But didn't the ruling specifically say that it was unconstitutional for the government to discourage companies from reimbursing the legal fees of their employees?
But that ruling doesn't necessarily change the department's policy,…[nor] would it be the first time where a policy is in place that a particular federal judge objects to; where we have to deal with that litigation, but we don't change our policy. If you look at what the Thompson memo says, it's pretty straightforward. When it comes to charging a company, there's a real possibility of bringing criminal charges against the corporation itself if senior officials have engaged in wrongdoing and the company benefited from that wrongdoing…. We didn't make up that law. That's what the law is. Now it would be interesting if we didn't have any guidance on that. It would be interesting to know what the corporations and defense lawyers would be saying…if we let every office make its own judgment as to whether or not to charge the company itself. The Thompson memo was an effort to try to guide that discretion.
What would you say to critics who argue that the government has been too aggressive in its efforts to get companies to cooperate?
I don't accept that characterization. I'd say that the government has been aggressive in the way that taxpayers and investors expect us to be. We're fulfilling the responsibility we have to guard their interests. That requires a certain amount of aggressiveness and energy. But I believe that the vast majority of prosecutors handle these considerations responsibly and work in a productive way with companies that want to cooperate. And I wonder sometimes if companies cooperate because they realize it is in the interest of the corporation to do so, and then complain later because it may be a more popular thing to do.
What about accusations that prosecutors have been unfair in pursuing waivers of attorney-client privilege?
There are some unique factors here.... Often the individuals who respond to the investigation are not the wrongdoers, but people who are trying to serve their company well. They're willing to work with the government to hold the right people accountable. That's why the discussion of waiving privilege even comes up.... And sometimes their only concern is [what] exposure it might create for lawsuits from the shareholders and whether waivers with regard to the government might result in waivers across the board. But a real willingness to work with the government is what we've seen in many cases. Now that by itself shows the unique nature of this type of law enforcement activity.
You recently said that the Task Force may investigate hedge funds. Why have you targeted them?
Because of the growth in that area and the fact that they are not regulated. [Those factors indicate] they might be susceptible to criminal conduct. It goes back to the question of the integrity of the marketplace.... The issue of regulation [of hedge funds] is a difficult one because of the recent court decision striking down the SEC's ability to regulate this area. So the Task Force will discuss what direction we may want to go in in dealing with [the ruling].
Is prosecution one avenue that is open to you now that registration [of hedge funds with the SEC] seems to be closed?
Yes. [But] we wouldn't pursue that course if we didn't believe that there was a sufficient legal predicate for the criminal prosecution. So really it will be determined on what kind of specific cases emerge.
What else is on your radar screen?
Recently we've devoted more attention to the follow-through with deferred-prosecution agreements [with cooperating companies]. We've had a significant number of those agreements in recent years, and we need to make sure that the companies are following through on the conditions and the commitments that have been made.
Do you envision a time when the Task Force won't be necessary?
No. The need to remain vigilant in this area is not going to go away. We see things emerging regularly that remind us that there are tremendous temptations in the area of business finance and that there will always be a certain percentage of people who will not resist the temptation to enrich themselves. If we signal that we are reducing our efforts, it could be very dangerous.
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