With the advent of the new M&A Safe Harbor policy, the US Department of Justice (DOJ) is throwing a lifeline to corporations facing the daunting question: to self-report or not to self-report discovered criminal conduct within the company.
In a corporate world where image is everything, the margin between success and failure can get remarkably thin. This is especially true when it comes to matters of legal misconduct. Nothing can erode the corporate image faster than a criminal investigation by the government, be it for financial fraud or regulatory violations.
Companies all over have grappled with this fundamental question for years: after discovering criminal conduct inside a company, do you self-report to the government or not? There has always been the choice to quickly and quietly fix the problem, hoping against hope that this would be enough to fully remediate the issue and avoid any negative publicity or government involvement.
Furthermore, the previous lack of clarity from the authorities on the benefits of self-reporting has done little to encourage corporations to come clean about internal wrongdoings. But with the roll-out of the new M&A Safe Harbor Policy by the DOJ, there seems to be a glimmer of hope.
This new policy, as detailed in a Vinson & Elkins LLP report, could prove to be a game changer. It seeks to provide a clear outline of the benefits and procedures tied to self-reporting, in an effort to encourage more corporations to take this route. True to its name, the policy offers some level of safety or assurance to companies who take the plunge and self-report any discovered criminal conduct.
The full implications and effectiveness of this new policy are yet to be seen and assessed in practice. For now, it serves as an important milestone in the ongoing discourse on corporate responsibility, self-reporting, and the government’s role in regulation and oversight.