The May 1, 2020 federal felony indictment [1] of former Blue Bell Creameries LLP CEO Paul W. Kruse provides an important lesson to governing boards and their senior executives on the regulatory risks associated with communications during times of corporate crisis, especially communications with public health and safety implications.
Company executives and public relations consultants often debate about what is too little or too much to say in a time of crisis. The Kruse prosecution is a reminder that there can be criminal implications to those debates, and sometimes there can be more risk in what a company does not say than in what it does say. The case also provides a cautionary note about the broad scope of anti-fraud enforcement authority available to the federal government. Together, these are risks that corporate leadership should discuss with their general counsel and the compliance officer, especially given the ongoing pandemic.
The most immediate of these lessons are the critical need (a) for corporate leaders to be extraordinarily careful with the transparency and accuracy of crisis communications, especially those relating to acute impact on consumers created by the company’s products or services; and (b) to confirm that the company’s compliance program adequately alerts the board to the presence of such risks.