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You are an individual.
If you commit a crime, mostly likely you will be charged with committing a crime.
And then face the truth.
Twenty years ago, if you were a corporation, and you committed a crime, you would be charged with committing a crime.
And then face the truth.
And mostly like plead guilty to committing the crime.
But then, corporate America said ? we don’t have to put up with this justice system.
And it unleashed its 15,000 corporate lobbyists and defense attorneys on Washington.
And collectively, they refined the corporate criminal justice system.
From every direction.
Now, after 20 years of corporate refining, if you are a corporation, and you commit a crime, you will be not be charged with committing a crime.
And you won’t be forced to plead guilty.
This is the state of corporate criminal justice in America.
Guilty plea for street criminals.
No prosecution for corporate criminals.
The most recent devolution came yesterday.
The Justice Department announced this morning that the Luxembourg based Tenaris S.A., will pay a $3.5 million penalty for violations of the Foreign Corrupt Practices Act (FCPA).
Tenaris provides steel pipe products and related services to the oil and gas industry.
The Justice Department alleged the company made “improper payments” in Uzbekistan.
But there was no criminal charge.
No deferred prosecution agreement.
Instead, the company and the Department entered into a non prosecution agreement.
Under this type of agreement, the Department says to the corporation ? we won’t prosecute you.
And the company says ? we will pay a fine and update our compliance program.
And then across town at the Securities and Exchange Commission, things were devolving even further down the prosecutorial ladder.
It used to be that the SEC would charge a company like Tenaris with violating the FCPA and settle the case with a consent decree.
Typically, under these consent decrees, the company would “neither admit nor deny” violating the law.
And then promise not to violate the law again.
It was considered the weakest of the all the slap-on-the-wrist settlements you could find in Washington.
Federal judge Jed Rakoff recently ripped into “neither admit nor deny” consent decrees saying they resulted in a “a stew of confusion and hypocrisy.”
But even the “neither admit nor deny consent decrees” were too much for major corporate criminals, their lobbyists and defense attorneys.
Big companies will agree to anything.
Just as long as they don’t have to be charged with wrongdoing.
They’ll pay the money ? which they have a lot of.
But don’t mess with their “reputation” by charging them with federal wrongdoing.
They want to find safe harbors where they can’t be charged.
And corporate controlled Washington, D.C. is their safe harbor of choice.
And what did Tenaris get from the SEC today?
The first ever deferred prosecution agreement from the SEC.
Under a new SEC program, a company that cooperates with the SEC has a chance of getting one of these sweetheart deals.
Under the agreement, the SEC will refrain from prosecuting the company in a civil action for its violations if Tenaris complies with certain undertakings.
Butler University Professor Mike Koehler runs the FCPA Professor blog.
And he’s on to the SEC’s new devolutionary wrinkle.
“We used to have a law enforcement system in this country where companies and individuals who committed crimes or engaged in other wrongdoing were prosecuted criminally and/or civilly and where companies and individuals who did not commit crimes or did not engage in other wrongdoing were not prosecuted,” Koehler told the Corporate Crime Reporter. “That system has to a large extent been abandoned by the Department of Justice years ago ? particularly in the FCPA context. But now that system appears to be crumbling at the SEC as well with the announcement of its first deferred prosecution agreement against Tenaris. As has generally happened with the Department’s enforcement of the FCPA, the SEC’s enforcement of the FCPA will now be further removed from judicial scrutiny and resolutions will now be negotiated over private conference room tables. This is a troubling development on many fronts and it gives the public little confidence that our laws are enforced in a consistent and transparent manner or that regulators and companies are being held accountable.”
Sooner or later, the American people are going to catch on to the devolution and demand that criminal charges be brought.
And companies be held accountable.
As for now, this is what we can expect.
Young lawyer graduates from Ivy League law school.
Goes to work for a couple of years at the Justice Department or the SEC.
Brings deferred and non prosecution agreements against major multinational corporations.
Paid a relatively meager amount in salary.
Making sure they don’t rock the boat (translate: secure criminal convict major multinational corporations.)
After gaining said “experience,” same young attorneys are hired by major defense law firms, tripling salary at least ? to represent major multinational corporations before the Justice Department and the SEC.
Result: Justice once again relegated to just us.
Russell Mokhiber edits the Corporate Crime Reporter.