The Future of Corporate Monitorships: Lessons Learned From the Walmart Case

Last year, Assistant Attorney General Brian A. Benczkowski issued a memorandum to all Department of Justice (DOJ) Criminal Division personnel providing new guidance for the selection of corporate monitors. The Benczkowski Memo sets forth, among other things, considerations for determining whether a monitor is needed in a particular case, which include whether the misconduct involved exploitation of inadequate internal controls, whether the misconduct was pervasive across the business organization, whether the company has made significant improvements to its compliance programs and internal controls, and whether those improvements have been tested to demonstrate effective deterrence for similar misconduct in the future. The Memo also instructs that DOJ should take into consideration “whether the changes in corporate culture and/or leadership are adequate to safeguard against a recurrence of misconduct,” as well as whether adequate remedial measures were taken to address the misconduct.

There has been much discussion following the Benczkowski Memo about the extent to which DOJ still views monitorships as a helpful and worthwhile compliance tool. Earlier this year, DOJ provided an affirmative answer to that question, imposing a two-year monitorship on Walmart as part of a non-prosecution agreement.

That non-prosecution agreement resolved a multi-year inquiry surrounding alleged violations of the Foreign Corrupt Practices Act by Walmart subsidiaries in Mexico, Brazil, China and India. The approach taken by DOJ offers several important lessons for companies, their counsel, and compliance personnel regarding corporate monitorships.