Starting last year, white collar defense counsel would whisper it to each other at conferences.

Then they would say it in a louder voice.

Now they are saying it openly.

Corporations are less likely to self-report Foreign Corrupt Practices Act (FCPA) problems to the government.

Is it the echo chamber?

Or is it real?

Paul Friedman is a partner at Morrison & Foerster in San Francisco, California.

He says it’s real.

“My experience is that if you went back five years, pretty much every company’s reaction from the board of directors on down was – whatever we find, we’ll report to the Department of Justice. That’s what the government wants us to do,” Friedman told Corporate Crime Reporter in an interview last week.

“Now, things have evolved quite a bit. The first instinct of many people who do what I do has changed. The word has reached the board room and general counsel. And that is – they are not so sure that the government has come through with the benefits of self-reporting.”

“If a company can first see if it has a problem, determine whether there is a violation, investigate everything that needs investigating, then remediate – clean up everything that you find – why is it in the company’s best interest to then involve the government?”

“If you read carefully not just the speeches, but some of the more recent cases that try to emphasize the benefits to companies of cooperation, the government is trying to be more explicit for the reasons why this was done or that was done.”

“They are trying to make the case that it really is worthwhile for corporate America to cooperate, voluntarily disclose, to pick up the phone because the benefits will come into the company at the end of the day.”

Any chance there will be spillover from Judge Rakoff’s challenge to the SEC’s neither admit nor deny clause? Will judges similarly start challenging deferred and non prosecution agreements?

“The government has this policy and it goes back a long time – the responsible thing to do if you want a benefit is to come to us as soon as you know it, share what you know, dig everywhere you think should be dug or where we tell you, and then we will negotiate a resolution where you will get the benefit,” Friedman says.

“If judges were t o begin to second guess these negotiations, it would only contribute to the trend of companies not sharing the information with the government. They are doing the right thing – they are cleaning it up – but they are just not sharing the information.”

We are hearing that from other defense attorneys – this is a trend that big companies are not going to the government as much as they once were. Is part of the calculation that the government is overstretched?

“One of the key elements of the calculation has to be – will the government find out if we don’t tell them?” Friedman says. “If you think there is a significant risk that the government is going to find out anyway, then you are going to be better off going in. It’s just – what is the tipping point?”

And the other consideration is the new whistleblower provision.

“That’s one. And when you look at the dollar amounts in the resolutions of FCPA cases, if someone could claim to have originated one of these huge cases, it would be buckets of money.”

What exactly is it that the government is requiring that is making corporate executives think twice about cooperating?

“The whole range of relief, including money. There is a lack of transparency as to how fines and penalties are determined. All of these companies have cooperated and they still get an extremely onerous outcome, even after spending a fortune on the investigation costs and remediation costs.”

“What if the government does come knocking and you haven’t self-reported? But you have done a complete and thorough investigation. You have remediated.”

“You have cleaned up everything. You have come up with all of the state of the art compliance practices. You do everything we would have done had the government been involved in the process. If the government ever comes, we say – this is what we did, this is what we found, this is the investigation, this is the remediation and clean up.”

In making the recommendation on whether the company reports, how much does the nature of the wrongdoing weigh into it?

“There certainly would be some cases where the seriousness of the conduct is such – and if it is at a high level – you would say this is a case where it is in the company’s interest to self report.”

[For the complete Interview with Paul Friedman, see 26 Corporate Crime Reporter 3(12), January 16, 2012, print edition only.]