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For corporate defendants, there will (probably) be blood

Some members of Congress are evidently concerned that corporate defendants are getting off the hook. Too many deferred- and non-prosecution agreements, and not enough criminal indictments.

So acting assistant AG Mythili Raman, who’s now heading the DOJ’s criminal division, testified Wednesday before the U.S. House Financial Services Subcommittee on Oversight and Investigations.

Among other things, she said FCPA and related prosecutions are as ‘robust’ as they’ve ever been.

‘In just the past two months,’ she said,’ we have announced charges against 11 individuals — including corporate executives and employees, and one foreign official — in active Foreign Corrupt Practices Act investigations.’

So no one, she said, should have the idea that the DOJ is soft on white collar crime. After all, she implied but didn’t need to say, it’s actually people who commit crimes, not the fictional legal entities we call corporations.

But she assured Congress that corporations themselves can and will face criminal charges — when appropriate.

The problem, as always, is collateral damage. How much do we really want to punish corporations when the damage inflicted falls hardest on innocent employees, shareholders, customers, lenders, and suppliers?

In her Congressional testimony Wednesday, Raman said:

As is evident from this track record, we are deeply committed to holding wrongdoers — whether individuals or business entities — to account for their crimes. . . .

There has been some discussion in recent months about . . . the potential collateral consequences of charging a corporate entity — and we appreciate your interest in better understanding the extent to which the [DOJ] may consider possible collateral consequences . . .

The consideration of collateral consequences on innocent third parties, like the other factors we must consider when determining whether and how to proceed against a corporation, has been required by the U.S. Attorneys’ Manual since 2008. But the basic principles underlying that policy have a much longer history at the Department. The first [Justice] Department-wide guidance on this subject was issued in 1999, and those basic principles have been reaffirmed multiple times since then, including in 2003, 2006, and 2008.

[A]lthough the factors set forth in the U.S. Attorneys’ Manual, for good reason, inform our prosecutorial decisions, none of those factors, including potential collateral consequences, acts as a bar to prosecution . . .

Most of her testimony was about the prosecution of large financial institutions — is ‘too big to fail’ (or be indicted) really the policy of the DOJ? And no doubt the DOJ will continue to be cautious when it comes to indicting corporate criminal defendants.

On the other hand, the DOJ — although constitutionally apolitical — exists in a political environment. And when Congress raises concerns about enforcement policy, the DOJ can be quick to respond. See, for example, the criminal indictment of the Siemens 8 after criticism from Congress that individuals weren’t being held accountable for FCPA violations.

So a corporate criminal prosecution, perhaps of a well-known FCPA defendant, could make the news sometime soon.


Mythili Raman’s full prepared statement of May 22, 2013 to the U.S. House Financial Services Subcommittee on Oversight and Investigations is here.

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