When Andrew Weissmann was a partner at Jenner & Block in Washington, D.C., he advocated on behalf of the U.S. Chamber of Commerce for a corporate compliance defense.
Under a corporate compliance defense, a company could dodge a criminal charge if it could prove it had in place a robust compliance program.
The Justice Department was opposed to the Chamber proposal and the corporate compliance defense never made it to first base in Congress.
Andrew Weissmann has now transitioned — from Chamber of Commerce advocate to head of the Criminal Division’s Fraud Section at the Justice Department.
And as head of the Fraud Section, he has recently selected a “compliance counsel.”
As of this writing, we don’t know who that person is.
(The Justice Department did not return calls seeking comment for this story.)
Weissman told the Wall Street Journal last week that the newly appointed compliance counsel would “differentiate the companies that get it and are trying to implement a good compliance program from the people who have a near-paper program.”
Weissman’s compliance counsel has drawn decidedly mixed reviews.
Samuel Buell is a Professor at Duke Law School and author of the upcoming book — Capital Offenses: Business Crime in America’s Corporate Century (W.W. Norton & Co. 2016).
“Everyone who observes this field of enforcement agrees that the law of corporate criminal liability, on its face — that is, the federal rule of respondeat superior liability — is overbroad,” Buell told Corporate Crime Reporter. “If the purpose of prosecuting corporations, and credibly threatening to do so, is to tell companies that they must be responsible for preventing crime, and certainly for not facilitating it, then it makes no sense to prosecute every company for every crime on the job by every employee, regardless of the situation.”
“That’s why there has long been enormous prosecutorial discretion in this area. And that’s why that discretion has long been exercised around the question of how responsible the company was — in terms of management, policies, culture, compliance efforts, and the like — for the crime in question. Considering corporate ‘compliance’ in the decision to prosecute is nothing new, and it isn’t remotely controversial.”
“So why does the Department of Justice need to appoint a special lawyer to do the job of assessing what prosecutors have long assessed, especially when that lawyer will be exercising the same broad discretion, with no governing law, that federal prosecutors have been exercising up to now? Will this lawyer have some particular expertise in the connection between crime and corporate compliance efforts that other prosecutors have lacked? If so, where will this expertise come from? It’s hard to see how adding another person to the process of exercising existing discretion in this area is really going to change the landscape much.”
NYU Law Professor Geoffrey Miller called the corporate compliance counsel “a good idea” and said that Weissmann “deserves credit for pushing it forward.”
“But it depends on whether the compliance counsel can accurately determine whether a corporate defendant should receive credit for a robust compliance program,” Miller told Corporate Crime Reporter. “This is a difficult task because companies with state of the art programs can turn out to be corrupt. Unless this individual has the expertise, the resources — including adequate staff — the independence, and the stature within the department to resist political pressure, there is a risk that the initiative will be merely a palliative rather than a fundamental reform.”
University of Maryland Law Professor Rena Steinzor, author of Why Not Jail? Industrial Catastrophes, Corporate Malfeasance, and Government Inaction (Cambridge University Press, 2015), said that “reasonable minds could differ on the wisdom of individual prosecutions.”
“In some cases, prosecutors may have stepped over the line of what should and should not be punished criminally,” Steinzor said. “But in our system of justice, sorting the good from the bad is the role of juries and judges. Trying to forestall this criticism by hiring a single person to advise prosecutors on the goodness of corporate targets seems a little naive. The proponents of this agenda undoubtedly won’t rest until the law is weakened to their satisfaction.”
Michael Volkov of the Volkov Law Group said that Justice Department prosecutors “have a long and valuable expertise in this area.”
“To suggest that they need some assistance is just a little too politically cute for me,” Volkov wrote. “As a former federal prosecutor, I am not so sure that the position was really needed. In my mind, career prosecutors at the Department and in US Attorneys Offices across the country are quite familiar with these issues already and there does not seem to be a real need for such compliance assistance.”
“Federal prosecutors have more than enough expertise in this area, and to suggest otherwise is a slap at the professionalism and care that prosecutors bring to their jobs.”
University of Virginia Law Professor Brandon Garrett, author of Too Big to Jail (Harvard University Press, 2015) told Corporate Crime Reporter that he hopes this means that the Department will take compliance more seriously at all stages of corporate prosecutions.
“Doing a better job of evaluating whether a company deserves credit for prior compliance is very important,” Garrett said. “Even that is a huge job given how many types of industries and types of corporate crimes are the subject of enforcement. For those evaluations to be fair, the Department of Justice will need to provide more guidance on what makes for effective compliance in a range of areas. But on the back end far more also needs to be done to implement compliance reforms and to be sure that the changes made are effective before letting a company off the hook. Far too many agreements offer leniency, say some things about best practices, and allow a company to avoid punishment without any oversight or auditing to be sure that real changes are made. “
“In some areas, little is known about what types of compliance works,” Garrett said. “Nor has the Department of Justice created much incentive for companies to subject compliance to rigorous performance evaluations. Most cases do not involve independent monitors and deferred prosecutions are usually not supervised by a judge. More of a focus on compliance at the Department of Justice is long overdue but whether one person can tackle these problems is far from clear.”
Patrick Burns of Taxpayers Against Fraud was a bit more harsh.
“The latest attempt at contrived complexity is the notion that a ‘compliance program’ is necessary for a company to not lie, steal and cheat — and that creating a working compliance program is so difficult as to require advice from Department of Justice,” Burns said.
“Nonsense. Let’s start with the simplest point: the big frauds we see today are not being done by good people that have simply made a mistake. They are not being done by ‘rogue employees.’”
“The big frauds being done today are being planned by corporate predators often operating from the highest levels of a company,” Burns said.
“Federal and state government programs are seen as flocks of sheep, ready for the taking. And why not raid the flock? Even if caught, no one goes to jail, or loses their job. The federal government will continue to do business with the company.”
“Look at Pfizer, Novartis, Omnicare, KBR, Abbott, HCA, Bank of America, GlaxoSmithKline, and dozens of other companies. Private profits are banked and the wolves come away with bigger paychecks and new beach houses. No wonder they keep coming back.”
Mike Koehler, writing as FCPA Professor, calls the compliance counsel proposal “just the latest public relations move by the Department to hide its justified discomfort with respondeat superior corporate criminal liability principles and to make it appear that the Department is addressing the core issue.”
And ProPublica’s Jesse Eisinger, author of the upcoming The Chickenshit Club (Simon & Schuster, 2016), tweeted simply — “The worry with this is the Department of Justice is putting up another roadblock to investigations, or that it encourages fall guys.”