Justice Dept. Sets Sights on Corrupt Foreign Companies

WASHINGTON — Justice Department officials last week announced plans for a whistleblower program targeting foreign corporations accused of misconduct.

They plan to start the pilot program this year.

The Justice Department already operates a whistleblower program that offers large rewards for tips about corporate misbehavior but it focuses only on publicly traded companies regulated by the Securities and Exchange Commission.

The misconduct typically consists of fraud, bribes, misrepresentation and insider trading.

The new program is part of a wider enforcement effort that includes foreign corporations.

Justice Department officials announced the program during a legal conference in San Francisco, California, while Congress considers banning the Chinese company that operates the social media app TikTok.

TikTok’s parent company is accused of conspiring with the Chinese military to secretly collect private information on Americans.

Congress is scheduled to vote Wednesday on a bill that would force TikTok to divest itself from its parent company, ByteDance, or to be banned from U.S. social media.

Under the program the Justice Department is developing, whistleblowers would be paid from settlements with corporations or from private funds of executives sentenced for crimes, according to Deputy Attorney General Lisa Monaco.

“Used proactively, this program will fill gaps. It will create new incentives for individuals to report misconduct to the department, and it will drive companies to invest further in their own internal compliance and reporting systems,” she said at the American Bar Association’s white collar crime conference.

The new crackdown is being designed by the Justice Department’s Money Laundering and Asset Recovery Section, which also participated in the Securities and Exchange Commission’s whistleblower program.

The Securities and Exchange Commission reports having given out $1.9 billion to 397 whistleblowers since the program started in 2011. About $600 million was awarded in the past fiscal year.

In addition to the kind of misconduct found among U.S. corporations, whistleblowers could be compensated for being the first to report foreign corporate violations of sanctioned entities.

The United States sanctions several foreign adversaries, including Iran, Russia, Cuba and Venezuela. They sometimes use their corporations for foreign transactions before funneling the revenue to their militaries.

In one example, whistleblowers could report corporations doing business with Russian oligarchs. If the oligarchs’ assets are seized, the whistleblowers could be paid from sale of the property.

“This helps us build the strongest criminal cases against the most culpable wrongdoers, and it helps us impose the most significant penalties on those who most deserve it,” Monaco said in remarks at the ABA conference. “Our message to whistleblowers is clear. The Department of Justice wants to hear from you.”

Monaco said the Justice Department is particularly interested in information about violations of the Foreign Corrupt Practices Act and the Foreign Extortion Prevention Act. Both federal laws prohibit American citizens or organizations from bribing foreign officials to benefit their business interests.

She said the Justice Department would continue to allow corporations to decide between a “carrot” and a “stick” through its voluntary self-disclosure policy.

Under the policy, the Justice Department will not prosecute corporations or executives that disclose their misconduct, cooperate in investigations and offer compensation to anyone damaged by their wrongdoing.

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