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The Use of Corporate Monitors in Any Deferred or Non-prosecution Agreement

June 1, 2010
Acting Deputy Attorney General Gary G. Grindler issued a memorandum on May 25, 2010 to Department of Justice Component Heads and U.S. attorneys to provide additional guidance to prosecutors regarding the use of corporate monitors in any deferred or non-prosecution agreement. Corporate monitors, which are sometimes included as a part of a criminal disposition, are engaged by a corporate defendant to review the company’s compliance with the terms of the deferred prosecution or non-prosecution agreement and to evaluate the company’s compliance practices, among other undertaking. In 2008, then-Deputy Attorney General Craig S. Morford issued a memorandum providing guidance to prosecutors regarding the use of monitors. The Morford memorandum listed nine principles for drafting monitor-related provisions in agreements; the Grindler memorandum issued this week adds a tenth basic principle: namely, that a deferred prosecution or non-prosecution agreement that involves the use of a corporate monitor "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." A November 2009 Government Accountability Office report noted that a few companies that previously had engaged a monitor would have liked additional information regarding the role the Department could play in addressing questions regarding a monitor’s cost and the scope and amount of work the monitor should perform. For that reason, the GAO recommended that the Department explain what role the Department could play in resolving such disputes. The Department concurred in the recommendation and the Grindler memorandum focuses on this issue. In particular, the new guidance recommends that the Department and company representatives meet at least annually to discuss the monitorship and issues relating to scope and cost of the monitorship, if necessary. As noted in the memorandum:
 "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."
Read the Memo: Additional Guidance on the Use of Monitors in Deferred Prosecution Agreements and Non-Prosecution Agreements with Corporations

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