As part of a nationwide effort to address white- collar crime, federal prosecutors in Hawaii have implemented a voluntary self-disclosure policy for businesses as an incentive to report misconduct.
The policy details the circumstances under which a company will be considered to have made a voluntary self-disclosure to the U.S. Attorney’s Office. It provides “transparency and predictability … concerning the concrete benefits and potential outcomes” when a business reports violations of federal law, fully cooperates and in a timely manner “appropriately” fixes the underlying issues that created the crime.
“The goal of the policy is to standardize how voluntary self disclosures are defined and credited nationwide, and to incentivize companies to maintain effective compliance programs capable of identifying misconduct, to expeditiously and voluntarily disclose and remediate misconduct, and to cooperate fully with the government in corporate criminal investigations,” said U.S. Attorney Clare E. Connors in a news release Thursday.
Each U.S. Department of Justice division that prosecutes corporate crime was directed in a memorandum to review its policies and, where none existed, to come up with a “written policy to incentivize self-disclosure.”
The policy applies if a company learns of misconduct by employees or agents before that misconduct is “publicly reported or otherwise known to the DOJ” and discloses all relevant facts known about the misconduct to a federal prosecutor in a “timely fashion prior to an imminent threat of disclosure or government investigation,” the release said.
According to the federal agency, the benefits of disclosure for companies include the government agreeing to not attempt to secure a guilty plea; no criminal penalty or, alternatively, no fine that is greater than 50% below the minimum outlined in federal sentencing guidelines; and no imposition of an independent compliance monitor if the company proves it cleaned up the problem.
However, three aggravating factors could lead to the government seeking a guilty plea: if the alleged crime “poses a grave threat to national security, public health, or the environment”; if it is “deeply pervasive” throughout the firm; and if the crime involves executive leadership.
In those cases, prosecutors may still elect not to pursue a guilty plea, but minimum sentencing might be sought.
A Corporate Criminal Enforcement Policy Working Group was led by U.S. Attorney for the Eastern District of New York Breon Peace, and Connors was among its members.
