Wal-Mart Acts Fast On Taping
March 5, 2007 | Filed Under Criminal Liability, Compliance
In the post-HP pretexting era, companies need to move promptly when advised of potential wrongdoing. Wal-Mart today can be categorized as Exhibit A.
The New York Times reports (and the company has announced) that Wal-Mart uncovered that a company technician had intercepted messages and recorded phone conversations with company personnel and a reporter for the New York Times.
In this case, the board was promptly notified after an employee’s complaint in January, and the US Attorney was informed the next day.
The employment of the technician was terminated today. Other company managers have been disciplined. The company further stated that the US Attorney will conducts its own investigation. It will be interesting to see to what extent the feds take Wal-Mart’s voluntary disclosure into account in exercising prosecutorial discretion.
We are entering an era of compliance and regulatory disclosure that can be summarized in five words:
When in doubt, do it.
Corporate Attorney-Client Privilege: A Prof Strikes Back
February 26, 2007 | Filed Under Criminal Liability, Investigations
It’s a privilege to be a tenured professor. No, not that kind of privilege.
University of Florida law professor and ex-federal prosecutor Michael Seigel writes an op-ed in today’s Washington Post.
The good professor has been watching the actions of business to control the erosion of corporate attorney-client privilege and his view can be summed up in three words: he no likey. I took a look at these efforts last month.
Professor Siegel makes a few good points on the nature of the corporate attorney-client privilege (it’s not absolute and waiver can be a necessary prosecutorial tool). Heck, he even works the Upjohn case into the mass media!
However, he then goes Hemingway:
But big business smells blood. Its reaction to the McNulty memo has been negative, and its goal continues to be the outright prohibition of waiver requests. Through reintroduction of the Specter bill, it is pressing its legislative “fix” in the new Congress, and the newly empowered Democrats — eager for lobbyists’ money — are likely to be as responsive as their Republican predecessors. The result of a waiver prohibition, of course, would be a significant slowdown of white-collar criminal prosecutions — exactly what the business lobby wants. And the losers, once again, would be the victims of white-collar crime: the American people.
What Professor Siegel fails to note is that some prosecutors have essentially abused waiver and used it to fashion paper-thin criminal cases out of what is really civil wrongdoing (if any). Prosecutors have demanded almost real-time production of all attorney-client communications, sitting back and seeing what they can reel in. For many companies, “cooperation” is tantamount to capitulation.
The professor should also recognize the tremendous pressure public companies face when a cloud of alleged criminality hangs over the boardroom. The need to cut a deal–any deal–is there, and prosecutors know it. And we won’t event comment on the government’s pressure for corporations to withhold funding the defense of targeted executives.
If all prosecutors were measured in their requests for waivers, these organized business efforts probably wouldn’t be necessary. But business, for all of its faults, operates in the real world.
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.
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