Wednesday, November 10, 2004

What is the Effect of an Investigation on Corporate Employees?

On Nov. 5th we reported one of the side effects of  investigations -  the dismissal of corporate executives. (Ace, Ltd. dismisses two executives - NYTImes ; Marsh & McLennan dismisses four executives -NYTimes).

Today we are seeing the effect of an investigation on employees.  This mornings NYTimes reports that "Marsh is Planning to Cut 3,000 Jobs to Offset Recent Setbacks."  The Wall Street Journal has the interview with Michael Cherkasky, CEO of Marsh & McLennon Companies, who states, "we no longer face criminal prosecution as a corporation, and we have constructive discussions going on with regulators across the country."

There is no doubt that crime has its victims - oftentimes innocent people in the public who are wronged by the activity of those who perpetrate the criminal activity.

But investigations into allegations of criminal activity, even when no charges are filed, also can have victims.  The victims can be the public who may have been wronged by the alleged fraudulent activity.  Without them it is unlikely that prosecutors would be pursuing the conduct in the first place.

There also may be innocent parties associated with a company who may be dismissed when the company suffers because of the toll of the investigation (even when there may be no criminal activity found or when an alternative to prosecution is found). Professor Darryl K. Brown has a wonderful article titled, "Third Party Interests in Criminal Law, 80 Texas Law Review 1383 (2002) that explores the effect of criminal prosecutions and convictions on third parties.


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