September 24, 2012
Deferred Prosecution Agreements - Definitely A Plus
On September 13th Assistant Attorney General Lanny A. Breuer spoke to the New York City Bar extolling the virtues of DOJ's strategy for corporate prosecutions (see here). Former co-blogger Peter Henning here, also authored an article which focuses on the use of deferred prosecution agreements by the government.
One clearly has to credit the government with raising the bar in the corporate world to comply with legal mandates. Corporations throughout the world now have strong compliance programs and conduct internal investigations when questionable activities are reported to them. Likewise, post-Arthur Andersen, LLP, corporations are shy to go to trial - although there are some who have done so successfully (e.g. Lindsey Manufacturing- see here).
When the government first started using deferred and non-prosecution agreements, in a prior administration, there were government practices that were questionable. For example, allowing for huge sums to money to go to a former attorney general as a monitor, giving a chair to a law school that happened to be the same school the US Attorney graduated from, and negotiating for continuing work with the government as part of the agreement. (see Zierdt & Podgor, Corporate Deferred Prosecutions Through the Looking Glass of Contract Policing-here) Without doubt there were terms within the agreements that needed revision. Some terms that give complete control to prosecutors in deciding who can determine breaches of agreements present problems. But many of the questionable practices are not seen in recent deferred prosecution agreements, and this is good.
Agreements that still provide an imbalance between corporate misbehavior and individual miscoduct is creates an imbalance, but much of this is created by the fact that corporations have greater resources and can control the discussion with DOJ, to the detriment of the individual. Clearly there needs to be a better recognition of corporate constituents during the internal investigations, the subject of a forthcoming article that I author with Professor Bruce Green (Fordham) titled, Unregulated Internal Investigations: Achieving Fairness for Corporate Constituents. But this issue may not be one strictly for DOJ to resolve.
What is particularly impressive about the DOJ use of deferred prosecution agreements today is that it uses an educative model to reform corporate misconduct. One can't put a corporation in prison, so with fines as the best alternative it is important to focus on motivating good conduct. Corporate deferred and non-prosecution agreements are an important step in achieving this positive result. So, it is important to credit today's DOJ with how it is tackling the problem of corporate misbehavior.
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So pretty much the worst that can happen to a corporation and its shareholders as a result of corporate crime is a deferred prosecution agreement. When corporations and corporate executives commit crimes, those are "mistakes" -- a sign that the corporation needs the right "motivation" (to use your word). The corporation is a toddler in need of a different rewards system.
Simultaneously, the US incarcerates more people as a percentage of its population than any society in human history, a society that has all but discarded any notion of rehabilitating criminals, or even rehabilitating juvenile offenders (who now can be sentenced to life without parole). When a fallible, flesh-and-blood human being makes a mistake in a street crime, they are locked up for most or all of their lives (or executed).
Citizens United understates the reality. Corporations don't just enjoy personhood, they enjoy super-personhood. And Breuer's speech was nothing more than an elegant rationalization for the Bush and Obama administrations' exemption of corporations from the rule of law.
Indeed, Breuer's speech had about as much legal substance as Eric Holder's speech arguing that the due process rights of US citizens assassinated by the US goverment aren't violated because they enjoy the "due process" of having a group of generals and spies sit around the table with the President to decide that they should die.
Please don't fall for this idiocy. It makes no sense. The best way to start a corporate crime wave is to assure corporate executives nationwide that the worst that can happen if they break the law is a DPA. If a corporation commits crimes, it should be indicted and vigorously prosecuted. If it is put out of business as a result, fine. Perhaps that will encourage the shareholders and managers of other corporations to ensure that their corporations obey the law.
Posted by: Gracie Evans | Sep 26, 2012 1:23:22 PM