Jonny Frank, a Partner at StoneTurn and former Big Four Partner and Federal Prosecutor, recently attended a white-collar crime conference where Department of Justice officials announced a 90-day sprint to launch a corporate whistleblower program. This program aims to reward individuals who report corporate crimes and fill gaps in other government initiatives. The DOJ also introduced a Pilot Program on Voluntary Self-Disclosures for Individuals, allowing individuals to blow the whistle on their own criminal conduct in exchange for a non-prosecution agreement under certain conditions.
Whistleblowing has become more than just a compliance issue; it is now a critical business issue with significant implications for an organization’s reputation and financial bottom line. The government relies heavily on whistleblowers and corporate self-disclosure to initiate investigations and prosecutions of corporate crimes, as prosecutors and law enforcement agents need allegations or suspicions to pursue cases.
The whistleblower race includes three types of contestants: perpetrators of misconduct, companies involved in wrongdoing, and individuals aware of but not involved in the misconduct. Winners of the race depend on the contestant type, with perpetrators possibly avoiding criminal prosecution, corporations potentially avoiding prosecution through self-disclosure and cooperation, and whistleblowers not involved in the misconduct earning monetary rewards.
The DOJ’s corporate whistleblower program is expected to increase corporate self-disclosures, as companies weigh the likelihood of government discovery against potential penalties. The program introduces complexities for organizations navigating internal investigations, whistleblower concerns, and the need for early remediation. Delays in remediation can be a critical mistake, as the DOJ requires fully remediated and tested compliance programs at the time of resolution to obtain benefits.
The implications of the whistleblower program extend beyond immediate rewards and penalties, aiming to drive a lasting impact on corporate culture. The program seeks to foster transparency and accountability within organizations, but also introduces challenges for companies in balancing investigations, whistleblower issues, and the need for early remediation. Proactive measures and strategic decisions will shape corporate governance and compliance in the evolving landscape. In the face of this new initiative, businesses must prepare to navigate the changing terrain of corporate whistleblowing.
