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How to Keep a Good Deed from Going Bad

In the corporate world, maintaining the integrity of good deeds requires strategic management during audits and self-disclosures. This guide emphasizes understanding privilege and determining audit direction, involving outside counsel, and limiting knowledge dissemination. It explains the importance of properly preparing audit reports and considering the consequences of self-disclosure, including potential risks and benefits. Businesses must also be prepared for governmental inquiries by establishing proactive plans, identifying key personnel, and protecting employees. This comprehensive approach minimizes legal liability and fosters a transparent organizational culture.

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How to Keep a Good Deed from Going Bad

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  1. How to Keep a Good Deed from Going Bad David P. Graham Oppenheimer Wolff & Donnelly LLP 45 South Seventh Street Suite 3300, Plaza VII Minneapolis, MN 55402

  2. First Things First: Privilege • Determine how the audit should be directed • Legal • Regulatory affairs • Outside law firm • Outside consultant hired by law firm • Limit knowledge • Relevant and key personnel • Inside the company

  3. Determine if you need a written report • What did the audit find? • No material issues? • Far worse issues that require a different procedure and/or more investigation • Prepare the Report Under Cloak of Privilege • Prepared by or at the direction of counsel • Label the report appropriately • Do not widely disseminate until a plan of action implemented, if any needed

  4. Self-Disclosure • What is the threshold? • If reasonable, responsible government officials could deem the conduct unlawful • OIG statement: “Whether as a result of voluntary self-assessment or in response to external forces, companies must be prepared to investigate such instances, assess the potential losses suffered by the Federal [Government] and make full disclosure to the appropriate authorities.”

  5. Assuming something needs to be reported – get assistance to decide • Narrowly define what needs disclosure • Consider consequences in terms of government’s reaction, future intervention and monitoring • Risks • May give rise to Federal legal action • Employee questions corrective action taken • Onerous compliance monitoring • Reporting to shareholders/securities laws • Exclusion or debarment from government programs

  6. Possible Benefits • Can minimize criminal and civil liability • Reduce monetary penalties • Reduce the possibility of exclusion or debarment • Cut-off whistleblower suits

  7. Avoid Creating Whistleblowers • Address troubled employees discovered in the audit process • Listen to their concerns • Document solutions to issues identified and addressed • Share solutions with those who have raised questions • Do not necessarily share the audit, but explain how it will be used to resolve issues raised

  8. What to Do If the Government Pays a Visit • Have a plan in place in advance • Who will interact with agents • What will employees be told • Who knows where the documents are • Identify counsel that can assist • Identify public relations person/company • Understand the scope of the warrant or investigation

  9. Be cooperative, but protect privilege materials • Protect employees – send them home, if possible • Call outside counsel, unless inside counsel can assist • Inventory what is taken and to whom the government speaks

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