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by
Russell Mokhiber and Robert Weissman
July
26, 2003
President
Bush's man in charge of the Corporate Fraud Task Force, Larry Thompson, went to
the White House this week to let the world know that Bush was cracking down on
corporate crime.
Thompson,
who is the second in command under Attorney General John Ashcroft, told the
assembled reporters that in the year since the task force was created, it had
obtained over 250 corporate fraud convictions or guilty pleas, including guilty
pleas or convictions of at least 25 former CEOs, and that it had charged 354
defendants with some type of corporate fraud in connection with 169 cases.
"We
have over 320 investigations pending, involving in excess of 500 individuals
and companies as subjects of these investigations," Thompson said.
That's
a pretty impressive accomplishment for one year.
But
forcing corporate criminals and their executives to plead guilty is only half
the game. The other half is punishment.
What
Thompson didn't say is that only one high-level corporate executive has gone to
jail in that year.
That
was Sam Waksal, the former ImClone CEO, who reported yesterday to Schuylkill
Federal Correctional Institution in Minersville, Pennsylvania. Waksal was
sentenced last month to seven years and three months in prison and ordered to
pay about $4.3 million after pleading guilty to insider trading.
What
Thompson also didn't tell reporters -- why would he? -- was that he has helped
rig the system so that corporations have a way to get out of a criminal jam
once they commit the crime.
Thompson
says that he wants to hold corporations accountable for the criminal culture
and conduct they promote.
Yet
in a memo issued under his name in January 2003, Thompson opened a loophole for
corporations to get away with criminal behavior without effective criminal
sanction.
The
memo, titled "Federal Prosecution of Business Organization," gives prosecutors
discretion to grant corporations immunity from prosecution in exchange for
cooperation.
These
immunity agreements, known as deferred prosecution agreements, or pre-trial
diversion, were previously reserved for minor street crimes.
They
were never intended for major corporate crimes.
In
fact, the U.S. Attorneys' Manual explicitly states that a major objective of
pretrial diversion is to "save prosecutive and judicial resources for
concentration on major cases."
Since
Thompson's memo, there have been a rash of deferred prosecution agreements in
cases involving large corporations, including a settlement with a Puerto Rican
bank on money laundering charges and a Pittsburgh bank on securities law
charges.
And
some corporate crime defense attorneys believe that it is possible to enter
these agreements with the Justice Department so as to avoid any publicity.
"This
is a favorable change for companies," said Alan Vinegrad, a partner at
Covington & Burling in New York. "The memo now explicitly says that
pre-trial diversion, which had been reserved for small, individual, minor
crimes, is now available for corporations."
Vinegrad
said that while there have been a handful of publicized pre-trial diversion
cases by corporations, it is conceivable that the Justice Department can cut these
kind of deals with companies without filing a public document -- and therefore
without any publicity to the case.
Vinegrad
said that one such case has been handled by his office.
"Sometimes
the agreement does not require -- depending on how they get done -- the filing
of any public documents in court," Vinegrad said. "There wouldn't be
that relatively easy means of finding out what happened."
Larry
Thompson argues that corporations must be criminally prosecuted if they commit
crimes. At the same time, he says that if they commit crimes, but cooperate
with the government, they can wipe the slate clean, settle the case -- maybe
even without public notice -- and avoid punishment without admitting criminal
wrongdoing.
The
Justice Department also allows corporations to plead out minor units to major
crimes when the parent companies should be held responsible. The reason the
parent companies aren't forced to plead guilty is because they then would lose
federal contracts. Real punishment for real crime. Can't allow that to happen.
The
fines imposed in connection with such cases generally are minor wrist slaps.
Corporations
most fear losing government contracts, major adverse publicity and their
executives going to jail.
Little
of that happens with this Justice Department.
Corporate
crime and violence inflicts far more damage on society than all street crime
combined.
Corporate
criminals should not be given a special pass.
Make
them admit guilt.
Impose
tough sanctions.
Publicize
the cases.
Russell Mokhiber is editor of
the Washington, D.C.-based Corporate Crime Reporter (http://corporatecrimereport.org). Robert Weissman is editor of
the Washington, D.C.-based Multinational Monitor (www.multinationalmonitor.org).
They are co-authors of Corporate Predators: The Hunt for MegaProfits and the
Attack on Democracy (Monroe, Maine: Common Courage Press; http://www.corporatepredators.org).