Subscribe to Feed (Atom)
Bookmark and Share

Wednesday, April 9, 2008

Desperately seeking a DPA.

A front-page article by Eric Lichtblau in today’s New York Times examines how, in a “major shift in policy,” federal authorities are increasingly allowing companies to enter into deferred prosecution agreements rather than face criminal indictment.

Under a DPA, the company hires outside counsel and conducts a thorough internal investigation, then agrees to clean up its act and often consents to oversight by an independent monitor. The company avoids the stigma and cost of defending itself in a criminal prosecution. It also avoids any formal admission of guilt.

Once rare in resolving corporate criminal liablity, DPAs have become “a favorite tool of the Bush administration,” Lichtblau says. Proponents of DPAs say they can prevent the kind of havoc that followed the collapse of accounting giant Arthur Anderson in 2002, which led to the loss of 28,000 jobs. Former attorney general John Ashcroft is one such fan of DPAs, calling the indictment of a company “a corporate death sentence.” Paul McNulty, the former deputy attorney general who penned the federal guidelines for corporate criminal prosecution, has defended the agreements as “pretty burdensome.”

Burdensome is facing the rest of your natural life in prison, not paying for a monitor. In effect, the DOJ is outsourcing the criminal investigation of corporations to large firms and consulting shops. And engagements for internal investigations and monitorships are incredibly lucrative. It’s hardly surprising that Ashcroft defends DPAs – his consulting firm was paid more than $52 million as an outside monitor for a medical supply company hoping to avoid criminal prosecution.

While it has always been rare for a company to go to trial in front of a jury, now companies are not even being charged. At the same time, individual corporate officers and employees are being thrown under the bus and sacrificed to criminal prosecution at the urging of companies seeking DPAs. I don’t have a real issue with companies receiving DPAs. However, while the DOJ goes easy companies, they have thrown the book at individuals and this is deeply unfair. CR

No comments: