This recent Wall Street Journal article titled “DOJ Uncovering More Misconduct Through Self-Disclosure Program, Says Top Official” begins:
“More companies are choosing to voluntarily disclose misconduct to prosecutors after a policy revision last year that increased the potential benefits of doing so, a top Justice Department official said.
As stated in the article:
“When you see these declinations…they are just a fraction of the self-reports we are getting,” Acting Assistant Attorney General Nicole Argentieri said at a Global Investigations Review conference in Washington. “We are seeing a mix and I think that’s exciting and it’s showing that our policies are working.”
In 2023, the Justice Department received twice as many disclosures as it did in 2021, according to Argentieri.
By far the greatest number of disclosures by companies relate to possible violations of the U.S. Foreign Corrupt Practices Act, which prohibits companies from paying bribes to foreign government officials. That reflects the fact that the Justice Department has long operated a program to reward disclosing that type of misconduct, Argentieri said.”
Let’s analyze this for a bit.
First, rare is a government official who says that a government program is not working. Thus, one should take with a grain of salt (but obviously not completely discount) when a DOJ official says that a DOJ policy is working as intended.
Second, the above statements from the DOJ official focus (to borrow math terms) on the numerator without knowing the denominator. In other words, without actually knowing how much “misconduct” is actually occurring (impossible to know just like it is impossible to know how much “misconduct” took place in the United States last week) saying that more “misconduct” is being reported to the DOJ lacks context. Perhaps more “misconduct” is being reported to the DOJ because more “misconduct” is occurring, but the percentage of “misconduct” being reported is actually lower. Perhaps not. It is simply impossible to know.
Third, the statement that “more companies are choosing to voluntarily disclose misconduct to prosecutors after a policy revision last year that increased the potential benefits of doing so,” assumes causation. Corporate leaders – advised by counsel – consider a number of factors in making a decision to voluntarily disclose with DOJ policy being just one factor.
Fourth, the notion that meaningful conclusions can be drawn from comparing voluntary disclosures in 2023 to 2021 is laughable. 2021 was likely one of most disruptive and unique years in corporate history due to COVID. Comparing many statistics about various aspects of corporate decision-making to 2021 is likely not going to tell one much of anything other than that 2021 (as well as 2020 and perhaps even 2022) were unique years.
