DOJ Awards Program Goes Live

The U.S. Justice Department has formally launched its whistleblower awards program to encourage tips about corporate crime, complete with a dedicated website where whistleblowers can submit their tips and new policies that might let companies reap the benefit of self-disclosure even if whistleblowers report the misconduct first.

Deputy attorney general Lisa Monaco unveiled the awards program on Thursday, although she first announced that an awards program would be coming back in March. The Justice Department’s program is part of a larger effort to incorporate whistleblower programs across the entire federal government.

“With this program we’re doubling down on a proven strategy to ferret out criminal activity that might otherwise go unreported,” Monaco said in a prepared statement.

As usual, would-be whistleblowers stand to receive a percentage of whatever assets are left over from a Justice Department settlement, after compensating victims and paying other costs associated with the forfeiture. Whistleblowers can receive up to 30 percent of the first $100 million in net proceeds, then up to 5 percent of proceeds from $100 million to $500 million. The exact percentage will depend on “various factors,” according to Justice Department guidance, including the usefulness of the whistleblower’s information and the amount of cooperation provided.

The program has a few other restrictions, too. For example, if the misconduct being reported is eligible for an awards program run by some other agency (say, the IRS or the Securities and Exchange Commission), then the complaint will be shipped off to that agency instead. The Justice Department awards will only be for crimes that are not covered by some pre-existing awards program. 

To submit a complaint, whistleblowers simply need to visit  www.justice.gov/CorporateWhistleblower and start typing.

New Self-Disclosure Eligibility Policy

Now comes the interesting part. The awards program is meant to encourage whistleblowers to bring their knowledge of corporate criminal activity to the Justice Department — but once a whistleblower brings an issue to the department’s attention, that typically means the company would lose any chance at winning credit for voluntary self-disclosure of the misconduct. 

So in a roundabout way, the awards program could end up discouraging companies from voluntary self-disclosure, an outcome the department very much wants to avoid. 

Hence the Justice Department also announced a new policy Thursday that, under certain circumstances, a company can still receive all the benefits of voluntary self-disclosure even if a whistleblower has already alerted the department to the violation in question.

Specifically (and as spelled out in guidelines for the awards program the department published Thursday) a company receives a whistleblower’s internal report and then self-discloses those allegations to the Justice Department within 120 days, and before the Justice Department itself reaches out to the company; then the company remains eligible for all the benefits of the voluntary self-disclosure program even if the whistleblower has already submitted the information to the department.

So for example, say employee John Smith reports a potential FCPA violation to your company’s internal reporting hotline on Aug. 1. Then on Aug. 15 he says, “Screw this, I’m going to Justice right now” and reports it. The company has until Dec. 1 to self-report that same misconduct to the Justice Department, and still be eligible for all the usual voluntary self-disclosure credits, assuming that prosecutors have not yet contacted your company about the FCPA allegation.

As fate would have it, this new policy from the Justice Department speaks quite closely to a $37 million whistleblower award the Securities and Exchange Commission handed out just last week. 

In that case, the whistleblower did report his concerns internally, but the company dragged its feet on investigating the complaint. By the time the company got serious, looked into the matter, and decided to self-report to the SEC, the whistleblower had already gone to the SEC with his concerns too. He had already begun cooperating with the agency, so by the time the company knocked on the SEC’s door and self-disclosed, SEC investigators already knew more about the violation than the company was telling them. 

Whistleblower Awards for CCOs?

Next question: Can compliance officers themselves take advantage of this awards program? 

Alas, the guidelines of the program say no, you are not. The tip provided must be “original information,” and a tip will not be considered original information if the whistleblower… 

…obtained the information because they were: (a) an officer, director, trustee, or partner of an entity and another person informed them of allegations of misconduct, or they learned the information in connection with the entity’s processes for identifying, reporting, and addressing possible violations of law; (b) an employee whose principal duties involve compliance or internal audit responsibilities…

So that seems to rule out compliance officers, internal auditors, and related risk assurance executives.

[Editor’s note: An earlier version of this post said compliance officers likely would be eligible for whistleblower awards. Credit goes to Adam Turteltaub of the Society of Corporate Compliance & Ethics for catching the CCO exclusion cited above and passing it along. Radical Compliance regrets the error.]