Good morning Mr. CEO.
What do you have there in your hand?
Yes, indeed, that is a subpoena from the Justice Department.
Yes, indeed, the corporation is a target of a criminal investigation.
Yes, indeed, it appears that in fact the corporation did engage in serious criminal wrongdoing.
It is true, that if convicted of a felony, the corporation faces serious collateral consequences — it could lose substantial government contracts, it could face embarrassing publicity, it could be forced out of business.
Remember Arthur Andersen?
But no, even though the corporation engaged in felonious conduct, it is not a sure thing that it will be convicted of a crime.
If you hire me, I have a playbook with the top 10 plays to save any major corporation from corporate death by felony conviction.
You want to hire me?
Here’s my fee.
Sit down. Sit down.
It will come out of the corporate treasury.
This is shareholders’ money.
Okay, let’s open the book.
1. Prosecutors don’t like the corporate death penalty.
If a corporation is convicted of a serious crime, there is a chance that the corporation will be forced out of business — the government might stop doing business with it, the adverse publicity might nuke its bottom line. In the case of Arthur Andersen, the question was: who would want to hire an accounting firm convicted of obstruction of justice? Answer
– no one. Thus, the perception has arisen that being convicted of a felony, especially for companies in certain lines of business, is the equivalent of being sentenced to death. Prosecutors, especially the politically motivated ones, even ones who like the death penalty for individuals, don’t like the corporate death penalty.
2. Clean out the files.
All large corporations have document retention policies. As one corporate executive told an undercover FBI informant recently — you don’t have to turn over to the government documents you don’t have. Get it?
3. Spare the corporation, torch the individuals.
If the corporation hires me, we’ll begin cooperation with the government immediately. We’ll turn over all the documents and individual executives who were involved with the criminal activity. Just as long as the government gets some individual scalps, it is unlikely that it will seek to indict the corporate entity. They go to jail, we stay in business.
Nice deal, huh?
4. Get a non-prosecution agreement.
These are growing in popularity. If we turn in the executives, if we self-report, the government is likely to cut a deal whereby we agree to a statement of facts as to what happened, we cooperate with an ongoing investigation of individuals, we neither admit nor deny wrongdoing, and if we stay clean for two years or so, then the government won’t file any criminal charges against the company.
5. Get a deferred prosecution agreement.
If we can’t get a non-prosecution agreement, we can get a deferred prosecution agreement. It’s the next best thing. With a deferred prosecution agreement, the government files criminal charges against the company, but if we stay clean for two years or so, the charges are dropped. By my count, more than 10 major corporations have cut this kind of deal in recent months.
6. Plead out a small subsidiary.
If the government demands that some corporate entity plead guilty, we can offer up an insignificant unit that can be put out of business after the plea. Major corporations do this all the time. This spares the parent company from the collateral consequences of a guilty plea. Neat, huh?
7. Neither admit nor deny.
Unlike street crimes, there are many ways to settle corporate crime cases. We can argue that only civil charges should be brought, that they should be brought by an administrative agency, instead of the Justice Department. Once we are in the civil arena, we can settle the case with a “neither admit nor deny” clause. This way, there is no admission of wrongdoing.
8. Apply political pressure on the prosecutor to drop the case.
Almost every prosecutor you speak to denies that this ever happens. But it does happen. Recently, a slam-dunk criminal Medicare fraud case against a hospital corporation in Mississippi was reportedly closed out due to political pressure. This case is creating a stink down there, but that’s only because it made it into the media. There are ways to get to prosecutors.
9. Elect politicians who are soft on corporate crime.
In law, as in business, you get what you pay for. Throw your weight around politically. Have your executives contribute to political campaigns — local, state and national. When push comes to shove, politicians — and many prosecutors are politicians — know who’s buttering their bread.
10. Bury the story.
Earlier this month, a small unit (see number 6 above) of the giant multinational drug company Novartis pled guilty to nine felonies in a fraud case in Illinois. The Justice Department didn’t put out a press release to the national press. Only two reporters wrote about it on the day it was announced — from Bloomberg and the St. Louis Post Dispatch.
The plea got very little national publicity. In another major fraud case, HealthSouth Corporation, the nation’s largest provider of rehabilitative medicine services, paid $325 million to settle allegations that the company defrauded Medicare and other federal healthcare programs. The case was announced by the Justice Department on December 30, 2004 — right during the holidays — and as a result received very little national press attention.
So, Mr. CEO, worry not.
We have the playbook.
We have the plays.
In justice, as in life, you get what you pay for.
Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter,