Labor Department News Releases Update

Labor Department News Releases Update

SEC.gov | Toward Healthy Companies and a Stronger Economy: Remarks to the U.S. Treasury Department’s Corporate Women in Finance Symposium

SEC.gov | Toward Healthy Companies and a Stronger Economy: Remarks to the U.S. Treasury Department’s Corporate Women in Finance Symposium

RINGLING BROS. SETTLES WITH DOL RELATED TO FALL INCIDENT INVOLVING 9 EMPLOYEES

FROM:  U.S. DEPARTMENT OF LABOR 

Ringling Bros. to enhance safety for all aerial acts after settlement agreement

9 employees injured in May 2014 fall in Providence, Rhode Island

BOSTON — Ringling Bros. and Barnum & Bailey Circus, will implement ongoing safety enhancements in aerial acts to protect employees against injuries like those sustained by its aerialists during a May 4, 2014, performance in Providence, Rhode Island. Feld Entertainment Inc., headquartered in Palmetto, Florida, owns the circus.

The proactive measures are part of a settlement agreement with the U.S. Department of Labor concerning a citation issued to the circus by the department's Occupational Safety and Health Administration in connection with a 2014 incident in which eight employees were badly hurt. They were performing an act called a "Hair Hang" when the carabiner used to support them failed and they fell more than 15 feet to the ground. The aerialists, along with a ninth employee who was struck by the falling workers, sustained serious injuries.
OSHA's inspection determined that the carabiner used to lift performers was not loaded according to manufacturer's instructions. The agency cited the circus for one serious violation of occupational safety standards and proposed the maximum fine of $7,000. The circus initially contested its citation and penalties to the independent Occupational Safety and Health Review Commission.

"This agreement goes beyond this one case. It commits Ringling Bros. to continual, effective and detailed corrective action that will address and enhance safety for all its aerial acts, so that catastrophic incidents, such as the Providence fall and the needless worker injuries that resulted, never happen again," said Patrick Griffin, OSHA's area director in Rhode Island.

"We sought and achieved a settlement that will maximize safety for the circus' employees and minimize the possibility of future falls and injuries. It's incumbent upon the circus to follow through on its pledge with a thorough, effective, proactive and continuous safety program," said Michael Felsen, the department's regional solicitor of labor for New England.

Under the settlement, the circus agrees to take the following actions on an ongoing basis:

All new and existing aerial acts will be reviewed by a registered professional engineer.

For each act, assemble and provide to each circus unit a technical book.
Develop a written checklist for equipment and hardware inspections for each act.
Each circus unit will conduct an annual safety day that will address employee safety topics.

The circus will also pay the full OSHA fine and submit documentation that the hazard has been corrected and preventive measures put in place. The settlement will become a final order of the Occupational Safety and Health Review Commission on May 13, 2015.

The Providence Area Office conducted the OSHA investigation. Senior trial attorney Carol J. Swetow of the department's regional Office of the Solicitor in Boston litigated the case for OSHA.

ASSISTANT AG CALDWELL'S REMARKS ON CORPORATE COMPLIANCE AND ENFORCEMENT

FROM:  U.S. JUSTICE DEPARTMENT 

Assistant Attorney General Leslie R. Caldwell Delivers Remarks at New York University Law School’s Program on Corporate Compliance and Enforcement

New York City, NYUnited States ~ Friday, April 17, 2015

Good afternoon, and thank you for that kind introduction.  Thank you, Professor Arlen, for facilitating this important conference and for inviting me to join today’s conversation, and thank you to NYU for hosting this event.  I am honored to speak with this audience of leaders in the field of corporate compliance and enforcement, an area to which I have dedicated much of my own professional career.

I want to focus my remarks this afternoon on the Criminal Division’s efforts to increase transparency in its corporate prosecutions.

For the past year, I have had the pleasure of leading the Justice Department’s Criminal Division, which includes approximately 600 attorneys from 17 sections and offices.  Our attorneys investigate and prosecute crimes, develop criminal law and policies and promote the rule of law abroad.  While most of the U.S. Attorneys’ Offices around the country focus on prosecuting crime in their respective districts, the Criminal Division—often in partnership with U.S. Attorneys’ Offices—focuses on issues that affect the nation as a whole, and frequently participates in investigations that are international in scope.

Among the sections that I oversee are two sections that do a significant number of corporate prosecutions.  The Criminal Division’s Fraud Section plays a unique and essential role in the department’s fight against sophisticated economic crime, bringing complex securities and commodities fraud cases, health care fraud prosecutions and Foreign Corrupt Practices Act (FCPA) cases.  I also oversee the Asset Forfeiture and Money Laundering Section—known as AFMLS—which pursues prosecutions against institutions and individuals engaged in money laundering, Bank Secrecy Act violations and sanctions violations.  AFMLS attorneys also forfeit the proceeds of high-level foreign corruption through the Kleptocracy Asset Recovery Initiative.  The investigations handled by the Fraud Section and AFMLS are increasingly global in nature, and our Office of International Affairs plays a significant role in helping us gather evidence and secure the return of fugitives from abroad.  

One of my priorities in the Criminal Division is to increase transparency regarding charging decisions in corporate prosecutions.  I know that many corporate counsel have concerns about what they perceive as a lack of transparency in how the department decides when to bring charges, or to seek some lesser resolution.

Greater transparency benefits everyone.  The Criminal Division stands to benefit from being more transparent in part because if companies know the benefits they are likely to receive from self-reporting or cooperating in the government’s investigation, we believe they will be more likely to come in and disclose wrongdoing and cooperate.  And on the flip side, companies can better evaluate the consequences they might face if they do not receive cooperation credit.  Transparency also helps to reduce any perceived disparity, in that companies can compare themselves, as best as possible, to other similarly-situated companies engaged in similar misconduct.

There are often limits to how much we can disclose about our investigations and prosecutions—particularly for investigations in which no charges were brought—but we are trying to be more clear about our expectations for corporate cooperation and the bases for our corporate pleas and resolutions.

One of the themes of today’s program is the shaping of corporate culture.  Shaping corporate culture through deterrence is an area where the Criminal Division plays an important role.  One important purpose of criminal prosecution of corporations is the deterrence of future would-be wrongdoers.  But to achieve deterrence, the Criminal Division must transparently communicate its expectations and the consequences of corporate misconduct.  An opaque or unreasoned enforcement action carries little deterrent effect.

We recognize the productive role we can play in influencing corporate conduct, and we take seriously the effects of our enforcement actions.  Wherever possible, we try to communicate clear guidance to the corporate community through our criminal resolutions, our interactions with companies and their counsel during an investigation or prosecution and other channels such as conferences like this one.

During my first year in leading the Criminal Division, we have tried to make as clear as possible what we expect from those companies that choose to cooperate.  Put simply, if a company wants cooperation credit, we expect that company to conduct a thorough internal investigation and to turn over evidence of wrongdoing to our prosecutors in a timely and complete way.  Perhaps most critically, we expect cooperating companies to identify culpable individuals—including senior executives if they were involved—and provide the facts about their wrongdoing.

As this sophisticated audience knows, there is no “off the rack” internal investigation that can be applied to every situation at every company.  Effective investigations must be tailored to the unique misconduct at issue and the circumstances of each company.  But, there are hallmarks of all good internal investigations.  Chief among them is the identification of wrongdoers.  Prosecuting individuals, including corporate executives, for their criminal wrongdoing is a top priority for the Criminal Division.  Corporations seeking cooperation credit should conduct their internal investigations with those principles in mind.

The mere voluntary disclosure of corporate misconduct—by itself—is not enough.  All too often, corporations expect cooperation credit for voluntarily disclosing and describing the corporate entities’ misconduct, and issuing a corporate mea culpa.  True cooperation, however, requires identifying the individuals actually responsible for the misconduct—be they executives or others—and the provision of all available facts relating to that misconduct.

Investigations must also be independent and designed to uncover the facts, not to spread company talking points or whitewash the truth.  We expect that the complete facts about the wrongdoing will be provided, and in a timely way.  As we work to be transparent, we expect transparency in return.  Transparency is a two-way street, and we expect companies that are claiming to cooperate to walk the walk.

The Criminal Division, meanwhile, will conduct its own investigation.  We will pressure test a company’s internal investigation with the facts we gather on our own, and we will consider the adequacy of an internal investigation when we evaluate a company’s claim of cooperation.

Let me be clear, however, the Criminal Division does not dictate how a company should conduct an investigation.  If a company decides to conduct an internal investigation and seek cooperation credit, that company must determine how best to conduct its own internal investigation.  Although we can provide guideposts, the manner in which an internal investigation is conducted is an internal corporate decision.

All too often, criticism is leveled against the Justice Department for purportedly causing companies to spend years, and many millions of dollars, investigating potential violations.  This is particularly true in the FCPA context where the need for international evidence can add to the expense and burden of an investigation.  Critics wrongly question the wisdom of disclosing misconduct and cooperating with the government in light of what they perceive to be the department’s requirement that companies then must conduct unnecessarily costly, time consuming and widespread investigations.

There is no question that some cooperating companies spend large sums of money investigating potential misconduct and correcting internal controls issues that allowed the misconduct to occur.  The decision to incur those costs, however, is one made by those companies, not a requirement of the department.  When a company chooses to cooperate with the government, the manner in which the company approaches its cooperation, and its own investigation of the conduct, can significantly affect the length of the investigation and the costs incurred by the company.

Although we expect internal investigations to be thorough, we do not expect companies to aimlessly boil the ocean.  Indeed, there have been some instances in which companies have, in our view, conducted overly broad and needlessly costly investigations, in some cases delaying our ability to resolve matters in a timely fashion.

For example, if a company discovers an FCPA violation in one country, and has no basis to suspect that violations are occurring elsewhere, we would not necessarily expect it to extend its investigation beyond the conduct in that country.  On the other hand, if the same people involved in the violation also operated in other countries, we likely would expect the investigation to be broader.

This example is not intended to suggest the proper scope of an investigation of any given matter.  My point instead is that, to receive cooperation credit, we expect companies to conduct appropriately tailored investigations designed to root out misconduct, identify wrongdoers and provide all available facts.  To the extent a company decides to conduct a broader survey of its operations, that decision, and any attendant delay and cost, are the result of the company’s choices, not the department’s requirement.

To assist cooperating companies in appropriately targeting their investigations, to the extent possible, we will make clear to those companies our areas of interest.  I tell my prosecutors that where possible, if it would not compromise our own investigation, we should share information about our investigation with a cooperating company to help focus the company’s internal inquiry.  I encourage an open dialogue between company counsel and our prosecutors about the progress of the internal investigation.  Companies that truly demonstrate a commitment to cooperation will find that this dialogue comes easily.

As is their right, corporations may also choose not to cooperate with the government.  But, they too must understand the consequences of their decisions.  The lack of timely and complete cooperation, which effectively frustrated the prosecution of culpable individuals, was one of the tipping points leading to charges, guilty pleas and landmark monetary penalties in the BNP Paribas and Credit Suisse cases last year.  BNPP’s failure to cooperate was expressly referenced in the plea agreement in which the bank admitted guilt and agreed to pay nearly $9 billion in financial penalties.

Likewise, a company’s decision not to cooperate may delay, but rarely thwarts, our investigation.  In a recently announced FCPA case against Alstom, a French power and transportation company, the company opted not to cooperate for years.  The Criminal Division performed an extensive investigation without the company’s cooperation.  Today, four individual Alstom executives have been charged with FCPA crimes; three of the executives have pleaded guilty; Alstom’s consortium partner, Marubeni, was charged and pleaded guilty after also opting not to cooperate, and Alstom pleaded guilty and paid a $772 million penalty—the largest criminal penalty in the history of the FCPA.

These are all facts that a company must consider in deciding whether to cooperate with our criminal investigation.  A company must choose on its own whether to conduct an internal investigation or to cooperate.  For our part, when we have them, we can openly provide facts and reference points to allow the company to make an informed decision about the scope of its investigation.

We recognize that information about the bases for our corporate guilty pleas and resolutions is an important reference point for companies that are evaluating whether to self-disclose a violation or cooperate.  Corporations may wish for a formula or definitive matrix that could be applied in this context.  But, while a rote formula might bring certainty and consistency, it would do so at the expense of the individualized justice that comes with thoughtful and nuanced prosecutorial decision-making.

For decades, the department has disclosed the factors that prosecutors must evaluate when considering corporate criminal charges and resolutions.  The corporate prosecution principles were originally adopted two decades ago—in the Holder Memo, issued when now Attorney General Holder was the Deputy Attorney General—and have been refined through the years into the current Filip Memo, otherwise known as the Principles of Prosecution of Business Organizations.

This audience is no doubt versed in the comprehensive considerations laid out in the nine Filip factors, which are publicly available on the Internet.  When applied to a particular case against a business organization, the factors could lead to charges, a deferred prosecution agreement or a non-prosecution agreement—known as DPAs and NPAs—or a declination.

Arriving at a corporate resolution requires a unique balancing of the Filip factors in each case.  But this balancing does not take place in a prosecutorial vacuum.  In virtually every instance, we invite company counsel to make a presentation regarding the application of the Filip factors in the case at hand before we make a charging decision.  Again, wherever possible, we encourage an open and transparent dialogue between the company and our prosecutors at every stage.

In each of our corporate resolutions—be it a guilty plea, NPA or DPA—we provide an explanation of the key factors that led to our decision.  The factual statements filed with resolution documents typically include a detailed recitation of the misconduct, as publicly admitted by the company.  The actual agreements outline the factors that were significant in determining the type of resolution, such as the corporation’s cooperation—if any—and remedial measures.  We usually publicly announce corporate resolutions and pleas, and make the documents available on our website.

In the future, you should expect that our resolutions will include even more detailed explanations of our considerations.  This is a priority of mine.  While these documents already provide significant insight into our thought processes, they will soon provide an even greater explanation of our analysis and conclusions.

In addition to their use as enforcement tools, our plea agreements, DPAs and NPAs provide a transparent explanation of the department’s expectations when it comes to compliance programs.  Companies seeking to measure their own compliance programs need look no further than many of the resolutions we have made publicly available.

DPAs and NPAs provide explicit roadmaps for companies to get back on track, sometimes under the watchful eye of a monitor or court.  There is perhaps no more transparent guidance to a specific corporation than the terms in a DPA or NPA, especially when we set forth remedial or compliance measures we expect.

These agreements have real teeth.  When companies subject to a NPA or DPA are required to cooperate and fail to do so, or where they engage in other criminal conduct during the term of the agreement, the Criminal Division will not hesitate to tear up a DPA or NPA and file criminal charges, where such action is appropriate and proportional to the breach.  The Criminal Division’s role is not just to set guideposts for companies that have engaged in significant misconduct, but to prosecute those corporations when they ignore those guideposts.  Just as with individuals, companies are expected to learn from their mistakes.  A company that is already subject to a DPA or NPA for violating the law should not expect the same leniency when it crosses the line again.

Over the course of my career, I have found that when it comes to affecting corporate conduct, nothing has a more powerful impact than concrete examples.  Such examples have traditionally stemmed from publicized corporate prosecutions, as it is more challenging to publicize investigations in which we decline to file charges.  The department has maintained a long-standing practice not to discuss non-public information on matters it has declined to prosecute, based in large part on concerns about the privacy rights and interests of uncharged parties.  There are serious privacy concerns inherent in publicly identifying an individual who was implicated in our criminal investigation if we eventually decide not to bring charges.  Indeed, internal department policy prohibits us from publicly identifying those individuals who have been investigated, but not charged.

Likewise, companies often strongly oppose publicity that they were under Justice Department scrutiny, even if we ultimately declined to prosecute.

The challenge we are currently working to address is how to publicize these cases while taking into consideration the legitimate concerns of the companies and individuals who were under investigation.  We are looking for ways to better inform the community about cases in which we decline to prosecute, as there is often as much to learn from a decision not to bring charges as a decision to prosecute.  We seek not just to prosecute, but to encourage and reward good corporate citizenship, and increasing transparency can play an important role in achieving that goal.

A significant example of our efforts in this regard is the Foreign Corrupt Practices Act Resource Guide published by the Criminal Division and the Securities and Exchange Commission.  The Guide has a section on declinations and provides anonymized examples of real FCPA cases in which we declined to bring a prosecution.  Although each potential case is based on its own unique circumstances and facts, the examples in the Guide provide useful insight into the circumstances of real-world declination decisions.

The Criminal Division’s FCPA website continues this effort at transparency by posting relevant enforcement actions and opinion letters.  The department responds to opinion requests concerning enforcement intent about prospective actions that might violate the anti-bribery provisions of the FCPA.  This procedure enables companies and individuals to request a determination in advance as to whether proposed conduct would constitute a violation of the FCPA.  These opinion letters are publicly available on our website.  While they are binding only on the party that makes the request, they provide significant guidance on the department’s approach to enforcing the FCPA.

Through these and other steps, the Criminal Division has prioritized increased transparency in our corporate investigations and prosecutions.  We strive to disclose more information, to the extent we can, while protecting ongoing investigations and privacy rights.  And we encourage companies to do the same—to self-disclose criminal violations and to cooperate with our investigations—or risk the consequences.

Thank you for inviting me to speak with you all today.  I would be remiss if I did not point out that opportunities to speak at conferences like this one enable increased transparency and productive dialogue.  I appreciate your creating an open forum for these discussions.

I look forward to addressing any questions that you might have.