Corporate “Crime” and Punishment
January 22, 2007 | Filed Under Criminal Liability, Compliance
The Chicago Tribune (via the Albany Times-Union) has an interesting article about the state of corporate criminal liability. It reports that business lobbying groups have been busy:
Meanwhile, business advocates have targeted enforcement aimed at corporations rather than individuals. They tallied a victory in December when the Justice Department put new restraints on prosecutors who were demanding the legal communications of companies under threat of indictment.
The routine practice of forcing those businesses to waive attorney-client privilege as a condition of settlement violates the rights of defendants, critics say. And even the new restraints fail to go far enough in protecting companies from being indicted, they assert.
“We’ve learned something from Andersen, where thousands of innocent people were ruined,” said Hal Scott, a Harvard University law professor who heads a pro-business lobbying group. “You should only prosecute when the whole company is criminal from bottom to top.”
That DOJ “restraint” would be the McNulty memorandum updating Thompson; this WilmerHale alert notes one important feature:
The McNulty Memorandum is also a positive development for corporations and individuals confronted with government investigations. Corporations can continue to properly invoke the attorney-client privilege, the oldest privilege in the law. As a result of the privilege’s continuing vitality, the quality and accuracy of internal corporate investigations are likely to improve because individual employees are prone to be more candid when they have better reason to believe that their statements will not be turned over to the government.
And perhaps better able to detect problems and implement solutions before agents serving subpoenas knock at the door.
Tomorrow a view of how a recent court ruling fits into the corporate “criminal” puzzle.
Another GC is Sentenced
January 17, 2007 | Filed Under On The Dock, Compliance, In the News
This item from the AP says it all:
Steven Woghin, the former general counsel at Computer Associates, was sentenced to two years in prison Tuesday in connection with a scheme to artificially boost the software maker’s quarterly revenue through backdated sales contracts, prosecutors said.
Mr. Woghin had been cooperating with authorities since a guilty plea in 2004; Sanjay Kumar, ex-CEO of Computer Associates, received 12 years last November after his plea.
Here’s a rather vivid glimpse of life before the judge after a guilty plea:
Appearing before U.S. District Court Judge I. Leo Glasser, as well as about 15 friends and family members, Woghin reportedly choked back tears as he apologized for his crimes. According to Newsday, Woghin said his part in the affair was “not a legacy I would like to leave…It was not for personal gain or hubris.” Added Woghin, “I’m deeply sorry for what I have done.”
“I’m sorry you’re here,” Glasser reportedly told Woghin before passing sentence. “I would be happier if I had never seen you before.”
The crux of the offense was this:
In 1992, observed Newsday, Woghin was a 10-year veteran at the Department of Justice when he joined the software company previously known as Computer Associates. He allegedly headed up a team of CA lawyers that “routinely” drafted software licensing contracts with clients after a quarter had closed, according to the newspaper.
This was referred to as the 35-day month (artificially extending reporting months, usually the last month of a fiscal quarter).
The company is now known as CA; there’s something about crimes of former executives that tends to dilute a brand.
James Baker and the BP Safety Review
January 16, 2007 | Filed Under Investigations, Crisis Planning, Compliance, Governance
Fresh off chairing the Iraq Study Group, former Secretary of State James Baker has delivered a report to BP regarding the March 2005 accident at its Texas City refinery. Fifteen people died, 170 were injured.
The complete report is here (374 pages…). BP has committed to follow its 10 recommendations (summarized here by the Wall Street Journal).
The first one is rather stark from a compliance and governance perspective:
1: The Board of Directors of BP, BP’s executive management (including its Group Chief Executive), and other members of BP’s corporate management must provide effective leadership on process safety. Those individuals must demonstrate their commitment to process safety by articulating a clear message on the importance of process safety and matching that message both with the policies they adopt and the actions they take.
And this item will haunt BP’s board and senior management for at least five more years:
9: BP’s Board should monitor the implementation of the recommendations of the panel (including the related commentary) and the ongoing process safety performance of BP’s U.S. refineries. The Board should, for a period of at least five calendar years, engage an independent monitor to report annually to the Board on BP’s progress in implementing the panel’s recommendations (including the related commentary). The Board should also report publicly on the progress of such implementation and on BP’s ongoing process safety performance.
I wrote about the BP legal response previously.
The recent announcement that BP CEO John Browne would be stepping down later this year doesn’t seem entirely unrelated. Further management changes are ruled out for the time being.
The energy business is ferociously intolerant of operating mistakes, given the volatile nature of the materials being handled. This reality drives most industry companies to obsess about safety. Better having engineers on the site sooner rather than lawyers drafting a report later.
A New Specter on Corporate Crime
December 8, 2006 | Filed Under Regulation, Compliance
Senator Arlen Specter weighs in on righting some of the wrongs in the prosecution of corporate crime. There may be some reason for optimism.
According to the New York Sun, the legislation introduced yesterday by Senator Specter:
[…] would nullify portions of corporate crime guidelines issued to federal prosecutors in 2003 as part of the response to business frauds, such as the collapse of Enron. The directive, authored by the deputy attorney general at the time, Larry Thompson, has come under fire from many quarters as an erosion of attorney-client privilege.
[..] would also bar the Justice Department from making prosecutorial decisions based on a company’s provision of legal fees or legal counsel to its employees. In March, a federal judge in Manhattan, Lewis Kaplan, ruled that prosecutors violated the constitutional rights of defendants in a tax shelter case by pressuring the accounting firm where they worked, KPMG, not to pay for their legal defense. The government’s appeal of that ruling is pending before the 2nd Circuit.
However, since Senator Specter is the outgoing chairman of the Judiciary Committee, it is not clear that this legislation will ever see the light of day.
And the NFL owners are probably happy about that…
Wired GC — Unplugged Show #7
October 26, 2006 | Filed Under International, Unplugged - Audio, Technology, Compliance
“Publishing With Principle”
The printed word has come a long way since Gutenberg. The reach of “traditional” and “new” media is now worldwide and immediate. With these new technologies come new responsibilities. Some publishing companies and even individual bloggers have run afoul of laws in several jurisdictions.
In today’s audiocast, we talk to Charles J. Glasser Jr., media counsel with Bloomberg News and author and editor of the “International Libel and Privacy Handbook.” Its subtitle notes that it is intended as a “Global Reference for Journalists, Publishers, Webmasters, and Lawyers.”
Mr. Glasser also provides for listeners a glimpse into the life of a counsel to a leading media company and gives key insights into how to make compliance with law a reality in a business that really never closes its doors.
Today’s show is here (just click on the “mp3″ link):
mp3 (15:03 min; 3.4 mb)
Show Notes:
– Mr. Glasser’s book is available on the Bloomberg website, which contains biographical information as well.
– This book is also available on Amazon here.
Search
Powered By
Links
| ||||
 | ||||
| ||||
| ||||
