Why Self-Report?

At one of the panels I attended at the ABA Annual Meeting (oh boy – that meeting is a gift that keeps on giving to this blog), government lawyers on the panel stated that self-reporting of legal violations is often part of full cooperation with a government investigation.  An attendee posed the following comment/question in response to that statement (of course, this is a paraphrase):

Let’s say that a company discovers wrongdoing by one of its employees.  The company investigates, determines the extent of the wrongdoing, remedies the wrongdoing (including making any victims whole), disciplines the wrongdoers (up to and including termination, when warranted), and makes any necessary changes to internal policies and procedures.  If the organization does all of this, why also require self-reporting?  If the organization acted admirably in correcting the misconduct, what else does self-reporting add?

The panelists gave two pretty good answers that I will share here.

First, the question incorrectly assumes that (1) the government ALWAYS expects self-reporting, or (2) absent self-reporting, there will be no credit for cooperating with the government.  Neither assumption is correct.  Rather, self-reporting is A FACTOR to be considered along with many others in determining the culpability of and cooperation offered by the organization.  (The Thompson Memo, which was discussed in a prior post, sets forth the main factors.)

Second, without self-reporting, the government cannot take action that will ensure that the individual wrongdoers will not cause further harm.  If the employee who orchestrated the wrongdoing is simply let go, that person can simply find another organization at which to continue similar wrongdoing.  (This is especially so given employer’s hesitance to give any reference – especially a negative one – for a former employee.)  Self-reporting that includes identification of individual wrongdoers allows the government to take steps, including prosecution or barring the individual from the marketplace, that will protect the public from further wrongdoing.  Allowing organization’s to keep the problem within the family keeps the government from taking action needed to protect society.