Should ethics officers guarantee confidentiality to those who report wrongdoing, and should they violate that confidence to protect the firm from prosecution?Protecting confidentiality is one of the most effective tools in creating a corporate culture in which illegal and unethical behavior can be uncovered.

Corporate ethics officers, ombudspersons, and ethics hotlines typically guarantee that any reports of illegal or unethical behavior will be held in strictest confidence. Ethics officers promise anonymity to whistle-blowers, and those who report wrongdoing trust that this promise of confidentiality will be upheld.

However, Federal Sentencing Guidelines can create real ethical dilemmas for corporations that promise anonymity and confidentiality. The guidelines call for significantly reduced punishment for firms that immediately report potential wrongdoing to government authorities. Failure to report evidence of wrongdoing can mean the difference between a significant penalty and exoneration. Of course, failure to promise confidentiality can also be evidence of an ineffective ethics and compliance system, itself a potential risk for receiving stiffer legal penalties.