Risk & Compliance

Two Steps over the Line?

The jury is still out on whether companies' complaints about how prosecutors gain cooperation in corporate crime cases will do any good.
Joseph McCaffertyNovember 9, 2006

Corporations have long complained about the methods federal prosecutors use to gain cooperation in white-collar investigations. Now those complaints have been voiced both on the federal bench and in Congress.

In September, a Senate Judiciary Committee held hearings on certain provisions of the Department of Justice’s Thompson memo, a 2003 document that set forth guidelines for weighing whether or not to indict a company. A number of witnesses, including Chamber of Commerce president Thomas Donohue and former U.S. Attorney General Edwin Meese, complained that certain tactics used infringe on constitutional rights.

The hearings came less than two months after the second ruling by U.S. District Court judge Lewis A. Kaplan that tactics used in a case involving KPMG were unconstitutional. In the first, Kaplan accused federal attorneys of overstepping their bounds by pressuring KPMG to cut off payment of attorneys’ fees for former partners under investigation. Then, the judge ruled that prosecutors unfairly pressured executives to waive their Fifth Amendment right against self-incrimination — a decision cheered by defense attorneys. “The rulings help restore some of the balance between government’s duty to prosecute crimes and the right of individuals to defend themselves,” says Sanford Saunders, an attorney at Greenberg Traurig.

The rulings don’t necessarily mean that prosecutors will change course, however. In a July interview with CFO, U.S. Deputy Attorney General Paul McNulty maintained that the Thompson memo was still departmental policy. “We disagreed with the court’s decision, and we’ve been dealing with that case,” he said. Then, at the congressional hearings, McNulty added that the government would give “new guidance if, and that’s the key here, if something should be identified that would improve the process.”

Yet Michael Kendall, a defense attorney at McDermott Will & Emery, thinks the June Kaplan decision could force the government’s hand. “It is so powerfully written and reasoned that I expect it to be a powerful precedent,” he says.