Bloomberg Law
Free Newsletter Sign Up
Bloomberg Law
Free Newsletter Sign Up

WhatsApp, Wickr Seen by Justice Dept. as Tools to Erase Evidence

May 16, 2018, 9:56 AM

• DOJ bribery policy establishes corporate guidelines on disappearing messaging apps • Companies can face steeper fines and penalties if apps erase bribery evidence trails

The Justice Department wants companies to discourage employees’ use of apps like Facebook Inc.'s WhatsApp and Wickr that self-delete communication streams after a certain period of time, which can destroy evidence trails.

Companies that allow employees to use disappearing apps for work purposes could lose out on discounted fines or other punishments under a new policy that offers leniency for firms that self-report illegal bribery schemes. The DOJ’s Foreign Corrupt Practices Act policy became a permanent fixture in November.

Going forward, the DOJ will be critical of companies that use these types of disappearing communications, Kevin Feldis, partner at Perkins Coie LLP, told Bloomberg Law. “The bottom line is that the recent FCPA Corporate Enforcement Policy puts companies on notice that they should not ignore how their employees communicate about work matters,” he said.

Prohibiting such disappearing apps is easier said than done for companies, especially multinationals with thousands of employees, David Schindler, partner at Latham & Watkins LLP, told Bloomberg Law.

“Companies did not introduce the apps to their employees. Rather, companies have had to recognize that large segments of their workforce use apps to communicate,” he said.

Communication Crackdown

The shift to disappearing communications tools is complicating the DOJ investigations of corporate wrongdoing, especially when it comes to uncovering multi-national bribery schemes, Daniel Kahn, chief of the DOJ’s FCPA unit, said May 8 at the American Conference Institute in New York. “As technology evolves, it becomes easier for criminals to engage in this conduct without detection and harder for prosecutors to track.”

The DOJ’s FCPA policy can offer substantial benefits to companies who self report corruption, including enforcers’ decision not to prosecute at all. But that can happen only if they carefully follow the program’s guidelines, Kahn warned.

Prosecutors need a robust evidence trail to conduct a through investigation, and disappearing applications like WhatsApp and Wicker prevent that. “Don’t expect full cooperation if there are no records of the misconduct,” he said.

In order to receive full credit for coming to authorities with bribery violations, the FCPA guidelines say companies must prohibit “the improper destruction or deletion of business records, including prohibiting employees from using software that generates but does not appropriately retain business records or communications.”

This may mean that U.S. companies with a global presence need to think through their current policies. Outside of the U.S., WhatsApp is the go-to tool for communicating abroad, Lucinda Low, partner at Steptoe & Johnson LLP, told Bloomberg law.

“In Brazil, the whole country is on WhatsApp, and that’s the reality of how people communicate,” said Low, who routinely assists companies in FCPA matters. “It’s very hard to tell people that the way they operate is completely wrong, and the DOJ wants to do it differently. It’s especially hard to play this out in a global context.”

Corporations can’t police employee communication 24/7, but they still need to set realistic expectations for accountability in the age of ephemeral messaging, Low said. “I think companies have to draw reasonable lines around record keeping. That’s where the issue is now.”

Internal Policies

Companies should first determine if ephemeral communications are even addressed in internal corporate policies and ensure the guidelines about these apps are consistent with overall communication policies, Feldis said. “In 2018, it is likely not a satisfactory answer for a company to say it has not considered or anticipated the use of the many types of dynamic, encrypted or disappearing communication applications that are now prevalent.”

The DOJ wants companies to be thinking about these apps now as opposed to when it is embroiled in an FCPA investigation, Kahn said. A company “can’t undo it’s WhatsApp policy and then expect full credit” under the enforcement policy, he said.

Some corporations have tried to legitimize disappearing apps, stating that they were more cost-effective. But Kahn said that doesn’t make sense. “From a business standpoint, wouldn’t companies want the ability to go back to what is being communicated?”

Valid reasons for using such apps do exist, Stephen Wu, shareholder with Silicon Valley Law Group, told Bloomberg Law. “Sometimes, with perfectly good intentions, employees want to do business but their IT systems are slowing them down,” he said. Ephemeral messaging can be a communication tool that offers faster, more reliable service.

If a company can validly explain why it uses ephemeral messaging, the DOJ would listen, Kahn said. “It may be a risk-based approach when they [employees] did this, and we may not agree with it, but we won’t deduct a company from having done something thoughtful.”

The actions of every individual employee are out of a corporation’s control, but its standards can still be refined, Low said. “If a company can maintain reasonable efforts and is trying to promote a culture of lack of accountability, then I think the fact this it is not perfect shouldn’t come back to bite them.”

Wu said ephemeral messaging can also be a tool for company officers engaged in pre-merger talks who need a forum for preliminary communications.

To contact the reporter on this story: Victoria Graham in Washington

To contact the editor responsible for this story: Fawn Johnson