CORPORATE CRIME REPORTER
Eric
Holder on Corporate Crime
22 Corporate Crime Reporter 47, December 4, 2008
Remember The Holder Memo?
Also known as Federal Prosecution of Corporations.
It was written by Eric Holder when he was Deputy Attorney General in 1999.
Ten years later, he’s destined to become the Attorney General.
The Holder memo led to the Thompson Memo and then the McNulty Memo.
It also led to the counterintuitive reality today that large corporations are rarely if ever criminally convicted.
Instead, they settle criminal investigations with deferred or non-prosecution agreements.
This was not Eric Holder’s intent.
In a 45-minute interview in August 2002, Holder told Corporate Crime Reporter that he would use deferred prosecution agreements only “sparingly.”
“It is incumbent upon the prosecutor to make a decision,” Holder said. “Do you have a case or not? Is it a case you want to bring or not? It may be that there are compelling reasons as to why you want to defer prosecution. But generally, the better way to go is to make the decision – yes or no.”
We asked Holder how the memo came about.
“There was a concern in the Department about two things,” Holder said. “One, we wanted to be more aggressive than we had in the past with regard to the seeking of indictments against corporations for engaging in illegal conduct. And two, given the fact that we wanted to be more aggressive, we wanted to insure that there was some uniformity through the federal system, that prosecutors in different parts of the country, in making decisions as to whether or not they were going to indict corporations, would apply the same standards. A task force was put together to look at what needed to be put in place, what are the factors that prosecutors should be considering in making those kind of indictment decisions. They met through much of 1998 and through 1999.”
At the time of the interview, Holder, a partner at Covington & Burling, had just published an article in the Wall Street Journal titled “Don’t Indict WorldCom” (July 30, 2002).
“Forget the title of the Wall Street Journal article,” Holder said. “I didn’t come up with that title. I was very careful in the article. I didn’t say that WorldCom should not be indicted. I said that it was hard to understand – based on what is publicly known.”
In September 2005, three years after “Don’t Indict WorldCom” was published in the Journal, federal prosecutors in New York decided not to file criminal charges against MCI, the successor to WorldCom, for perpetrating one of the nation’s largest financial frauds.
The U.S. Attorney in New York said at the time that he decided not to criminally prosecute MCI for the $11 billion fraud because in June 2002, the company reported to federal officials the discovery of the fraudulent accounting entries that were at the heart of the WorldCom fraud.
In the interview, Holder was ambivalent about the Justice Department’s criminal prosecution of Arthur Andersen.
“I’m not sure where I come out on the Andersen indictment,” Holder said. “You had a corporation that was already reeling and given the impact that the indictment had. . .I wonder whether an indictment was appropriate in that situation. . .But I’m not sure, because the conduct of Andersen itself, not just with regard to Enron, but with regard to other corporations it was supposed to be doing work for, might have sealed its death in any case.”
We asked Holder – why not just throw convicted corporations into receivership – the way unions are thrown into receivership when they commit crimes?
“It’s a possibility,” Holder said. “The only thing you can do when you convict a company is to fine the company and put it on probation. But when you come up with the terms of the probation, you should consider ways to put in place constraints to insure that the kind of conduct that led to the indictment does not continue. So that makes sense.”
[For a complete transcript of the Interview with Eric Holder, see 16 Corporate Crime Reporter 32(9-14), August 12, 2002, print edition only.]
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