Stop Using Deferred and Non Prosecution Agreements in Major Corporate Crime Cases

David Uhlmann has a message for the top brass at the Department of Justice.

Stop using deferred and non prosecution agreements in major corporate crime cases.

Uhlmann, the former head of the Environmental Crimes Section at the Department and currently a professor at the University of Michigan Law School, will deliver that message at a conference May 3 at the National Press Club titled — Neither Admit Nor Deny: Corporate Crime in the Age of Deferred Prosecutions, Consent Decrees, Whistleblowers & Monitors.

Top ranking federal law enforcement officials — including the newly appointed chief of enforcement at the Securities and Exchange Commission (SEC) and the head of the Department’s Criminal Division — will appear at the conference to defend the widespread and ongoing use of deferred and non prosecution agreements.

Just this week, Ralph Lauren Corporation was granted not just one — but two non prosecution Foreign Corrupt Practices Act (FCPA) agreements — one from the SEC and one from the Justice Department — after the company revealed that it bribed its way into markets in Argentina.

In a soon to be published article in the Maryland Law Review titled “Deferred Prosecution and Non-Prosecution Agreements and the Erosion of Corporate Criminal Liability,” Uhlmann argues that the Justice Department “must amend its corporate prosecution policies to curtail the misuse of deferred and non-prosecution agreements.”

“If it fails to change course, the Department will further erode the concept of corporate crime, undermine the rule of law, and breed cynicism about our criminal justice system,” he writes.

Uhlmann says that “if the law and the facts justify prosecution, charges should be brought — they should not be sacrificed to deferred prosecution or non-prosecution agreements.”

“If the conduct does not rise to the level that warrants criminal prosecution, the matter should be declined,” Uhlmann says. “Deferred and non-prosecution agreements, if they occur at all, should be limited to relatively minor cases where civil or administrative enforcement is not available.”

Uhlmann is especially troubled by the case of Massey Energy and the April 2010 Upper Big Branch disaster that killed 29 miners.

In December 2011, the Department of Labor found that Massey’s “unlawful policies and practices” were the “root cause of this tragedy.”

But at the same time, the Justice Department entered into a non prosecution agreement with the Massey.

“It is hard to imagine a case in the last decade where corporate criminal prosecution was more warranted — indeed, essential to the rule of law — than the Upper Big Branch mining disaster,” Uhlmann says. “The nature and seriousness of the violations could not have been greater — Massey’s willful violations of the mine safety laws resulted in twenty-nine deaths and the worst mining disaster in the United States in more than forty years. On that basis alone, criminal prosecution would have been warranted. Massey also engaged in a deliberate, long-standing, and deceitful effort to thwart the mine safety laws that were enacted to prevent exactly this kind of tragedy. Even without the worker deaths, it would have been appropriate to prosecute Massey for its false and misleading conduct and its efforts to undermine safety.”

Uhlmann says that the failure to prosecute Massey “sent a terrible message about how we view corporate misconduct and weakened the Department’s commitment to address corporate crime.”

“As a former federal prosecutor, I supervised or handled the criminal prosecution of hundreds of corporations that, while serious, did not involve the tragic loss of life that occurred at the Upper Big Branch Mine and rarely involved anything close to the rampant corporate misconduct committed by Massey. If it was not appropriate to prosecute Massey for its crimes, it is hard for me to envision when criminal prosecution of any corporation would be warranted.”

“The Justice Department’s deal with Massey continues a disturbing trend where corporations can avoid criminal charges by entering deferred or non-prosecution agreements with the Department. Indeed, in some areas of corporate prosecution, such agreements have become almost the norm. The terms of the agreements are attractive to the government, because they often provide large penalties, far-reaching corporate compliance programs with outside monitors approved by the Department, and promises of cooperation by the companies involved. But plea agreements can offer many of the same benefits to the government — without making it appear that wealthy companies can buy their way out of criminal prosecution.”



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