The recent decision by the US Justice Department under Assistant Attorney General Kenneth Polite to scale back white-collar criminal enforcement has sent ripples across the corporate landscape. As someone who has lived on both sides of the ethical divide, I find this shift in enforcement both troubling and illuminating. It raises an age-old question: Will people choose to be ethical when the fear of punishment is diminished, or will they exploit this perceived leniency for personal or organizational gain?
To answer that question, let’s examine the implications of the DOJ’s change in focus and the fundamental human behavior and ethics issues this shift reveals.
What Is the Shift and Why Does It Matter?
The Bloomberg Law report highlights the Justice Department’s intention to deprioritize certain white-collar crime investigations in favor of national security and violent crime enforcement. This shift comes as the DOJ realigns its resources, signaling that specific corporate crimes—once aggressively pursued—will face less scrutiny.
Historically, robust white-collar crime enforcement has acted as a deterrent. The possibility of federal investigation or prosecution loomed over boardrooms, ensuring at least a base level of ethical compliance. But now, with fewer watchdogs at the door, the burden falls squarely on organizations to self-regulate. And that’s where the trouble begins.
The Human Behavior Dilemma: Do We Choose Ethics, or Does Fear Enforce It?
Let’s be honest: human behavior is inherently driven by both intrinsic motivators (such as personal values and organizational culture) and extrinsic pressures (such as laws, regulations, and the threat of consequences). When the extrinsic pressures weaken, organizations and individuals face a critical decision—do the right thing because it’s right, or take advantage of the system because they can?
As a former fraudster turned business ethics speaker, I know how thin that line can be. I didn’t wake up one day and decide to engage in unethical behavior. It was a gradual process of justifications, rationalizations, and a false sense of security that no one was watching. What scares me about this enforcement shift is that it may create the same conditions across industries—subtle, creeping rationalizations that lead to major ethical lapses.
Here’s the issue: Without the external threat of enforcement, companies with weak internal controls are ripe for ethical failure.
The Fraud Triangle Becomes the Fraud Diamond
The fraud triangle—composed of opportunity, pressure, and rationalization—is often used to explain why individuals commit fraud. But the DOJ’s shift in priorities enhances that model into the fraud diamond by adding a fourth critical factor: capability.
- Opportunity: With fewer investigations and enforcement, the doors to unethical activity are left open wider.
- Pressure: Economic pressures and performance targets remain constant, if not heightened, due to volatile markets and stakeholder demands.
- Rationalization: Employees or executives can more easily justify unethical decisions, especially when there is a perception that “the DOJ won’t care.”
- Capability: Individuals in positions of authority who know how to exploit weaknesses in internal controls will have fewer external checks and balances.
This shift in enforcement will disproportionately impact organizations that lack strong ethical cultures and internal compliance mechanisms. The absence of DOJ oversight does not mean there will be no consequences; it simply delays them until the damage is too large to ignore.
The Ethical Fork in the Road: Two Paths Forward
Organizations now face two options:
- Strengthen internal ethical frameworks: Companies that proactively double down on ethics training, compliance, and leadership accountability will distinguish themselves in the long term. These organizations will not only avoid scandal but also gain a competitive edge in attracting ethically conscious investors, employees, and customers.
- Exploit the enforcement gap: Organizations that view the DOJ’s reduced oversight as an opportunity for unethical practices—whether through fraudulent financial reporting, insider trading, or bribery—will see short-term gains but face inevitable long-term consequences.
The latter path is a dangerous one, and history is filled with examples of companies that crumbled due to short-sighted ethical decisions. Enron, WorldCom, and Theranos all benefited from temporary blind spots in enforcement, but they could not outrun the consequences of their choices.
Can Business Leaders Be Trusted to Self-Regulate?
The honest answer is no—not all of them. Self-regulation only works in organizations where ethical leadership sets the tone from the top. Leaders must recognize that ethics is not a compliance checkbox but a culture that influences decision-making at every level. Without this recognition, self-regulation is meaningless.
This is why my work as a business ethics speaker focuses heavily on building ethical cultures within organizations. The goal is to create environments where employees feel empowered to do the right thing—not out of fear of punishment but because it’s embedded in their values and reinforced through positive leadership.
What Companies Must Do Now
With the DOJ’s scaled-back enforcement, companies need to act decisively. Here are some critical steps:
- Conduct an ethics audit: Evaluate the organization’s ethical strengths and weaknesses. Identify areas where external enforcement once acted as a safety net and develop internal controls to fill those gaps.
- Implement ongoing ethics training: One-off training sessions are not enough. Ethics should be a continuous conversation, tailored to different roles within the organization.
- Establish whistleblower protections: With fewer government investigations, internal reporting mechanisms become even more vital. Employees should feel safe reporting ethical concerns without fear of retaliation.
- Incentivize ethical behavior: Too often, performance incentives are tied solely to financial outcomes, which can encourage cutting corners. Companies should reward employees who demonstrate ethical leadership, even when it costs the organization in the short term.
- Hold leadership accountable: Ethical behavior must start at the top. Leaders who fail to model integrity create environments where unethical behavior thrives.
Final Thoughts: A Wake-Up Call for Business Leaders
The DOJ’s shift in white-collar enforcement is not just a change in policy—it’s a wake-up call for businesses. Those who take this as an opportunity to reinforce their ethical commitments will emerge stronger, with long-term reputational and financial benefits. Those who take it as an invitation to cut corners will inevitably face public, legal, and financial consequences.
As someone who has seen firsthand how quickly ethical lapses can spiral into catastrophe, I offer this warning: Just because no one is watching today doesn’t mean no one will see the damage tomorrow.
The real test of ethics is what you do when no one is watching. And right now, the world is watching how businesses will respond.
