CORPORATE CRIME REPORTER
Syriana,
Corporate Lawyers, and the Illusion of Due Diligence
19 Corporate Crime Reporter 48(3), December 9, 2005
Syriana – released nationwide last week – is a movie
about oil industry corruption and U.S. political control in the Middle East.
The bad guys are – the oil industry, the CIA, and Islamic militants.
And corporate lawyers.
The law firm of Sloan Whiting represents the giant oil company Connex in a merger
with a small Texas oil company – Killen.
The founding partner of the law firm Dean Whiting (Christopher Plummer) is a
member of the Committee to Liberate Iran.
The firm represents Connex in the merger.
But there is a fly in the ointment.
The Justice Department is investigating bribes paid by the oil company to public
officials in Kazakhstan.
Sydney Hewitt (Nick Henson) is tasked to beat back the charges so that the merger
can go through.
He brings in a young African American associate Bennett Holiday (Jeffrey Wright)
to be the point man.
Holiday is a quick study.
He tells his associates that in looking at the details of the merger, it’s
not so much about due diligence as it is about creating “the illusion
of due diligence.”
In briefing Holiday on the case, Hewitt says that “when the government
approves this merger it’s going to buy a lot of houses out on the Vineyard,
maybe even yours, so of course it is delicate all around.”
“Who is this U.S. Attorney?” Hewitt asks. “What is his agenda?
Is it a political force? Another corporation? Is he a glory boy making a name?”
Donald Farish (David Clennon) is the Assistant U.S. Attorney investigating the
case.
In his first meeting with Holiday, Farish says “there is no way a company
like Connex pulled off a deal like this without paying somebody off.”
“Why don’t you tell me what you have so I can respond,” Holiday
says.
Bad move.
“I used to think something was wrong here,” Farish says. “Now
I know something is wrong. Either you don’t find anything because you
don’t know how to look. Or you do, and they carve you out and light you
on fire. That’s got to be the play, right?”
One of the oil men weighs in with this gem:
If people in oil deals talked to U.S. Attorneys, there would be no oil business.
Another oil man puts it this way:
“Some trust fund prosecutor got off message, thinking he’s going
to run this up the flag pole, make a name for himself maybe get elected some
two bit no name Congressman from somewhere.”
“Corruption charges – corruption?” he says “Corruption
ain’t nothing more than government intrusion into market efficiencies
in the form of regulation. That’s Milton Friedman. He got a Goddam Nobel
prize. We have laws against it precisely so we can get away with it. Corruption
is our protection. Corruption keeps us safe and warm. Corruption is why you
and I are prancing around in here instead of fighting over scraps of meat out
on the street. Corruption is why we win."
In creating his illusion of due diligence, Holiday finds out that his oil company
client sent $70 million to the children of the President of Kazakhstan.
“It is illegal to offer gifts, money or the promise of money or anything
of value to influence foreign officials,” he tells the board of directors.
To which one of the oil men responds – “Oh is it? I have personally
seen from your law firm to the government of Saudi Arabia – a one line
bill for $36 million for services rendered.”
Holiday brushes this detail aside and goes on to save the company and the merger
by fingering the president of the company.
The U.S. Attorney says that’s not enough.
So Holiday fingers Hewitt – the senior partner at the law firm and Holiday’s
mentor.
That’s enough.
And Holiday earns his play with a page right out of the current real life big
firm playbook – plead the individuals, save the corporation.
Corporate Crime Reporter
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