Unless something dramatic happens in the next week or so, it appears that the Biden Justice Department’s prosecution of corporate misconduct will come to an end not with a bang but with a whimper.
This is in stark contrast to what happened the last time the DOJ prepared to turn over the reins to a Trump Administration expected to be less than relentless in going after corporate miscreants. In the period between the 2016 election and Trump’s inauguration, the Obama DOJ resolved a flurry of high-profile cases in which major corporations paid more than $30 billion in fines and settlements.
These included four ten-figure settlements: Deutsche Bank’s $7.2 billion toxic securities case; Credit Suisse’s $5.3 billion case in the same category; Volkswagen’s $4.3 billion case relating to emissions fraud; and Takata’s $1 billion case relating to defective airbag inflators. There were also nine-figure cases involving corporations such as Moody’s, Western Union, Shire Pharmaceuticals, and Rolls-Royce.
The Biden DOJ has bagged one significant trophy recently: in December it got the consulting firm McKinsey to agree to pay $650 million to resolve criminal and civil allegations relating to its role in assisting the disgraced company Purdue Pharma in the improper marketing of Oxycontin, which fueled the opioid epidemic. As is common in major cases of this kind, McKinsey was allowed to avoid the full impact of the criminal charges by being offered a deferred prosecution agreement.
Another major consulting company, Booz Allen, recently settled a False Claims Act case involving a contract with the Defense Department, but the penalty amount was only $15.9 million. Otherwise, the resolutions announced since the election have been run-of-the-mill cases brought against lower-profile companies.
I should point out that the Biden DOJ did achieve a couple of major wins in the period leading up to the election. In October, TD Bank paid $1.9 billion and pled guilty to charges relating to anti-money-laundering deficiencies and Raytheon paid $950 million to resolve allegations of contracting abuses and foreign bribery.
My focus here, however, is what the DOJ decides what to do once it has attained lame duck status. Faced with the prospect of turning over their cases to an overly corporate-friendly administration, prosecutors should do their best to achieve strong settlements.
In theory, career prosecutors should be able to pursue cases aggressively, regardless of the ideological orientation of the administration. Yet DOJ leadership can set policies that control how those prosecutors operate.
What complicates the current situation is that even before the election results became known, the Biden DOJ was not, apart from a few cases such as those cited above, taking a particularly aggressive posture toward corporate crime. The department put undue emphasis on offering leniency deals to encourage companies to self-report misconduct. This approach falls apart when the misconduct is not the work of a rogue employee but is instead inherent in the company’s operations and even encouraged by those at the top.
It remains unclear whether the Trump DOJ will continue on the leniency path and perhaps even offer sweetheart deals to companies that have curried favor with MAGA World–the way Meta Platforms has just done by announcing it will end its fact-checking program.
Trump’s choice to run the DOJ, Pam Bondi, does not have a strong track record in prosecuting corporate misconduct. In the eight years she was attorney general of Florida, there were only a handful of successful cases brought against large companies. She spent a lot more time as a leader of the effort by Republican AGs to overturn the Affordable Care Act.
As a fierce MAGA loyalist, she is likely to focus more on prosecuting Trump’s perceived enemies and less on rogue corporations.
Note: A new resource from Public Citizen called the Corporate Enforcement Tracker documents more than 200 pending cases and reported investigations against corporations. Since most, if not all, of these cases are unlikely to be resolved in the next ten days, their fate will be determined by the Trump DOJ.