Conrad Black’s Homer Simpson moment
In case you hadn’t heard, timing is everything. Last November, I reported the contents of a long piece from Law.com describing in depth the diminishing enthusiasm at the DOJ for the prosecution of corporate crime. Further evidence appeared this morning by way of a page-one headline in The New York Times: “In Justice Shift, Corporate Deals Replace Crimes.” It seems that, rather than seeking criminal indictments, the DOJ is seeking to mete out justice on the cheap.
In a major shift of policy, the Justice Department, once known for taking down giant corporations, including the accounting firm Arthur Andersen, has put off prosecuting more than 50 companies suspected of wrongdoing over the last three years.
Instead, many companies, from boutique outfits to immense corporations like American Express, have avoided the cost and stigma of defending themselves against criminal charges with a so-called deferred prosecution agreement, which allows the government to collect fines and appoint an outside monitor to impose internal reforms without going through a trial. In many cases, the name of the monitor and the details of the agreement are kept secret.
Deferred prosecutions have become a favorite tool of the Bush administration. But some legal experts now wonder if the policy shift has led companies, in particular financial institutions now under investigation for their roles in the subprime mortgage debacle, to test the limits of corporate anti-fraud laws.
If and when Lord Black picks up this issue of the Times at the prison library, I imagine him enacting the quintessential Homer Simpson moment: head slap followed immediately by “d’oh!” What the great man wouldn’t give right now for a monitor and a fine!
However, there is still reason for him to hope. Paul Waldie, writing in the Globe this morning, twins two appeals—those of Black and Enron’s Jeffrey Skilling—around the stated misgivings of various appeal court justices regarding the so-called honest services statute. Reports Waldie, “many legal experts say…[the statute] is vague and has been stretched too far. Several convictions based on the statute, including three related to the collapse of Enron, have also been thrown out by appeal courts.”
Like I say, timing is everything.