Among the more frequent questions one hears about the Wal-Mart case are questions about corporate governance. Thanks to recent high-profile prosecutions and the whistleblower provisions of the Dodd-Frank Act, legal experts are paying more attention to corporate governance than at any time since the passage of Sarbanes-Oxley Act and the Nature’s Sunshine case. High on their list of preoccupations is the question of whether to disclose, and when. To many, Wal-Mart looks like a clear-cut case. “Why didn’t Wal-Mart disclose to the Department of Justice or the Securities and Exchange Commission?” the commentators ask. Conventional wisdom puts the blame on Wal-Mart’s corporate governance. But a closer look at the facts, viewed prospectively rather than in hindsight, suggest that while Wal-Mart might wish it had acted differently, its failure to disclose was not a failure of corporate governance per se.
The decision to disclose potential FCPA violations is more convoluted and political than many realize. For most in-house counsel, the question is not whether to disclose potential problems, but whether to disclose actual violations. To be sure, the benefits of voluntary disclosure are many. As identified by leading FCPA commentator Richard Cassin, they include:
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