Even though the government has been encouraging companies to voluntary disclosure Foreign Corrupt Practices Act (and other) issues for approximately 20 years, every few years it seems the DOJ tweaks it voluntary disclosure and related corporate criminal enforcement policy.
The latest example occurred in January 2023. (See here for the prior post).
As long as there have been government programs advocated by government officials, officials have been inclined to proclaim the program a success.
And so it is with the DOJ’s most recent voluntary disclosure revisions.
As highlighted here, earlier this week Assistant Attorney General Kenneth Polite of the DOJ’s Criminal Division said “prosecutors have seen an uptick in companies that self-report wrongdoing — which is arguably the central policy goal that the department has been trying to achieve with its recent refinements. Polite confirmed that the government is seeing a shift in the frequency of voluntary self-disclosure, even in the short time since the revisions have been in effect. “We are already seeing that have an impact,” he said.
Let’s analyze this for a minute.
For starters, I think it would be unwise to automatically accept at face value the DOJ’s statements about the frequency of voluntary disclosure and whether they represent an uptick. No one other the DOJ knows these numbers and there is no transparency around these numbers.
Even accepting the DOJ statements, the question arises: an uptick from what? An uptick from voluntary disclosures during the general time period 2020-2022? If that is the baseline, COVID impacted lots of things including the number of corporate internal investigations launched and completed – a dynamic which can certainly impact voluntary disclosures. With business conditions returning to normal over the 12-18 months, might the asserted uptick simply be due a resumption of normal business activities including the number of internal investigations launched and completed?
Moreover, certain business organizations were voluntarily disclosing prior to the January 2023 revisions to the DOJ’s voluntary disclosure guidance. It is assuming causation to suggest that the corporate voluntary disclosures that have occurred since January 2023 have been the result of the revisions, when the disclosures may have occurred despite the revisions.
Another issue to consider is that the DOJ’s assertion about an uptick in voluntary disclosures concerns (in math terms) the numerator without any insight into the denominator. In other words, one can’t proclaim a voluntary disclosure program successful if it yields 10 disclosures compared to 8 disclosures last year without knowing how many instances of conduct could have been voluntary disclosed (in other words the denominator).
Consider the following analogy. During one season, a basketball player makes on average 5 shots per game. During the off-season, the basketball player hires a shooting coach and the next season the player makes on average 7 shots per game. It might be tempting to say that the player has become a better shooter and this is due to the shooting coach. But we don’t know the denominator. What if during the first season, the player attempted 8 shots per game and during the second season, the player attempted 14 shots per game?
In any event, what is really funny about DOJ officials proclaiming the latest revisions to its voluntary disclosure guidance successful, is that DOJ officials have also done this over the years.
For instance, in 2017 a DOJ official said that its then existing voluntary disclosure guidance was working (see here for the prior post).
Likewise, in 2019 a DOJ official said that its then existing voluntary disclosure guidance was working (see here for the prior post).
In each instance, DOJ officials asserted the logical fallacy post hoc ergo propter hoc (in other words, since event Y followed event X, event Y must have been caused by event X).
And earlier this week a DOJ official did it yet again.
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