Home > Uncategorized > Deferred Prosecution Agreements and Cookie-Cutter Justice – NYTimes.com

Deferred Prosecution Agreements and Cookie-Cutter Justice – NYTimes.com

September 18, 2012 Leave a comment Go to comments

Lanny A. Breuer, the head of the Justice Department’s Criminal Division, last week spoke to the New York City Bar Association, extolling the virtues of deferred and nonprosecution agreements as the new standard for how the Justice Department deals with criminal conduct by corporations.

It is not just corporate investigations that are being concluded with these agreements. They have been used recently with individuals to resolve investigations, like the recent agreement with the cyclist Floyd Landis over possible fraud charges. The Securities and Exchange Commission has also embraced them as a means to wrap up civil securities fraud cases.

But are these agreements all they are cracked up to be as an enforcement tool? Or do they let corporations off too easily? Like anything in the world of white-collar crime, there are good reasons to use them, but questions remain about whether they should be the norm for policing corporate misconduct.

Deferred and nonprosecution agreements are contracts with the government in which a company (or individual) undertakes specified actions in exchange for charges being dismissed or not filed altogether. The terms usually require payment of a fine, continued cooperation with any investigations or trials and a commitment to enhance internal controls. If the agreement is breached, the agreement typically permits prosecutors to restart the case and use any admissions by the company in the a subsequent proceeding.

A significant advantage to these agreements is that there is no judicial involvement, so the Justice Department does not have to worry about a judge second-guessing its terms or questioning the fairness of the resolution.

Mr. Breuer stated that the growing use of these agreements had meant “unequivocally, far greater accountability for corporate wrongdoing – and a sea change in corporate compliance efforts.” He pointed to the recent agreement with Barclays over manipulation of the London interbank offered rate, or Libor, as an example of how companies pay a heavy price when the settle, citing the replacement of the bank’s top management.

But a close look at the Barclays settlement does not show the Justice Department being as tough as advertised. The only discussion of the involvement of senior managers is buried in the press release with a bland reference that “members of Barclays management directed that Barclays’s Dollar Libor submissions be lowered.”

There was no specific mention of the former chief executive, Robert E. Diamond Jr., or the chief operating officer, Jerry del Missier, who lost their positions only after significant pressure from the British Parliament, not the Justice Department.

via Deferred Prosecution Agreements and Cookie-Cutter Justice – NYTimes.com.

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