|
|
|
|
Joseph Bernardino, former CEO of Arthur Andersen LLP, testifies before the House Financial Services Committee in February 2002.
|
Criminal prosecutions of large organizations exhibit a unique power dynamic. The target organizations include goliaths—some of the largest corporations in the United States, including AIG, America Online, Bristol-Myers Squibb Co., Computer Associates, HealthSouth, KPMG, MCI, Merrill Lynch & Co., and Monsanto. A U.S. Attorney’s office with its limited resources may look like a tiny David by comparison. But prosecutors have their slingshot: they wield the threat of an indictment, which results in potentially catastrophic collateral and reputational consequences to a corporation. Yet it is a threat that prosecutors can ill afford to carry out due to those consequences. The détente resulting from the collision of those oversized forces has taken a surprising turn, perhaps because there was nowhere else to turn—from criminal prosecution towards structural reform. By that I mean that prosecutors adopted a strategy to avoid an indictment and a conviction by entering into detailed compliance agreements with organizations. In one example of a demanding structural reform agreement, KPMG International, charged with marketing illegal private tax shelters, agreed to shut down its private tax practice, to cooperate fully in criminal investigations of former employees, and to hire an independent monitor for three years to implement an elaborate compliance program.
In my piece, “Structural Reform Prosecution,”1 I present a picture of why and how federal prosecutors now enter into such agreements supervising the rehabilitation of these goliath organizations. The Article examines the agreements’ origins, goals, terms, and the broader legal and institutional setting, including through empirical analysis of the agreements entered after the Department of Justice (“DOJ”) announced its new approach in January 2003.2 While hue and cry over organizational prosecutions have focused on privilege waiver and employer payment of attorney fees, those two issues just scratch the surface of the complex problems that these massive efforts raise. I hope here to draw attention first to a series of problems raised by how these agreements define compliance and second to the multi-polar context in which these agreements are entered. “Structural Reform Prosecution” concludes by posing questions for future work. I expand on that discussion here by proposing reforms that, from different perspectives, address some of the difficult issues that these agreements raise.
[More]
|
|
|
|
|
|
|
|
|
|
|
By Daniel Richman
The business pages regularly provide graphic stories about corporate deferred prosecution agreements (“DPAs”). And commentators regularly fulminate about this alleged abuse of government power, quite confident (or willfully blind to the fact) that the removal of this non-nuclear option from the prosecutorial arsenal would substantially lessen the ability of prosecutors to obtain cooperation from firms and their employees. Yet this emerging practice has received all too little scholarly attention, and Professor Brandon Garrett has made an important contribution by carefully examining the available facts and creatively drawing on the structure reform literature to highlight questions it raises about legitimacy and institutional competence.1
That Garrett raises more questions than he answers merely highlights the richness of the topic he has so nicely limned. It would indeed be troubling if a decentralized corps of unelected federal prosecutors, having cut their teeth on gun and drug cases, moved into the corporate arena and used the threat of criminal prosecution—often tantamount to corporate execution—to fiddle with corporate structures and goals. But prosecutors rarely act alone, and are unlikely to do so in a sustained white collar investigation.2 Of the DPAs Garrett studied, sixty-six percent were reached explicitly in conjunction with regulatory agencies3—with the SEC leading the pack—and that figure might substantially understate agency involvement, since an agency extensively consulted by prosecutors might go unmentioned in the formal agreement.
[More]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By F. Joseph Warin and Andrew S. Boutros
[Professor Garrett's] laissez-faire proposals lack passion and a basic appreciation for the fact that companies cannot wait for “decades” to receive guidance. This is not an academic question; Garrett’s proposals do not strike with the surgical precision that is needed under current circumstances. The prime point of this Essay boils down to this: Guidance on the availability and appropriateness of pretrial diversion agreements is needed now, and such guidance must come from DOJ, not from the courts. Regrettably, DOJ has been unhelpfully silent on this issue. Current DOJ guidance focuses only on the threshold discretionary question of whether a business organization should be indicted at all. There has been absolutely no guidance, however, on the second discretionary question of whether a case should be resolved through the vehicle of a guilty plea, a DPA, or an NPA. There also exists a lacuna of guidance about appropriate terms to be included in DPAs.
DOJ should fill both gorges. DOJ headquarters should issue clear guidance to its litigation sections and the ninety-three U.S. Attorney’s Offices with the aim of leading to consistency in the offering of pretrial diversion agreements.
[More]
|
|
|
|
|
|
|
|