Tuesday, January 18, 2005

Government Enjoined from Prosecuting Company Granted Antitrust Immunity

On Jan. 14, U.S. District Judge Timothy Savage (E.D. Pa.) enjoined the Department of Justice from indicting Stolt-Nielsen S.A., a foreign freight carrier, and Richard Wingfield, an executive vice-president, for antitrust violations for fixing prices in the chemical shipment industry.  In 2003, under the Antitrust Division's "Corporate Leniency Program," which permits the first company that discloses an antitrust violation to receive complete immunity from prosecution, Stolt-Nielsen received immunity from prosecution, and information provided by the company resulted in the successful prosecution of two other companies, Odfjell Seachem AS and Jo Tankers BV.  The government, however, then sought to revoke the immunity grant because Stolt-Nielsen had misled prosecutors about when it ceased its illegal activity.  An article in the Wall Street Journal (Jan. 17) states:

Stolt and Mr. Wingfield had been granted amnesty by the government in early 2003 and agreed to cooperate with the antitrust probe. But the Justice Department later revoked the amnesty and indicted them, arguing that they had failed to abide by terms that required "prompt and effective" action to halt the alleged activity. The Justice Department also suggested that Stolt, with headquarters in London but whose top executives are based in Connecticut, might not have been forthcoming with investigators.

Judge Savage found that the immunity agreement contained only one date--January 15, 2003--and that there was no express provision under which Stolt-Nielsen asserted that it had ceased fixing prices before that date (opinion here).  The court held:

We find that SNTG performed its obligation under the agreement when it supplied DOJ with self-incriminating evidence that led to the successful prosecution of SNTG’s coconspirators. Because DOJ got the benefit of its bargain, it cannot avoid fulfilling its promise based upon an understanding it contends the parties intended during negotiations but is not clearly defined in the integrated agreement. Thus, because SNTG did not breach the agreement, we shall enjoin DOJ from prosecuting and indicting SNTG for its part in the antitrust conspiracy to the date of the agreement.

Litigation over immunity agreements, either formal or informal, involves very high stakes, and in this case saved the company and an executive from an indictment.  (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/01/government_enjo.html

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