the last several years, including information developed during
a United States Government Accountability Office ("GAO") audit of the Department's use of
agreements.2 Clearly communicating to companies the role of the Department in addressing
companies' disputes with monitors should better position the Department to be notified of
potential issues relating to monitorships and monitor performance. Moreover, providing clarity
as to the Department's role should help to instill public confidence in the Department's use of
monitors, including the Department's mindfulness of the costs of a monitor and their impact on a
corporation's operations, as well as the accountability of monitors in performing their duties.
In applying this principle, prosecutors should keep in mind the following considerations..
First, the role that the Department plays in resolving particular types of disputes should be
consistent with the fact that the Department is not a party to the contract between the company
and the monitor. Accordingly, the dispute resolution language should not imply that the
Department will arbitrate contractual disputes between the company and the monitor. Second,
the Department's role in resolving disputes generally should be limited to questions relating to
whether the company has complied with the terms of the agreement.. Third, the Department's
appropriate role in resolving disputes will depend on the public and law enforcement interests
implicated by the dispute. For example, it generally would be more appropriate for the
Department to be involved in resolving a dispute over whether a company should adopt a
particular compliance program enhancement recommended by the monitor or whether the
company or the monitor is fulfilling its responsibilities under the agreement than a dispute over
an issue that has no corporate compliance or other law enforcement implications.
The specific provisions included in agreements will depend on the facts and
circumstances of the case and the monitor's specific responsibilities. In certain cases, the
Department has included provisions relating to dispute resolution with a corporate monitor.
Prosecutors should make clear when including such language in an agreement or when
communicating with a company about the Department's role in resolving disputes that such
concerns should be raised in the first instance with the United States Attorney's Office or the
Department Component that has been handling the case. In applying the principle set forth in
this memorandum, prosecutors should consider whether language along the lines of the
following provisions or similar language would appropriately be included in agreements:
• With respect to any Monitor recommendation that the company considers unduly
burdensome, impractica,a unduly expensive, or otherwise inadvisable, the company need
not adopt the recommendation immediately; instead, the company may propose in writing
an alternative policy, procedure, or system designed to achieve the same objective or purpose. As to any recommendation on which the company and the Monitor ultimately
do not agree, the views of the company and the Monitor shall promptly be brought to the
attention of the Department. The Department may consider the Monitorss
recommendation and the company's reasons for not adopting the recommendation in
determining whether the company has fully complied with its obligations under the
• At least annually, and more frequently if appropriate, representatives of the company and
the Department will meet together to discuss the monitorship and any suggestion,
comments, or improvements the company may wish to discuss with or propose to the
Department, including with respect to the scope or costs of the monitorship.
2 See GAO report entitled, "Prosecutors Adhered to Guidance in Selecting Monitors for Deferred Prosecution and Non-Prosecution Agreements, but DOJ Could Better Communicate Its Role in Resolving Conflicts"
(Nov. 19, 2009). The GAO report noted that most of the companies that had retained corporate monitors that it
surveyed were unclear as to how the Department could help address their concerns over how the monitors were
performing their responsibilities or the cost of the monitorships.