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Corporate Crime and Congress

When it comes to corporate crime and violence, there’s not a dime’s worth of difference between the Republicans and Democrats on the House Judiciary Committee’s Subcommittee on Crime.

At least, that would be the impression we got after listening in on today’s subcommittee hearing on corporate crime.

On one side, George Bush’s Justice Department, weakly and meekly defending its McNulty memo and the Department’s ability to investigate corporate criminal activity.

On the other, Republicans, Democrats–including full House Judiciary Committee chairman John Conyers (D-Michigan)–corporations, their defense lawyers, and the American Bar Association–flexing their collective muscles and beating up on federal prosecutors.

All want to hog tie the Justice Department and its ability investigate corporate criminal activity.

The McNulty memo–also known as Principles of Federal Prosecution of Business Organizations–tells prosecutors that they must consider nine factors in deciding whether or not to charge a corporation–including dreaded factor number six–“the corporation’s timely and voluntary disclosure of wrongdoing and its willingness to cooperate in the investigation of its agents.”

Cooperation often means turning over the internal investigation that was conducted by the company’s lawyers.

This report is often considered a roadmap for the prosecution.

Without it–and without the company’s cooperation–corporate criminal prosecutions are rarely successful.

And so, last year, big business ganged up to make it more difficult for prosecutors to get these internal investigations.

They pressured the Justice Department to amend the memo so that a prosecutor in the field must first go to Main Justice to get approval for privilege waivers.

Columbia Law Professor John Coffee believes that this requirement “went a bridge too far.”

“Under the McNulty memo, the government doesn’t say it can’t ask for that study,” Coffee said. “But it requires that it has to be approved by the Assistant Attorney General running the Criminal Division. And that is higher up than the typical young prosecutor will be comfortable going.”

But even the McNulty memo fix–requiring approval of Main Justice–wasn’t enough to satisfy the big business lobby–and their Democratic and the Republican lackeys in Congress.

They want more.

And Senator Arlen Specter (R-Pennsylvania) has given them the bill they want.

Specter’s bill would outright prohibit federal prosecutors from seeking privilege waivers or considering a corporation’s willingness to waive privilege voluntarily when evaluating its cooperation.

And according to Michael Seigel, a Professor of Law at the University of Florida College of Law, such a prohibition would result in “a significant slowdown of white-collar criminal prosecutions–exactly what the business lobby wants.”

Professor Coffee says he “cannot say what the statistical impact of such a prohibition would be–no one can.”

“But it would remove a very important tactic that has proven effective,” Coffee told CORPORATE CRIME REPORTER. “And worse, it would signal to prosecutors that the Congress and the public no longer supported such prosecutions.”

Now, why didn’t the Democrats invite Professor Coffee or Professor Seigel to testify at today’s hearing?

The House Judiciary Committee didn’t return calls seeking comment about today’s stacked panel.

Here was the line-up for today’s hearing:

Karen Mathis, a corporate lawyer, and president of the American Bar Association.

William Sullivan, a corporate lawyer and a partner at Winston & Strawn in Washington, D.C.

Andrew Weissmann, a corporate lawyer and a partner at Jenner & Block in New York.

Richard White, a corporate lawyer, and chairman of the board of the Association of Corporate Counsel.

And then you have Barry Sabin representing the Justice Department.

“The Justice Department isn’t doing a very good job in defending itself,” Professor Seigel said after watching part of the hearing.

Seigel would have happily traveled to Washington to testify before the committee and give a different view.

Maybe Professor Coffee would have come down from New York.

But they weren’t invited to testify.

“I would have loved to testify,” Seigel said.

Maybe he wasn’t invited because in an op-ed last month in the Washington Post he accused the Democrats–“eager for lobbyists’ money”–of bending to the demands of big business.

Most disheartening today was the performance of Judiciary Committee Chairman Conyers.

After first acknowledging “we’re in an almost corporate crime wave,” Conyers said “there is nobody that wants to get on top of some of the criminal activity that has been going on the last past number of years more than I do.”

But he then went on–in a meandering statement–to support big business in its effort to tie up the prosecutors in knots.

During the hearing, Winston & Strawn’ Sullivan was the most effective spokesperson for the corporations.

Republicans and Democrats on the subcommittee expressed an interest in punishing federal prosecutors for violating any prohibition they might pass.

But they weren’t sure exactly how that would work.

Sullivan filled in the blanks.

He suggested a number of ways to punish prosecutors “for the purpose of chilling a willfully aggressive prosecutor who seeks to violate” any prohibition that Congress might pass.

“In the pre-indictment phase, if there were a sanctions provision and it could be shown that an aggressive prosecutor violated that sanctions provision, you could move to dismiss the indictment,” Sullivan said gleefully. “You could allege in that motion that improper considerations were undertaken and adverse inferences were drawn by the refusal of the corporation to waive. You could argue that the request to waive itself was improper. If such a motion would fail, you could then move post-indictment that information obtained or potentially obtained through that request would be excluded for purposes of the prosecution’s case in chief. You could also move that the violating prosecutor could be subjected to internal investigatory review, including Bar sanctions where that person is admitted.”

Some believe that even if the Democrats and Republicans pass their curbs on prosecutors, it won’t have much of an impact because most big corporations today voluntarily turn over their internal investigations and cooperate with prosecutors.

But Seigel disagrees.

He argues that such a prohibition will have a real impact.

“If a prohibition against asking for or using waiver were written into law, the balance of power between prosecutors and corporations would undergo a fundamental shift,” Seigel told CORPORATE CRIME REPORTER. “Far more corporations would choose to exercise their privilege even if it meant that they could provide only minimal assistance to a criminal investigation as a result. If a prosecutor decided to bring charges against a corporation under such circumstances, the corporation could move for dismissal of the indictment based upon the statute, claiming that it was being penalized for failing to waive privilege. This would be a powerful argument. In any event, if the court refused to dismiss the charges, the same issue would arise at sentencing. The corporation would want–and would be entitled to receive–the full benefit of cooperation, even if that cooperation were of little use.”

CORPORATE CRIME REPORTER is located in Washington, DC. They can be reached through their website.

 

 

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