Academic journal article Journal of Corporation Law

Corporate Compliance Programs as a Component of Plea Agreements and Civil and Administrative Settlements

Academic journal article Journal of Corporation Law

Corporate Compliance Programs as a Component of Plea Agreements and Civil and Administrative Settlements

Article excerpt


Compliance programs have evolved as a standard feature in corporate life today. Almost routinely in resolving claims of regulatory deficiencies and other regulatory miscues, the Federal Government insists upon a compliance program. Although many executives and corporate counsel view corporate compliance programs as preventative measures implemented prior to any corporate wrongdoing, corporate compliance programs are increasingly also an essential component of both criminal plea agreements and civil and administrative settlements. The United States Sentencing Commission reports an increased use of compliance programs in the sentencing of organizational defendants.1 In 1994, only 8.8% of organizational defendants were ordered to implement a compliance program.2 In 1995, 13.4% were ordered to implement such a program, and in 1996, 11.9% were ordered to do so.3 Implementation of such a program may allow a corporate defendant to avoid suspension or debarment and perhaps alleviate the severity of criminal, civil, and administrative sanctions.

Although the citizenry views the federal government as a monolithic entity, it is quite apparent from the range of compliance programs imposed upon corporations by government encouragement or edict that the type of compliance programs varies widely from one government agency to another. This Article reviews a sampling of both healthcare and non-healthcare compliance programs, examines various terms of those programs, and draws contrast between those in each environment. Compliance program requirements are evolving regularly as new features are added and the scope of the programs expand. With each new feature in a program comes concomitant expense for the corporation. Frequently, corporations, in their haste to end a governmental inquiry, fail to recognize the long term costs and systems changes prompted by an elaborate compliance program.

Corporate compliance programs agreed to in criminal, civil, and administrative settlements vary significantly depending upon the nature of the offense, the features of the specific corporation involved, and the government agencies included in the negotiations. The provisions of the program may be contained within the criminal plea agreement itself, within a civil or administrative settlement, and/or within a corporate compliance agreement set forth as an appendix to any or all of the above. This Article will compare and contrast five such programs, with a focus on seven key features of each program:

(I) the role (if any) of the board of directors;4

(2) the designation of a corporate compliance officer or committee?

(3) the inspection of company books and records by the government;6 (4) the voluntary disclosure of wrongdoing to the government;7

(5) the waiver of any applicable privileges;8

(6) the provision of training to company employees, managers and executives;9 and

(7) the term of the agreement.10

Each of these features can significantly impact a corporation, both financially and structurally. Because the terms vary so widely among agreements and agencies, corporate counsels need to be sensitive to the implications of these terms and the range of options available when negotiating an agreement.


A. Company A11

Company A entered into a 1997 plea agreement with a U.S. Attorney's Office and pled guilty to wire fraud (18 U.S.C. 1343) and certain agricultural offenses in connection with the activities of one of its divisions.12 On that same date, Company A entered into a compliance agreement with the U.S. Department of Agriculture (USDA). The company avoided debarment as a government contractor by doing so.13 The Company A compliance program is noteworthy for, inter alia, its relatively thorough training requirements as well as its confidentiality provisions.14

B. Tyson Foods

Tyson Foods entered into a December 29, 1997 plea agreement with the Office of Independent Counsel (OIC)Is and pled guilty to a violation of the gratuity statute. …

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