In Shift, Prosecutors Are Lenient as Companies Break the Law - NYTimes.com

In Shift, Prosecutors Are Lenient as Companies Break the Law - NYTimes.com


Fascinating NY Times piece on DOJ's increasing use of deferred or non-prosecution agreements as an alternative to more aggressive prosecutions of corporations. Although the article is cynical in places, I don't believe that long, expensive prosecutions of companies are always in the public's best interests. In fact, many large corporations conduct a risk/benefit analysis to determine whether a particular business decision, if close to or over the ethical line, would ultimately be in the company's best financial interest if discovered by the government. Aggressive prosecutions, which almost always end in a fine and settlement, are merely part of this calculus.

The effectiveness of deferred prosecution agreements (which save the taxpayer an enormous amount of money) would be greatly enhanced if they routinely included independent corporate compliance monitoring as a condition of the agreement.In this model, the company agrees to an independent monitor looking at books and records, talking to employees, inspecting factory floors - - anything that is germane to the offense being investigated. The government identifies the items to be monitored (such as the accuracy of billings, for example), and the frequency and duration of the monitoring. The Independent Monitoring firm provides technical experts, ensures there are no conflicts-of-interest, and prepares reports on the company's compliance to the government. Typically, the monitor will also assess the company's Corporate Ethics and Compliance Program to ensure it is robust, effective, and actually ensuring an ethical corporate culture. The monitor would also assess a company's internal controls and identify process deficiencies that may have led to the initial offenes, making recommendations to the company along the way.

Independent monitoring helps protect the taxpayer; extends the oversight capability of government agencies and regulators; and (if done properly) helps the contractor remedy many of the bad processes that led to their problems in the first place.The government receives regular monitoring reports, but the total cost is borne by the company, not the taxpayer. At a time of severe budget austerity and increasing demands for accountability of government funds, the expanded use of deferred prosecution agreements that contain requirements for independent monitoring is simply a "no-brainer."