NEW YORK (Reuters) - The U.S. Department of Justice is in the process of hiring a compliance expert to help evaluate whether to charge corporations that fail to detect and prevent wrongdoing by employees, a top department official said on Thursday.
A former prosecutor has been offered the job and is undergoing background checks, Andrew Weissman, who heads the fraud section of the agency’s Criminal Division, said in an interview.
The new counsel, whom he declined to name, will ferret out whether a corporate compliance program is “robust ... or mere window dressing,” Weissman said. The candidate works in the private sector, has experience in building compliance programs, and has worked in the financial, health care and technology industries, he added.
The Justice Department recently negotiated plea agreements with major banks, including UBS AG and Barclays Plc, after they failed to stop traders from manipulating benchmark interest and foreign exchange rates. The agreements, which include fines, require improved compliance programs.
Weissman said the fraud section will increasingly focus on compliance in health care, noting that companies need the tools to spot illegal transactions such as Medicaid referral payments disguised to get around anti-kickback statutes.
The fraud section also oversees securities and Foreign Corrupt Practices Act (FCPA) violations.
Weissman said the department will rigorously evaluate compliance programs, and consider whether to prosecute or seek a lesser penalty against a company for wrongdoing by executives.
“We’d like to make sure we hold companies to a tough but realistic standard,” he said.
New York attorney Aaron Wolfson, a former prosecutor who has worked in compliance at JPMorgan Chase & Co, said the new counsel job shows the government is recognizing how critical compliance is in preventing fraud and corruption in financial institutions.
“This person should recognize when you have rogue employees versus a systemic issue,” he said.
Reporting by Karen Freifeld; Editing by Richard Chang