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 existing programs. Additionally, the DOJ launched 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 if certain conditions are met.
Whistleblowing has become a critical business issue, as failure to address it can have costly consequences for an organization’s reputation and bottom line. The government relies heavily on whistleblowers and corporate self-disclosure to investigate and prosecute corporate crime, as prosecutors and law enforcement agents require allegations or suspicions to pursue investigations. The whistleblower race includes perpetrators of misconduct, companies involved in wrongdoing, and individuals aware of but not involved in the misconduct.
Depending on the contestant, there are different prizes to be won in the whistleblower race. Perpetrators can avoid criminal prosecution by voluntarily self-disclosing their illegal conduct under certain conditions. Corporations can also avoid prosecution through self-disclosure and cooperation with investigations, including timely and appropriate remediation. Whistleblowers not involved in the misconduct can earn monetary awards, with rewards likely to be substantial based on other government whistleblower programs.
The whistleblower initiative by the DOJ is expected to increase corporate self-disclosures, as companies will weigh the likelihood of the government learning about misconduct and potential penalties. The whistleblower race presents challenges for organizations considering self-disclosure, as internal investigations can tip off potential whistleblowers. Companies must take potential whistleblowers into account when structuring investigations and prioritize early remediation to avoid potential penalties and monitorship.
The implications of the DOJ’s corporate whistleblower program extend beyond immediate rewards and penalties, aiming to foster a culture of transparency and accountability within organizations. However, the race introduces complexities for companies navigating internal investigations, whistleblower concerns, and the need for early remediation. Proactive measures and strategic decisions will shape the future of corporate governance and compliance in this evolving landscape. Organizations must prepare to navigate these challenges effectively.
