Issue link: https://nebusinessmedia.uberflip.com/i/1504032
20 HARTFORDBUSINESS.COM | JULY 24, 2023 Michael J. Clark, a senior lecturer who teaches criminal justice courses at the University of New Haven and a retired FBI agent, said companies that discover misconduct should tell authorities what happened and cooperate. PHOTO | CONTRIBUTED Carrot or Stick? Federal prosecutors offer CT companies incentives to disclose wrongdoing By Michelle Tuccitto Sullo msullo@hartfordbusiness.com M aybe you discovered one of your company's employees offered a bribe to secure a key contract. Or, you just learned your worker conspired with competitors to fix prices to boost profits. Companies and their employees sometimes run afoul of the multi- tude of federal laws and regulations governing them. Businesses caught by authorities have often faced severe penalties. In one of the more famous cases, German company Siemens had to pay $1.6 billion following a bribery scheme to secure international work. Now, federal prosecutors in Connecticut and elsewhere are hoping that when companies discover criminal wrongdoing, they'll come forward, thanks to the potential incen- tive of leniency. Officials are dangling a carrot: If a company discloses and helps fix whatever transpired, the govern- ment will be more lenient. But, if a company doesn't come forward and cooperate, the punishment could be more severe. U.S. Attorney for Connecticut Vanessa Roberts Avery announced in February her office has implemented a new voluntary self-disclosure policy. Avery said the policy will serve as an incentive for compa- nies to be honest and let the government know what transpired. "That is our hope and the whole point of the program," Avery said in a recent interview. "We encourage all companies who uncover wrongdoing from within to come forward, save valuable law enforcement investigative resources, and receive the benefit of being a good corporate citizen." Avery declined to say if any compa- nies have taken advantage of the policy since February. Self-reporting has proven beneficial for companies when dealing with other government agencies. In June, for example, the U.S. Securities and Exchange Commis- sion (SEC) announced it reached a settlement with Stanley Black & Decker Inc., after the New Brit- ain-based tool manufacturer failed to disclose to the SEC at least $1.3 million worth of executive perks. Stanley self-reported the issue, and the SEC did not impose a civil penalty on the company, which agreed to implement remedial measures. A former Stanley executive also had to pay a $75,000 civil penalty. "After consideration of Stanley Black & Decker's self-reporting, coop- eration, and remediation, the SEC declined to bring charges against the company," the SEC said in June. Avery said her office is hoping companies will come forward about a variety of cases, including financial fraud, corruption, market manipu- lation, price-fixing, bribery and any cases that might impact public health and safety, or national security. Local guidelines outlined Companies will be credited with having made a voluntary self-disclo- sure if they report the misconduct in a timely fashion, prior to it being publicly reported and before any imminent threat of disclosure or government investigation. Companies must fully cooperate with the government and reme- diate any criminal conduct, such as through forfeiture or financial restitu- tion, according to Avery's office. In return, the U.S. Attorney's office will not seek a guilty plea. Also, any potential fine would be significantly less, or no greater than 50% below the low end of the U.S. sentencing guidelines fine range. Also, prosecutors will not seek to require an independent compliance monitor if a company demonstrates it has implemented and tested an effective compliance program. In certain more serious cases, however, these benefits might not apply. The policy identifies three aggra- vating factors that may prompt the U.S. Attorney's office to still seek a guilty plea even if other requirements are met. Those factors include if the misconduct poses a grave threat to national security, public health or the environment; is pervasive throughout the company; or involved current company executive management. The U.S. Attorney's office frequently handles cases involving corporate crime. In recent months, Connecticut's U.S. Attorney's office has announced settlements and sentences for cases involving overcharging the government for defense contracts, improper Medicare/Medicaid billing, tax evasion, defrauding investors and Vanessa Avery