In cases of corporate wrongdoing that rise to the level of criminality, bringing charges to hold companies accountable can either feel like overkill or a slap on the wrist. After all, businesses don’t run themselves – people do. Holding the proper individuals responsible therefore has a greater impact on forcing companies and their peers to clean up their acts.
At least that appears to be the thinking behind the Department of Justice’s new approach to corporate environmental crimes. Todd Kim, who has led Justice’s Environmental and Natural Resources Division since July, laid out the federal government’s position on the issue last month in a speech to American Bar Association’s National Environmental Enforcement Conference. It involves getting tough on individual bad actors within companies as much as the companies themselves.
“Only individuals can go to jail, and we have found that criminal corporate accountability starts with accountability for individuals responsible for criminal conduct,” Kim said.
As Kim noted in his speech, the very point of forming a corporation in the first place undermines ENRD’s objectives by limiting liability. “How can we motivate corporations to not only comply with environmental requirements, but also respect the need to balance private benefits with the public good?” he asked.
Naturally, Kim’s solutions to this fundamental tension in environmental enforcement run parallel to those that Deputy Attorney General Lisa Monaco recently outlined for corporate compliance. They include restoring prior guidance mandating that companies will only receive credit for cooperating in a case if they turn over non-privileged information about all individuals who are a part of any wrongdoing. The objective is to ensure DOJ has all the context it needs to assess a case and the extent of any criminality. Additionally, resolutions to cases will incorporate companies’ full criminal, civil and regulatory histories, even for events unrelated to the current case.
“Taking the broader view of companies’ historical misconduct will harmonize the way we treat corporate and individual criminal histories, as well as ensure that we do not unnecessarily look past important history in evaluating the proper form of resolution,” Monaco said last year regarding DOJ’s corporate compliance program.
Kim offered an important addendum to ENRD’s stance on environmental enforcement: Companies need to mind their supply chains. He made it clear that if corporate supply chains are making use of “criminally-tainted” sources, ENRD will look into the criminal responsibility of the entire supply chain. As such, credit for cooperation in a criminal investigation may require identifying individuals outside of one’s own company.
Ultimately, in Kim’s mind, laying down the law on criminal matters will have knock-on benefits beyond encouraging corporate environmental compliance. When companies must take criminal enforcement more seriously, according to Kim, it simultaneously fosters more respect for other administrative and civil enforcement programs. In other words, getting tough on criminal cases will improve civil compliance, too.