At the Corporate Crime Reporter conference earlier this month, corporate crime prosecutor in chief Denis McInerney defended the use of deferred and non prosecution agreements to settle corporate crime cases by arguing, in part, that the result was a transparent process.
In response to Jenner & Block partner Anthony Barkow, McInerney said that the Justice Department has moved from the “black box” days pre-1999 Holder Memo (Principles of Federal Prosecution of Business Organizations) to the current period of increased transparency.
“Transparency is important,” McInerney said. “The Department has done a lot to help be as transparent as possible. It started with the Holder Memo in 1999. Before that it was a bit of a black box.”
McInerney said that deferred and non prosecution agreements contain both a relevant considerations paragraph and statement of facts.
“We have a pretty healthy paragraph that maybe goes on for a page or two pages or more that just lays out the relevant considerations for the disposition,” McInerney said. “It’s the relevant considerations paragraph. We have very detailed statements of facts that are attached to all of our agreements now. Those statement of facts give you a very good sense of what the conduct was that resulted in this disposition.”
“The combination of that statement of facts with the relevant considerations paragraph tells you — okay, this is what the conduct was, this is what the response was to the conduct by the company and this is the disposition that the Department concluded was the appropriate disposition.”
Very good, Denis.
But what happens when the Department of Justice refuses to release the agreement to the public?
Take the case of C.R. Bard.
The company was represented by Christopher Wray of King & Spalding in Washington and John Dodds of Morgan Lewis & Bockius in Philadelphia.
The Justice Department put out a press release earlier this week announcing the disposition of the Bard case.
There was both a criminal settlement and a civil settlement.
Under the civil agreement, Bard will pay $48.2 million to settle a whistleblower lawsuit that alleges its urological division and wholly owned subsidiary, ProSeed Inc., paid doctors and hospitals kickbacks to entice them to order Bard’s products at inflated prices to treat Medicare patients with prostate cancer.
The Department settled the criminal case with a non prosecution agreement.
The Department says in its press release that, “according to a non-prosecution agreement with the United States, Bard has agreed to pay an additional $2.2 million and to take numerous remedial steps, many of which the company identified and began to implement prior to the criminal investigation, to enhance its corporate compliance program to prevent similar illegal actions in the future.”
When we asked the U.S. Attorney in Atlanta, Georgia for a copy of the non prosecution agreement, we were told — no.
“My apologies — we will not be able to release the NPA,” Bob Page of the U.S. Attorney’s office wrote to Corporate Crime Reporter.
At the Justice Department, Allison Price wrote that the U.S. Attorney in Atlanta is handling it.
So, Denis, what good is all that information in the non prosecution agreement if we can’t see it?
We’d like to see the relevant considerations paragraph.
After all, one of those “considerations” or “factors” prosecutors may consider is the corporation’s past history.
“Prosecutors may consider a corporation’s history of similar conduct, including prior criminal, civil, and regulatory enforcement actions against it, in determining whether to bring criminal charges and how best to resolve cases,” the memo reads.
Bard has a long history of corporate wrongdoing, including pleading guilty in 1993 to selling defective heart catheters, concealing problems with the devices from the Food and Drug Administration and illegally experimenting on people.
Did the prosecutors in this case consider that relevant?
“I hope they have a very good reason (not to release the non prosecution agreement) but it is hard to imagine what that could be since they readily described the settlement in a press release,” Professor Brandon Garrett of the University of Virginia Law School told Corporate Crime Reporter.
Garrett is writing a book titled Too Big to Jail about the corporate crime.
He has created a comprehensive database of corporate criminal pleas and a separate one of public deferred and non prosecution agreements.
“I have been very disturbed to learn that there are a number if corporate prosecution agreements that federal prosecutors have kept under wraps,” Garrett said. “I have yet to hear convincing explanations for why that was done in those cases. And it is deeply troubling that cases of public importance are being kept secret — apparently not because a judge placed a case under seal, but because prosecutors did so.”
Garrett said that the First Amendment Clinic at the University of Virginia Law School plans to pursue Freedom of Information requests to obtain all such corporate prosecution agreements.
“The public should know what the terms of these agreements are,” Garrett said. “Any sensitive material can be redacted. I think in fact that far more than just the agreements should be routinely made public — so should progress reports from corporate monitors.”