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DOJ to Corporate America — Embrace the Whistleblower

Posted  May 9, 2019

In a clear push to companies to tighten up their internal compliance efforts, the DOJ Criminal Division recently announced a remake of the agency’s guidelines for corporate compliance programs. The document, titled “The Evaluation of Corporate Compliance Programs,” updates a previous version of the guidelines and is designed to provide more insight and context into the steps DOJ expects companies to take to ensure they stay on the right side of the law. Chief among them, a warm embrace of the corporate whistleblower. As DOJ makes clear, stifling would-be whistleblowers or retaliating against them for daring to step forward will have consequences in the government’s assessment of how it will punish corporate wrongdoers.

According to the new guidance, there are three overarching questions DOJ considers in evaluating internal compliance programs and how they play into the government’s ultimate enforcement decision:

        • Is the program well-designed?
        • Is the program effectively implemented?
        • Does the program actually work?

Central to the government’s three-part inquiry is that companies uphold a compliance system that is smart, serious and ingrained in the corporate culture from the highest levels of the company down to the most junior employee. This means creating an environment where misconduct will not be tolerated and the necessary policies, procedures and training are in place to effectuate that end.

At the heart of such a regime, is a program that encourages, respects and protects whistleblowers for reporting misconduct to management. In its new guidance, DOJ is explicit in this regard:

Another hallmark of a well-designed compliance program is the existence of an efficient and trusted mechanism by which employees can anonymously or confidentially report allegations of … suspected or actual misconduct. Prosecutors should assess whether the company’s complaint-handling process includes pro-active measures to create a workplace atmosphere without fear of retaliation, appropriate processes for the submission of complaints, and processes to protect whistleblowers.

It is not surprising DOJ is looking to whistleblowers to be a central component of any corporate compliance program. Whistleblowers have become increasingly critical to the government’s own efforts to combat fraud and over the past several years have been responsible for the lion’s share of government recoveries — billions of dollars annually — under DOJ’s main fraud enforcement tool, the False Claims Act. Whistleblowers, through both the SEC Whistleblower Program and CFTC Whistleblower Program, have likewise significantly contributed to the stepped-up efforts of these agencies to combat fraud, with each agency heavily promoting the indispensable role whistleblowers play in their respective enforcement approaches.

It is no wonder that more and more companies are following suit and providing their own incentives and protections for whistleblowers to step forward and report wrongdoing. The thinking among the more enlightened is that providing a clear path for whistleblowers to report internally — with confidence their concerns will be heard and there will be no retribution — will allow companies to uncover and redress wrongdoing at an early stage. It may obviate the need for the government to get involved at all, saving the company a whole lot of money and bad publicity, and a host of ancillary troubles down the road.

Afterall, survey after survey shows — as does our own experience representing and advising hundreds of whistleblowers over the years — it is only the rebuffed and retaliated against who typically end up reporting fraud to the government. Most whistleblowers are deeply loyal to their company and want to see the company keep its own house in order. The sooner more companies appreciate this reality and give whistleblowers the warm embrace they deserve, the better all of us will be.

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Tagged in: CFTC Whistleblower Reward Program, Importance of Whistleblowers, SEC Whistleblower Reward Program, Whistleblower Rewards,


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