Increase in Disclosures Shows New Policies Are ‘Paying Off,’ DOJ Official Says

DOJ officials said they have seen a rise in voluntary self-disclosures in recent months, including for possible violations of export controls and sanctions. They also stressed that the agency is continuing to double down on its enforcement resources, including by hiring more prosecutors and starting a new whistleblower initiative to better incentivize tips about corporate wrongdoing.

Matthew Olsen, head of DOJ’s National Security Division, said his division “just” received voluntary disclosures from two “major, multinational companies” that reported “significant violations they have discovered.” Olsen said the two companies had already shared the disclosures through other “regulatory channels,” but they also wanted to inform DOJ because of they “recognized that also enabling law enforcement action could be important to national security.”

Speaking during the American Bar Association’s White Collar Crime conference in San Francisco last week, Olsen said those disclosures were a direct result of recent changes to the government's voluntary disclosure policies. Both DOJ (see 2302060034) and the Commerce Department’s Bureau of Industry and Security (see 2402130013) recently updated their disclosure policies to encourage more self-reporting, including for more serious violations.

“That approach is paying off,” Olsen said, adding that companies have “internalized our warnings” about how “strong voluntary disclosure policies drive corporate responsibility and protect national security in concrete ways.”

Marshall Miller, DOJ’s principal associate deputy attorney general, said during a separate panel at the conference that companies should expect to see more DOJ cases that began from a company self-reporting, adding that there “are significant numbers of self-disclosures that are in the pipeline.” He said those cases will show businesses that DOJ is treating disclosures in a way that’s “transparent, consistent and predictable.”

“These cases don’t happen overnight,” he said. “I think as those roll out, the clarity and the predictability of the policies will then be followed by outcomes that people can look at and point to.”

But DOJ also isn’t “just waiting for the voluntary self-disclosures to come in,” said Nicole Argentieri, acting assistant attorney general of DOJ’s Criminal Division, speaking on the same panel. She said DOJ recently opened investigations on companies based on their competitor’s voluntary disclosure. In one case, DOJ declined to prosecute the disclosing company but pursued charges against two other firms in the same industry.

“We’re not waiting for you to come to us,” she said. “We are being, I think, very creative with the resources that we have to try to originate and develop cases on our own.”

Along with the new disclosure policies, Olsen said DOJ in recent months has “more than doubled” the number of prosecutors working on export control, sanctions and foreign agent laws. “Companies -- your clients, for many people in this room -- make business decisions every day that have serious consequences for our national security,” he said. “That means it is our job to ensure the right incentives are in place for companies to make choices that keep Americans safe.”

DOJ is also hoping to better incentivize whistleblowers, Deputy Attorney General Lisa Monaco said during a speech during the conference. She announced a new DOJ-led whistleblower reward program that will allow a whistleblower to “receive a portion of the resulting forfeiture” if their tip helps DOJ discover “significant” corporate or financial misconduct.”

The agency will offer payments to the whistleblower only after the victims have been compensated, and payments would be given only to people who “submit truthful information not already known to the government,” Monaco said. She also said the whistleblower can’t be “involved in the criminal activity itself,” and the case can’t already have an “existing financial disclosure incentive, including qui tam or another federal whistleblower program.”

Monaco said the program will accept tips about any federal violations, but DOJ is “especially” interested in criminal corruption or financial-related violations, including breaches of the Foreign Corrupt Practices Act. DOJ plans to launch a pilot program in the next 90 days, with a “formal start date later this year,” Monaco said.

Other existing government whistleblower programs, such as those carried out by the SEC, have paid out “many hundreds of millions of dollars,” but their scope is limited because they only “cover misconduct within their agencies’ jurisdictions,” Monaco said. “We are filling these gaps.”