In recent years, federal and state laws have sought to promote good corporate citizenship by encouraging business entities to establish internal compliance programs designed to avoid-or at least detect-illicit conduct. The most significant impetus toward effective internal corporate policing occurred in 1991, when the United States Sentencing Guidelines (Sentencing Guidelines) made the existence of an "effective" internal compliance program the sine qua non for receiving leniency upon conviction. As a result, corporations nationwide have sought to establish compliance programs that qualify for preferred treatment under federal law. Such programs, however, have produced an unanticipated dilemma for many businesses: when a company responds to regulatory incentives by starting a comprehensive compliance program that promotes lawful conduct, it risks generating incriminating information that may produce criminal or civil liability.
For example, to qualify for mitigation under the Sentencing Guidelines, responsible corporations must institute programs to assess their compliance with applicable laws and to prevent illegal conduct within the workplace. As part of such ongoing compliance programs, many companies periodically conduct comprehensive audits. These compliance programs and audits inevitably generate a variety of information and materials ranging from objective facts and photographs to subjective evaluations, reports, and opinions. Businesses use these materials to evaluate their compliance efforts and to construct new programs to help prevent future violations. Under present law, however, compliance program and audit materials are rarely confidential., Consequently, they may be subject to discovery in criminal investigations and civil actions against the company. Regulatory agencies, corporate shareholders, disgruntled employees, and third parties have all successfully accessed compliance materials in litigation against companies. Unless protected, these materials threaten to become a litigation road map for prosecutors and private plaintiffs. Ultimately, if such disclosures are routinely allowed, they will undermine the law enforcement policies upon which the Sentencing Guidelines and comparable measures are premised: that corporate good citizenship can be induced through incentives that promote self-policing.' Notwithstanding this important social policy, the disclosure risks posed by audit materials in litigation have generated only sporadic judicial or legislative attempts to confer protections.
Michael Goldsmith and Chad W. King,
Policing Corporate Crime: the Dilemma of Internal Compliance Programs,
50 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol50/iss1/1