Self-Reporting: 'Fess Up and Move On

FROM THE PRESIDENT

James D. Ratley, CFE
ACFE President and CEO

When we were kids, we always knew we had choices. When we fibbed to our parents, we could wait for the truth to emerge, or we could quickly go back to them and come clean with all the details. Our choices: harsh punishment or a possible lighter sentence.

Large U.S. conglomerates have a similar problem. As they acquire companies around the globe and transform them into subsidiaries, they often have to reconfigure them to conform to U.S. laws and regulations such as the Foreign Corrupt Practices Act and the Sarbanes-Oxley Act. Now, that's not necessarily the hardest part. Policing those subsidiaries is much more difficult.

Let's say that years later a whistleblower from one of the subsidiaries reports to the company widespread corruption — a resurrected remnant of long-followed practices. What does the conglomerate do? Manage its risks, keep the infractions under wraps and work to clean up the mess? Or report the problems immediately to the U.S. Department of Justice?

In our latest Fraud Magazine cover article, Leslie R. Caldwell, assistant U.S. attorney general for the DOJ's Criminal Division, in essence, says go for the second option: 'Fess up and make amends — quickly.

"We encourage companies, particularly public companies, if they discover a significant compliance problem that also is a significant criminal issue to self-report to the Department of Justice," Caldwell says during a recent Fraud Magazine interview. Caldwell will be a keynote speaker at the 26th Annual ACFE Global Fraud Conference, June 14-19 in Baltimore, Maryland. 

"We encourage them to cooperate with us in our investigation," Caldwell says. "And they should be prepared to give us the relevant facts, documents and evidence in a timely fashion. They should include who is responsible for what went wrong and what these individuals did in the form of facts, not in the form of opinions or privileged attorney-client information. It's very important for companies to understand that they tell us which employees did what — even if it's senior executives."

Of course, a corporation's first responsibility is to avoid a situation in which it has to self-report. But if it finds itself in a legal bind, it should lace up its running shoes and race to the DOJ.