The U.S. Chamber of Commerce published a lengthy critique of the Yates Memo yesterday, and cynics who believe the memo is a powerful threat to internal investigations will be pleased.
Others who don’t believe the memo is a threat should be more cynical.
Obviously the Chamber has an agenda with this paper, like it has with everything: corporations good, government bad. Most times the Chamber is a shill for corporate interests, threatening to sue any agency it can find with the audacity to propose any regulation at all. But this time, as much as the words pain me to say, the Chamber is on the right side of things: the Yates Memo is dangerous policy that should alarm compliance officers greatly.
The 29-page paper expands on plenty of criticism the Yates Memo has already received (I added my own concerns about it last month) and if I didn’t know any better, I’d say the Chamber is laying out arguments some unhappy company could claim in court once an internal investigation goes sour. It raises three main points:
- The Yates Memo, and its policy that corporations must disclose all facts they find in misconduct investigations if they want eligibility for any cooperation credit at all, drives a wedge between employee company. Employees will clam up more quickly, demand personal legal counsel more often, or seek whistleblower status so they’re protected while they stonewall you.
- The memo’s requirement that companies also disclose what they cannot find, and explain the reasons why, ultimately will lead to investigations of your investigation—that is, the Justice Department reviewing your investigation methodology. That second-guessing makes your first decision about whether to cooperate at all even more difficult to make.
- The memo doesn’t answer questions about how to balance the needs of disclosure against data privacy and attorney-client privilege laws. Yes, a company could cite those obligations as reasons why it cannot disclose some facts, but then we’re right back to the point above about second-guessing investigations.
All of these arguments are valid points to raise. They might sound hypothetical today, but let’s not kid ourselves—they will stumble into reality soon enough, and take compliance officers to some very uncomfortable places. One accounting executive at a mid-sized company has told me he is already facing this exact predicament: the Justice Department is investigating his company, and the employee with key facts has already filed a whistleblower claim. So any time the company tries to question him, he declines to cooperate and says any threats to dismiss him over non-cooperation are retaliation threats.
I know the counter-argument that the Yates Memo only codifies what companies should want to do anyway: root out misconduct at the organization. Somebody somewhere in the org chart is responsible, that thinking goes, and you want that person off the team. If he or she refuses to cooperate even if you threaten to fire them, then the company should want to fire that person anyway. Right?
That’s an elegant theory that disregards messy reality. The truth is that under the Yates Memo, the corporation becomes a de facto instrumentality of the Justice Department. It’s only a matter of time before some employee starts demanding to exercise his Fifth Amendment right to remain silent or his Sixth Amendment right to counsel. If you don’t believe that, look around. This is America. Going to court is what we do.
The Chamber’s paper is well worth reading this long weekend if you have some spare time. And per my earlier comments that the Chamber lives to file lawsuits against the Obama Administration—I wouldn’t be surprised if these arguments are the blueprint for that litigation, as soon as a real case comes along with the facts to fit. If nothing else, litigation will run down the clock until a new administration takes over in January with potentially different views on the Yates Memo.
Am I making too much out of all this worry? Well, the world is full of things that people before us said would never come to pass. You tell me.