In its latest report on the use of corporate monitors, a government watchdog agency says that companies with concerns about those monitors should get better information from the Department of Justice on how the agency may be able to help resolve those issues.

That was the conclusion of a November Government Accountability Office report, which states that "clearly communicating to companies the role [the] DoJ will play in addressing companies' disputes with monitors would help increase awareness among companies and better position [the] DoJ to be notified of potential issues related to monitor performance."

"Some companies had concerns about their monitors, such as the scope of their work or their fees, but the companies did not know what role [the] DoJ could play in helping to address their concerns," Eileen Larence, the GAO's Director of Homeland Security and Justice Issues, said in an e-mail response.

As such, the latest GAO report recommends that the Attorney General "direct all litigating components and U.S. Attorneys Offices to explain in each corporate DPA or NPA what role DoJ could play in resolving such disputes, given the facts and circumstances of the case."

Larence noted that the DoJ's Fraud section articulates in the Deferred Prosecution Agreement or Non-Prosecution Agreement itself what monitor concerns the section is willing to address and how.

"We think all litigating units, including USAOs, should specify in the DPA or NPA what role the unit is willing to play in addressing company concerns about monitors," she said.

The report, made public Nov. 19, stems from a House Judiciary Committee investigation into how deferred and non-prosecution agreements and corporate compliance monitors have been used by the Justice Department since 1993.

As the usage of DPAs and NPAs has become increasingly common, recent scrutiny of the variance in the terms of some of those agreements and some previous high-profile monitor appointments raised concerns among some members of Congress and many corporate defense lawyers that U.S. attorneys have had too much freedom to dictate the terms of those agreements.

As previously reported, those concerns led to the introduction of legislation in April that would require the attorney general to provide public written guidelines for and judicial oversight of DPAs, disclosure of all DPAs on the Justice Department Website, and the creation of a national list of compliance monitors. That bill is still awaiting action by a House sub-committee.

In total, the latest report looked at 152 agreements negotiated from 1993 through September 2009, 48 of which required an independent monitor. For those agreements, companies hired a total of 42 individuals to oversee the agreements, 23 of whom had previous experience working for the DoJ.

The report focused on adherence to the guidance issued by the DoJ in the March 2008 "Morford Memo," which laid out principles addressing monitor selection, scope of duties and duration, and required deputy attorney general approval of monitor appointments. An earlier GAO report noted that some federal prosecutors and U.S. attorneys didn't view the guidance as mandatory.

Of the 35 DPAs and NPAs entered into after the issuance of the Morford Memo, six required monitors. The report notes that the four selections made were in accordance with the Morford Memo guidelines. Monitors haven't yet been appointed in the other two cases.

However, the report notes that the DoJ didn't fully document the selection and approval process for two of the monitor selections, which the GAO says will make it difficult to validate that prosecutors across the DoJ offices followed the guidelines and that monitors were selected in a way that was "fair and merit based."

While representatives for eight of 13 companies interviewed by the GAO raised concerns about the monitor's cost, scope, and amount of work completed, some were unaware that they could raise monitor concerns to the DoJ or were reluctant to do so.

Three of the companies weren't aware of any mechanism in place to raise their concerns with the DoJ. While four companies were aware that they could raise their concerns with the DoJ, three said they would be reluctant to raise those issues in fear of repercussions. Another company didn't believe the DoJ had the authority to address its concerns because they were related to staffing costs delineated in the contract negotiated between the company and the monitor, not the DPA.

However, the report notes that the DoJ had a different perspective on its involvement in resolving disputes between companies and monitors.

"According to the senior counsel to the ODAG, while the DoJ has not established a mechanism through which companies can raise concerns with their monitors to the DoJ and clearly communicated to companies how they should do so, companies are aware that they can raise monitor-related concerns to the DoJ if needed," the report states. "Further, it was the senior counsel's understanding that companies frequently raise issues regarding DPAs and NPAs to the DoJ without concerns about retribution, although to his knowledge, no companies had ever raised monitor-related concerns to ODAG." Still, the senior counsel acknowledged that even if companies raised concerns regarding their monitors, the point in the DPA process at which they did so may determine the extent of the DoJ's involvement.

The latest report notes that the DoJ in August adopted internal procedures to document both the process used and reasons for monitor selection decisions—as recommended by a June GAO report. Specifically, the DoJ now requires the Office of the Deputy Attorney General to complete a checklist confirming receipt from the DoJ component of the monitor selection submission, including the process used and reasons for selecting the monitor, among other things.

Following the issuance of the June report, Larence told Compliance Week that the GAO was mulling whether to make additional recommendations such as calling for more guidance on the use and labeling of DPAs and NPAs, or seeking a process for companies to raise concerns about monitor selection and scope. When asked about those recommendations, Larence said the current report was only intended to address concerns about monitors.

However, she noted that the GAO has one more report coming out in December, but said the agency can't discuss the findings or recommendations in that report until it is publicly released.