Thursday, December 29, 2005
Crime without Conviction: U.S. Makes Deals With Corporate Criminals Instead of Prosecuting
Russell Mokhiber - editor of Corporate Crime Reporter
from an interview on Democracy Now
Corporations that commit securities and accounting fraud can now expect to get sweetheart deals from the Justice Department, and they don't face public exposure for their misdeeds.
A report released yesterday found that under a new policy implemented by the Justice Department in 2003, a number of major corporations caught committing serious crimes have not been prosecuted or convicted by the U.S government. The report, titled, "Crime without Conviction: The Rise of Deferred and Non-Prosecution Agreements" by the watch-dog group, Corporate Crime Reporter, named 34 major corporations that have entered into special deals with the U.S government. Under these deals, prosecutors agree not to criminally prosecute the corporation in exchange for cooperation against executives, implementation of corporate monitors and fines. In fact, the report finds that no major corporation caught engaging in accounting or securities fraud has been convicted since the Arthur Andersen conviction in June 2002.
If you and I engaged in a fraud against the government that cost the government $2.5 billion, as KPMG did, then you and I would be criminally prosecuted and sent to prison. I went to the press conference where the Attorney General of the United States announced this prosecution of KPMG, and he started off the press conference by saying, “Today, KPMG admits its criminal wrongdoing in this tax shelter fraud that cost the government $2.5 billion.” Then the head of the I.R.S. came on, and detailed the criminal activity.
There was no conviction. The company was charged with a felony, and then the government gave the company a deferred prosecution agreement. These kinds of agreements were intended for juvenile delinquents, to clear the courts of minor issues. But now they are being used in cases like KPMG to relieve the company of its criminal liability.
In our report, which is on our website, CorporateCrimeReporter.com, we have listed 34 of these fraud cases and bribery cases cases that we could identify, in which the company engaged in egregious criminal activity admits to its criminal wrongdoing, but there's no conviction. 23 of the cases have come in the last three years. And so, that’s twice as many in the last three years as in the previous ten years.
This sets a double standard for ordinary Americans. When we commit crimes, even minor crimes, we’re prosecuted, criminally convicted and sent to jail. But for major American corporations, like Monsanto and KPMG and the rest named in this report, they get these special deals. We think it’s unfair. And this just switched over the last couple of years since the Arthur Andersen conviction.
Corporate defense counsel really like these kinds of cases, because it let's the corporation off the hook. And what's happening is the corporate defense counsel is calling up the prosecutor and saying, ‘Look, we’ll turn over everything. We’ll give you the executives. We’ll give you all the information about what happened here in exchange for this kind of deal of not having a criminal record.’ It’s a backdoor way of getting around the stigma and major adverse publicity.
In the 1990s, we put out a report called “The Top 100 Corporate Criminals of the 1990s.” There were so many criminal prosecutions of these companies, they had an educational effect. It sent the message that the major criminal actors in our society are these major corporations, and that corporate crime and violence inflict far more damage on society than all street crime committed by individuals. That’s just a slam dunk. It was all over the papers.
We're treating corporate crime and corruption with double standards with these special deals. And, the result is the lingering public impression that street crime inflicts far more damage than corporate crime and violence, and we have to change that. If you ask an average person to give his impression on “looting”, the first thing that comes to his mind is the black kids in New Orleans stealing the DVDs and wading through the water, not Conrad Black, who looted a Hollinger International Corporation of millions of dollars and currently being prosecuted by U.S. Attorney Fitzgerald.
Creative corporate defense attorneys and prosecutors took the treatment for juvenile delinquents as a model and said, ‘Hey, here’s a way where we can settle these cases quickly, where we can give the corporation what it wants, which is no criminal prosecution, and where we can get out of these cases and not spend a lot of time on them.’ Also, in cases in which the prosecutors want to go after the individual executive they are more likely to get a lot of individual convictions if the corporate attorney is working with the prosecutor to go after the executives.
Ten years ago, it was the company protecting the individual executives and pleading the company guilty. And so what would happen is you get a guilty plea against the company, the executives would get off, and the company would pay a fine. And there was a stigma against the company. I think that had a real general deterrence. Now what you have is the corporate attorneys and the prosecutors working together to turn on the executives. To me, the ideal case is you prosecute both the corporation and the executives, and you put the company on corporate probation.
One of the things we found in agreements that were cut between the corporate counsel and the prosecutors is an area that’s ripe for corruption. The company really wants no conviction on its record, and it says to the prosecutor, ‘Okay, we don't want a conviction. What can we give you?’ So that opens the door to some shady deals.
Here’s a couple. Bristol-Myers Squibb, accused of a major accounting fraud by the U.S. Attorney in New Jersey, so Bristol-Myers’s attorney goes to the U.S. Attorney and says, ‘Okay, we don't want a criminal conviction. What can we give you?’ The U.S. Attorney says ‘Well, how about a chair in business ethics at my alma mater, Seton Hall Law School?’ That's what he got. The Attorney General of Oklahoma goes to M.C.I. and says, ‘Okay, we’ve got the goods on you. We’ll give you a deferred prosecution. What are you going to give us?’ ‘We’ll give you 1,600 jobs over ten years in Oklahoma.’
I think we have to move away from the kinds of deals that are being cut. We have to start criminally prosecuting the company and start getting convictions and bring some real punishment. Criminal prosecution is the big stick against corporate crime.
Russell Mokhiber's status at the Bush White House...
At a February 1, 2005 press conferences with Scott McClellan, Mokhiber asked, “Scott, last night in an amicus brief filed before the U.S. Supreme Court, the Justice Department came down in favor of displaying the Ten Commandments at courthouses and state houses around the country. My question is: "Does the President believe in Commandment number six, ‘Thou shalt not kill,’ as it applies to the U.S. invasion of Iraq?" And Scott McClellan said, "Go ahead. Next question."
Since then, he hasn't been able to ask many other questions. According to Mokhiber, "Here’s what was going on. I was going over and I had my press pass, they would make me wait at the gate. I would wait for like a half an hour. They would let me in. I would wait like for an hour for the thing to start. Then he would skip over me. There was a period of time where he wasn’t calling on me. He said he was going in order. But, when he’d come to me, he would skip over me, so he wasn't allowing me to ask questions. When I was asking questions, he wasn’t answering them. I was spending like three or four hours a day at the White House and not getting any questions answered. But it doesn't mean I'm not going back. I’m going back."
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Russell Mokhiber - editor of Corporate Crime Reporter
from an interview on Democracy Now
Corporations that commit securities and accounting fraud can now expect to get sweetheart deals from the Justice Department, and they don't face public exposure for their misdeeds.
A report released yesterday found that under a new policy implemented by the Justice Department in 2003, a number of major corporations caught committing serious crimes have not been prosecuted or convicted by the U.S government. The report, titled, "Crime without Conviction: The Rise of Deferred and Non-Prosecution Agreements" by the watch-dog group, Corporate Crime Reporter, named 34 major corporations that have entered into special deals with the U.S government. Under these deals, prosecutors agree not to criminally prosecute the corporation in exchange for cooperation against executives, implementation of corporate monitors and fines. In fact, the report finds that no major corporation caught engaging in accounting or securities fraud has been convicted since the Arthur Andersen conviction in June 2002.
If you and I engaged in a fraud against the government that cost the government $2.5 billion, as KPMG did, then you and I would be criminally prosecuted and sent to prison. I went to the press conference where the Attorney General of the United States announced this prosecution of KPMG, and he started off the press conference by saying, “Today, KPMG admits its criminal wrongdoing in this tax shelter fraud that cost the government $2.5 billion.” Then the head of the I.R.S. came on, and detailed the criminal activity.
There was no conviction. The company was charged with a felony, and then the government gave the company a deferred prosecution agreement. These kinds of agreements were intended for juvenile delinquents, to clear the courts of minor issues. But now they are being used in cases like KPMG to relieve the company of its criminal liability.
In our report, which is on our website, CorporateCrimeReporter.com, we have listed 34 of these fraud cases and bribery cases cases that we could identify, in which the company engaged in egregious criminal activity admits to its criminal wrongdoing, but there's no conviction. 23 of the cases have come in the last three years. And so, that’s twice as many in the last three years as in the previous ten years.
This sets a double standard for ordinary Americans. When we commit crimes, even minor crimes, we’re prosecuted, criminally convicted and sent to jail. But for major American corporations, like Monsanto and KPMG and the rest named in this report, they get these special deals. We think it’s unfair. And this just switched over the last couple of years since the Arthur Andersen conviction.
Corporate defense counsel really like these kinds of cases, because it let's the corporation off the hook. And what's happening is the corporate defense counsel is calling up the prosecutor and saying, ‘Look, we’ll turn over everything. We’ll give you the executives. We’ll give you all the information about what happened here in exchange for this kind of deal of not having a criminal record.’ It’s a backdoor way of getting around the stigma and major adverse publicity.
In the 1990s, we put out a report called “The Top 100 Corporate Criminals of the 1990s.” There were so many criminal prosecutions of these companies, they had an educational effect. It sent the message that the major criminal actors in our society are these major corporations, and that corporate crime and violence inflict far more damage on society than all street crime committed by individuals. That’s just a slam dunk. It was all over the papers.
We're treating corporate crime and corruption with double standards with these special deals. And, the result is the lingering public impression that street crime inflicts far more damage than corporate crime and violence, and we have to change that. If you ask an average person to give his impression on “looting”, the first thing that comes to his mind is the black kids in New Orleans stealing the DVDs and wading through the water, not Conrad Black, who looted a Hollinger International Corporation of millions of dollars and currently being prosecuted by U.S. Attorney Fitzgerald.
Creative corporate defense attorneys and prosecutors took the treatment for juvenile delinquents as a model and said, ‘Hey, here’s a way where we can settle these cases quickly, where we can give the corporation what it wants, which is no criminal prosecution, and where we can get out of these cases and not spend a lot of time on them.’ Also, in cases in which the prosecutors want to go after the individual executive they are more likely to get a lot of individual convictions if the corporate attorney is working with the prosecutor to go after the executives.
Ten years ago, it was the company protecting the individual executives and pleading the company guilty. And so what would happen is you get a guilty plea against the company, the executives would get off, and the company would pay a fine. And there was a stigma against the company. I think that had a real general deterrence. Now what you have is the corporate attorneys and the prosecutors working together to turn on the executives. To me, the ideal case is you prosecute both the corporation and the executives, and you put the company on corporate probation.
One of the things we found in agreements that were cut between the corporate counsel and the prosecutors is an area that’s ripe for corruption. The company really wants no conviction on its record, and it says to the prosecutor, ‘Okay, we don't want a conviction. What can we give you?’ So that opens the door to some shady deals.
Here’s a couple. Bristol-Myers Squibb, accused of a major accounting fraud by the U.S. Attorney in New Jersey, so Bristol-Myers’s attorney goes to the U.S. Attorney and says, ‘Okay, we don't want a criminal conviction. What can we give you?’ The U.S. Attorney says ‘Well, how about a chair in business ethics at my alma mater, Seton Hall Law School?’ That's what he got. The Attorney General of Oklahoma goes to M.C.I. and says, ‘Okay, we’ve got the goods on you. We’ll give you a deferred prosecution. What are you going to give us?’ ‘We’ll give you 1,600 jobs over ten years in Oklahoma.’
I think we have to move away from the kinds of deals that are being cut. We have to start criminally prosecuting the company and start getting convictions and bring some real punishment. Criminal prosecution is the big stick against corporate crime.
Russell Mokhiber's status at the Bush White House...
At a February 1, 2005 press conferences with Scott McClellan, Mokhiber asked, “Scott, last night in an amicus brief filed before the U.S. Supreme Court, the Justice Department came down in favor of displaying the Ten Commandments at courthouses and state houses around the country. My question is: "Does the President believe in Commandment number six, ‘Thou shalt not kill,’ as it applies to the U.S. invasion of Iraq?" And Scott McClellan said, "Go ahead. Next question."
Since then, he hasn't been able to ask many other questions. According to Mokhiber, "Here’s what was going on. I was going over and I had my press pass, they would make me wait at the gate. I would wait for like a half an hour. They would let me in. I would wait like for an hour for the thing to start. Then he would skip over me. There was a period of time where he wasn’t calling on me. He said he was going in order. But, when he’d come to me, he would skip over me, so he wasn't allowing me to ask questions. When I was asking questions, he wasn’t answering them. I was spending like three or four hours a day at the White House and not getting any questions answered. But it doesn't mean I'm not going back. I’m going back."
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