CORPORATE CRIME REPORTER

Baker Hostetler’s Stamboulidis On the Rise of Corporate Monitors
20 Corporate Crime Reporter 36(1), September 14, 2006

Who knew that corporate monitors had such power?


The day before the news broke this week that LeBoeuf Lamb’s Frederick Lacey, the court appointed monitor in the Bristol Myers case, had recommended that the giant drug company’s CEO Peter Dolan and its general counsel Richard Willard be sacked, we were interviewing George Stamboulidis about his practice.


Stamboulidis is partner at Baker Hostetler in New York.


Stamboulidis was the monitor in the Merrill Lynch Nigerian Barge case.


And he’s the corporate examiner in the Bank of New York case.


Both grew out of non-prosecution agreements with federal prosecutors.


Monitor, examiner – different name, same game.


“With both of them you are doing monitoring work – you are monitoring compliance with the non-prosecution agreement,” Stamboulidis explained.


And about in the middle of the interview, in response to a question, Stamboulidis says that about 70 percent of his practice involves monitoring corporations.


There must be only a handful of white collar practitioners in the country who even do monitorships?

“A couple of handfuls,” Stamboulidis shoots back.


That gave us a great idea.


We’ll put together a list of the top ten corporate monitors in the United States.


After Lacey’s blowout success last week – both Dolan and Willard were relieved of their duties at Lacey’s recommendation – corporate monitors are front page news.


It used to be – think monitors and think corrupt labor unions – Philadelphia roofers and Teamsters.

Now, think monitors and think – corporate crime.


Who appoints the monitor?


Sometimes the company, sometimes the government, sometimes both.


Who pays the monitor?


The company.


Who do you report to?


“With the Merrill Lynch monitorship, I reported to both the Department of Justice and to the general counsel of Merrill Lynch and in turn to the board,” Stamboulidis said. “For the Bank of New York examinership, I report to the U.S. Attorneys for the Southern and Eastern Districts of New York, the Federal Reserve Bank and the New York State Banking Commission.”


Are those reports eventually made public?


“Not typically, no,” he said.


If a reporter were to FOIA the government for these reports, is there anything preventing the government from turning over those reports?


“I wouldn’t have any comment on that,” Stamboulidis says. “I will say this – when a company gives information to its monitor, it should be encouraged to give as much information as is helpful to the monitor.”


And Stamboulidis favors a corporation/monitor privilege.


“That would encourage more accurate information going to government,” he says.


How many court-appointed monitors are there a year?


“On average, fewer than ten court-appointed corporate monitors a year at the federal level,” he says. “Just recently, you’ve had Computer Associates, Symbol Technologies, Bank of New York, Merrill Lynch.”


Stamboulidis says most of his monitor business is what he calls private monitorships.


“That’s where a corporation conducts an internal investigation and determines that – there is nothing that crosses the law criminally, there is nothing that needs to be reported to law enforcement – but it is something that we would want to monitor to make sure that this doesn’t happen, or that we don’t cross this line,” he explains. “So, the company will come to us and say – we want you to monitor us to make sure that we don’t even come close to the line, to make sure we don’t come near the edge, let alone look over it. So, we would get retained to be a private monitor. We report only to the client. There is an attorney/client privilege that protects the communications.”


(For a complete transcript of the question/answer format Interview with Stamboulidis, see 20 Corporate Crime Reporter 36(10), September 18, 2006, print edition only.)

 

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