Argentieri on DOJ’s Corporate Whistleblower Rewards Pilot Program | Thomas Fox – Evangelist of Conformity

The Department of Justice (DOJ) recently unveiled the Corporate Whistleblower Rewards (CWA) Pilot Program to strengthen corporate enforcement efforts. Although the program has only been up and running for a few weeks, it has already started to receive promising tips. This initiative reflects a strategic effort by DOJ to leverage financial incentives in the fight against white-collar crime, providing new opportunities for whistleblowers and reshaping the corporate compliance landscape.

In his recent speech at the Society of Corporate Compliance and Ethics’ 23rd Annual Compliance and Ethics Institute. Nicole M. Argentieri, Principal Deputy Assistant Attorney General, spoke about the CWA and reviewed its early developments. (A copy of his remarks can be found here.) Updated information on DOJ’s approach to whistleblowing and countering retaliation was also found in the 2024 Evaluation of Programs Update corporate compliance (ECCP 2024). This new language found in the 2024 ECCP will be the subject of a separate blog post.

Why whistleblower programs are important

Argentieri stressed that whistleblower programs have proven to work. Programs from other agencies, such as the Securities and Exchange Commission (SEC), have resulted in thousands of tips and hundreds of millions of dollars in rewards and have been instrumental in holding perpetrators accountable. However, these existing programs do not cover the full range of white-collar and corporate crimes prosecuted by the DOJ. The CWA was designed to address these critical gaps.

The CWA targets four priority areas not currently covered by other whistleblower programs: abuse of the financial system by financial institutions and insiders, foreign corruption and bribery, domestic corruption and health care programs targeting private insurers. It is important to note that the program is not limited to these categories. If a whistleblower has information about misconduct outside of these areas, the DOJ still wants to hear from them.

Encourage internal reporting and improve company compliance

Interestingly, Argentieri believes one of the most innovative aspects of the CWA is its focus on encouraging internal reporting. First-time whistleblowers who report internally within their company will be eligible for an award if they report to the DOJ within 120 days of their internal report. Additionally, completing an internal report before reporting to the DOJ is a factor that will increase the whistleblower’s potential reward.

This approach serves a dual purpose. It incentivizes employees to use internal reporting mechanisms, reinforcing the importance of strong internal compliance programs. At the same time, it provides a strong incentive for companies to take internal reporting seriously and act quickly in response to possible misconduct.

For businesses, the stakes are high. The DOJ clarified that the CWA would change the calculation when considering whether to engage in voluntary self-disclosure. Along with the whistleblower program, the DOJ amended its Corporate Enforcement and Voluntary Self-Disclosure (VSD) policy. Under this amendment, if a company receives an internal whistleblower report and then reports the misconduct to the DOJ within 120 days (before the DOJ contacts the company), it will be eligible for the greater benefit under the CEP : a presumption of refusal. provided that the company fully cooperates and remedies. This is a significant departure from the usual approach because it allows a company to benefit from a denial even if the whistleblower first goes to the DOJ.

Protecting whistleblowers: a priority for the DOJ

The DOJ’s whistleblower program aims to receive information and protect those who come forward. DOJ is fully committed to protecting the identities of whistleblowers to the fullest extent of the law. Additionally, the DOJ will closely monitor any action against whistleblowers who report internal misconduct. Compliance departments play a crucial role in this process by implementing robust anti-retaliation policies and training employees on these protections.

Under the 2024 ECCP, the DOJ will review a company’s commitment to protecting whistleblowers and promoting a culture of “speak up.” Companies that retaliate against whistleblowers risk losing credit for their cooperation and corrective actions and could face serious consequences, including harsher penalties and even prosecution for obstruction of justice.

Early successes and business lessons

Argentieri said the CWA is already off to a good start, with more than 100 tips received in just a few weeks. If these whistleblowers also report internally, as the program encourages, companies should take their reports seriously and consider contacting the DOJ.

With respect to recent corporate resolutions, the DOJ’s approach to recognizing and rewarding cooperation and remediation is instructive. A good example is the recent refusal granted to the Boston Consulting Group (BCG) under the CEP. BCG’s timely and voluntary disclosure of a potential FCPA violation and its full and proactive cooperation led the DOJ to decide to decline prosecution. BCG’s remedial efforts have been particularly notable, including firing staff involved in the misconduct and imposing compensation-based sanctions, such as requiring some partners to forfeit their equity and withhold bonuses.

On the other hand, SAP, mentioned above, obtained a 40% reduction in its criminal sanction, which is close to the maximum reduction available to companies that do not voluntarily disclose their information. SAP’s proactive cooperation began shortly after the information surfaced, and its rapid corrective actions, including disciplining responsible employees and improving its compliance program, were key to achieving this reduction.

In contrast, Trafigura only received a 10% discount for cooperation and remediation. The company’s delay in preserving and producing evidence, as well as its position during resolution negotiations, which resulted in significant delays, limited its credit for cooperation. Additionally, Trafigura’s remediation efforts have been mixed, as the company has been slow to discipline some employees, further diminishing its potential credit rating.

Key Takeaways for Compliance Officers

The lessons from these cases and the CWA are clear for compliance professionals. First, it is crucial to foster a strong internal reporting culture. Companies that encourage internal whistleblowers and act quickly on these reports are better positioned to benefit from DOJ policies such as the CEP. Secondly, the importance of proactive and in-depth cooperation must be taken into account. Companies that fully cooperate and take corrective action, going above and beyond, will receive significant advantages in any DOJ investigation.

Finally, the CWA highlights the need for strong protections for whistleblowers. Compliance departments must implement, actively promote and enforce policies that protect whistleblowers from retaliation. The DOJ is closely monitoring the situation, and companies that fail to protect their whistleblowers face serious consequences.

A new era of corporate responsibility

The launch of the Corporate Whistleblower Awards pilot program marks a new era in corporate responsibility. By leveraging financial incentives and protecting those who come forward, the DOJ is creating a powerful tool to combat white-collar crime. For businesses, the message is clear: invest in strong compliance programs, encourage internal reporting, and act decisively when misconduct occurs. This aligns with ethical business practices and allows the company to obtain the most favorable results in any DOJ investigation. As CWA continues to gain traction, compliance professionals will play a critical role in guiding their organizations through this evolving landscape, ensuring they remain on the right side of the law and the public trust .

(See source.)