Slapping the Corporate Wrist

May 30th, 2008 by Phil Mattera

Deferred prosecution. Corporate monitors. These are the less-than-intimidating terms used to describe the manner in which the U.S. Department of Justice goes after corporate crime these days. Not exactly in keeping with attitude of “throwing the book at them” applied to blue-collar criminals or the “Gitmo” treatment given to those charged as terrorists.

The Bush Administration has let many corporate offenders off the hook through the use of deferred prosecution agreements, which are arrangements under which the Justice Department postpones the filing of criminal charges against companies that agree to pay fines and submit to third-party monitoring. If the monitor determines that the company has cleaned up its act, the charges effectively disappear. The corporation avoids a major stain on its record, and the Justice Department avoids the trouble of putting on a trial.

This dubious practice had been going on largely under the radar. Russell Mokhiber, editor of the Corporate Crime Reporter, carried on a one-man effort to publicize it. Reports earlier this year that former Attorney General John Ashcroft’s consulting firm had been given a $52 million contract to serve as a corporate monitor for a medical supply company briefly put deferred prosecution (and possible impropriety in the selection of monitors) in the spotlight. Then the New York Times “discovered” the practice in a front-page story on April 9.

Thanks to the efforts of the House Judiciary Committee and its Chairman John Conyers, more is becoming known about the Justice Department’s light-handed treatment of corporate malefactors. Last week, Conyers and several of his colleagues announced that Justice had turned over the texts of 85 deferred prosecution and non-prosecution agreements, which were promptly posted on the Committee’s website along with a letter from Justice that includes the names of 40 monitors, most of whom turn out to be former federal prosecutors and other government officials .

Among the companies involved in the Justice Department’s list of unprosecution agreements (which Conyers said was missing at least a dozen cases) are: America Online, Bank of New York, Blue Cross and Blue Shield of Rhode Island, Boeing, BP America, Bristol-Myers Squibb, Chevron, HealthSouth, lngersoll Rand, KPMG, Lucent, Merrill Lynch, Monsanto, Prudential Securities and Textron.

The Justice Department is apparently sensitive to charges that it is not aggressive in fighting corporate crime. In a March 7 memo to U.S. Attorneys, Acting Deputy Attorney General Craig S. Morford warned that “the criminal conviction of a corporation may have harmful collateral consequences for employees, pensioners, shareholders, creditors, consumers, and the general public.” What a relief! Now, every time I read that a corporation caught committing a crime is being let off with a slap on the wrist, I can take comfort in the knowledge that the leniency is actually for my benefit.

3 Responses to “Slapping the Corporate Wrist”

  1. Neil Gordon says:

    Not only are these prosecutorial tools essentially a slap on the wrist (DOJ’s excuse is they are a good “middle ground” between not prosecuting corporate crime at all and punishing “innocent” employees, shareholders, etc.), but because they are so shrouded in secrecy, there is a big potential for abuse. Like giving corporate monitor jobs to your former DOJ colleagues/bosses, or making the company donate millions of dollars to your alma mater or favorite charity. In at least one case, the prosecutor used the corporate monitor fee as an excuse to reduce the fines the company had to pay for the harm it caused to the public.

  2. […] for real—and that it results in some serious charges rather than deferred-prosecution-agreement slaps on the wrist. Maybe then the financial sector will begin to clean up its […]

  3. monitor says:

    Thanks for the above.

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