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Article
Publication date: 13 July 2022

Megan Jean Parker and Mary Dodge

Deferred prosecution agreements (DPAs) are the tool of choice for federal prosecutors when adjudicating corporate misconduct. A DPA is a negotiation that permits the allegedly…

Abstract

Purpose

Deferred prosecution agreements (DPAs) are the tool of choice for federal prosecutors when adjudicating corporate misconduct. A DPA is a negotiation that permits the allegedly guilty party from undergoing a criminal trial if they avoid committing further wrongdoing for a specified period. This paper aims to examine whether DPAs are a beneficial mechanism for the criminal justice system to use while adjudicating corporate misconduct. By conducting in-depth semi-structured qualitative interviews with 24 practitioners in the legal field and white-collar crime experts, this study identifies the shortcomings and advantages of DPAs and highlights what policy enactments might enhance their application. The study contributes to the existing literature by expanding the narratives used by judicial officials, legal practitioners and white-collar crime scholars on the role of DPAs.

Design/methodology/approach

The current study is an in-depth qualitative analysis that explores judicial actors’ and white-collar crime scholars’ opinions on the adoption of DPAs to adjudicate corporate misconduct. The literature on DPAs is currently derived primarily from law and literature reviews published by legal scholars. Clandestine negotiations are not accessible to the public and are frequently kept in sealed files unless a breach of contract occurs, resulting in the case proceeding to trial. Hence, a qualitative analysis is the best approach to evaluate the effectiveness of DPAs. Further, little evidence is available that focuses on the opinions of professionals who have participated in these agreements. The interviews were conducted over Zoom and lasted an average of 43 min, with the longest interview spanning 1 h and 45 min and the shortest interview being 14 minutes. A non-probability sampling method – specifically, snowball sampling – was used to generate a total sample of 24 legal professionals and white-collar crime scholars. Initial participants were found by contacting law offices specializing in white-collar crime litigation and using current networks to attain access to a broader range of participants. Then, 19 participants provided referrals throughout the study. The final sample consisted of nine government officials, eight legal practitioners and seven white-collar crime academics experts. One of the government official interviews was excluded from the final research project due to a lack of expertise in the field of white-collar crime. The interview questions were designed to promote in-depth conversation and insight into personal opinions on the adoption of DPAs. Several inquiries highlighted whether DPAs are an appropriate response to corporate misconduct and whether they reduced recidivism through their intended deterrent effect. Furthermore, several descriptive questions sought to understand which criminal justice actors support the adoption of DPAs in white-collar crime cases and why. Coding of the data was first conducted individually by each author. The researchers then compared thematic findings that reflected consensus.

Findings

An immediate theme identifiable in the research is the intrinsic value that DPAs offer in adjudicating corporate wrongdoing. As indicated by a participant, corporate misconduct is not “black or white,” stressing the importance of prosecutors having a middle ground between criminal prosecution and the dismissal of charges. A judicial official indicated that “DPAs are another essential arrow in a prosecutor’s quiver – and something a defense attorney can bargain for” (Respondent 5). Seven government officials and legal practitioners noted that you are unable to send a corporation to jail, and you do not simply want to put them out of business; thus, a DPA is the only tool in which the government can mandate structural change in a company without dismantling the entire entity. Only three academics concurred with the government officials and legal practitioners that DPAs are beneficial and offer prosecutors a vital middle ground. One academic, for example, stated that “DPAs have given U.S Attorney offices that ability to be involved for a considerable amount of time in a company's business, while simultaneously promoting change within the entity” (Respondent 14). Additionally, DPAs ensure that corporations are held criminally liable without triggering an endless cycle of collateral consequences for innocent third parties. One legal practitioner, for example, stated: “Just look at the Enron case; they charged Arthur Andersen with obstruction of justice and dismantled the entire entity they made it where the business was never going to come back. A small subset of individuals, in this case, should have been held responsible but instead, hundreds and if not thousands of people were harmed. With this in mind, DPAs are extremely important, in that it limits collateral consequences because DPAs take a more holistic view that criminal prosecution does not consider” (Respondent 21). Another respondent highlighted that “DPAs are the only tool available that can be employed to change an entire organization structurally” (Respondent 20). Ultimately, the findings suggest that there is a consensus among respondents that DPAs are an appropriate response to corporate misconduct, particularly when the agreement stipulates that a company must hire an external compliance monitor and update their current compliance system. Overall, participants emphasized that these stipulations promote a sense of corporate accountability, provide for the dismissal of guilty employees and mandate structural change. The majority of the respondents (n = 20) insisted that DPAs are advantageous, yet a subset of participants were skeptical of their use in white-collar crime prosecutions. One legal practitioner, for example, noted that “DPAs are political creatures that are awarded as political favors to the largest of corporations that our economy relies upon” (Respondent 17). Another government official confirmed this statement, indicating that “DPAs are a mere slap on the wrist for large corporations – they simply see it as doing business” (Respondent 6). Four academic participants emphasized that DPAs are typically negotiated with multi-level corporations and are not extended to the small businesses that suffer the dire consequences of criminal prosecution. One academic, for instance, stressed that “the question becomes is it fairly applied and being implemented properly. Larger companies are more likely to receive and benefit from a DPA, thus, raising the question of fairness” (Respondent 12). Another academic who was previously a government official stated: “DPAs risk abuse – there have been several instances where prosecutors have forced companies to donate money to favored charities and overstepped their powers. Sometimes DPAs also come with monitors. For example, banks typically have to pay for the auditor, and it becomes extremely intrusive, and it it not clear that they are efficient.”

Research limitations/implications

Several limitations exist in this research. First, it is not a comprehensive study that is representative of the larger population, which limits generalizability. Given the contention of research on DPAs, this qualitative research contributes to the literature, and its findings are likely transferable to multiple settings in which DPAs are used. Second, DPAs are processed and drafted differently across jurisdictions; thus, comparing DPAs across state levels and among departments in the federal government would be equivalent to comparing apples to oranges. This comparison is yet another limitation to the study because criminal justice practitioners operate in both the state and federal jurisdictions. Another challenge in the current study and something that likely will be a problem for future researchers is the difficulty of gaining access to experts in an exclusive field of criminal justice, such as federal prosecutors, Department of Justice officials, federal judges and elite corporate defense attorneys. Ultimately, several obstacles arose during the study, particularly when recruiting participants to gain a large enough sample size to conduct meaningful analysis. This resulted in smaller sample size but rich, in-depth data that achieved saturation among participants.

Practical implications

Several policy implications are identifiable. First, it appears that DPAs are a mainstay of white-collar crime prosecution. No participants advocate for their complete removal from the prosecution process. Participants highlight that DPAs occupy an essential middle-ground between dismissal and criminal charges. Without this mechanism, prosecution would be impeded, and holding corporate criminal actors liable would increasingly become formidable. Although it appears that the system cannot function without DPAs, several respondents emphasize that we must begin to hold individuals accountable alongside corporations. Another policy implication that a minority of participants mentioned within the study involves ensuring that our compliance monitoring system operates appropriately. A majority of participants note that the overarching stipulation that promotes structural change within an organization is adopting a functioning compliance monitoring system, thus, emphasizing the importance of this process operating smoothly and ethically. The selection of an independent compliance monitor may be problematic. For example, a former government compliance monitor notes that not all monitors are experts in the field they are overseeing. A pharmaceutical expert, for example, may be attempting to regulate an automotive organization, which may present unique challenges. An agency of federal professionals dedicated to supervising specific industries such as automotive, pharmaceutical and financial would ensure that organizations are actually implementing the terms of the DPA.

Originality/value

Ultimately, the current research highlights the necessity of empirically studying the benefits and drawbacks of such agreements. Future research on the topic remains onerous due to the scarcity of a centralized database that contains extensive details of DPAs. The present study suggests that the verdict on DPAs is undecided, with more than half of the study's criminal justice professionals advocating for their continued and even increased use. However, about half of the participants, particularly academics, called attention to the agreements’ potential bias. The disagreement among participants is most contentious in the consideration of a DPA centralized database which would immensely aid future research and policy advancements.

Article
Publication date: 19 October 2022

Sandra K. Gates

Using the ethical consequentialist theory of utilitarianism, this paper aims to demonstrate the correlation between the prosecution of Arthur Andersen LLP and the United States…

Abstract

Purpose

Using the ethical consequentialist theory of utilitarianism, this paper aims to demonstrate the correlation between the prosecution of Arthur Andersen LLP and the United States Department of Justice’s (DOJ) increased use of pretrial diversion agreements, both nonprosecution and deferred prosecution agreements (N/DPA) for criminal corporations.

Design/methodology/approach

Through an analysis of previous literature, the United States Justice Manual, and data from the Corporate Prosecution Registry, this study examines the trend of N/DPAs from 1992 to 2021. Specifically, the data is examined to assess whether a pattern exists before and after the 2002 prosecution of Andersen.

Findings

This study finds an exponential increase of N/DPAs after Andersen’s prosecution. The DOJ’s basis for the increased use of these agreements is rooted in the utilitarian theory that the punishment of criminal corporations should deter and rehabilitate behavior while also maximizing the benefit to society (e.g. shareholders, employees and business community). The justice manual, memorandums and public speeches explicitly promote the use of N/DPAs for corporations to minimize collateral damage and the potential for negative societal impact.

Originality/value

This study applies a utilitarian framework to explain the criminal justice system’s increased use of pretrial diversion agreements for criminal corporations.

Details

Journal of Financial Crime, vol. 30 no. 6
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 11 November 2020

Emily M. Homer and George E. Higgins

The purpose of this study is to use crime mapping techniques to examine geographic patterns of signed deferred and non-prosecution agreements across federal districts. The purpose…

Abstract

Purpose

The purpose of this study is to use crime mapping techniques to examine geographic patterns of signed deferred and non-prosecution agreements across federal districts. The purpose is also to examine the variation in the number of agreements by the district since 1992.

Design/methodology/approach

This study uses data from the Corporate Prosecution Registry to examine geographic patterns in federal corporate agreements since 1992 (n = 534). Choropleth mapping techniques were used to create national crime maps displaying the geographic locations of signed corporate agreements.

Findings

The results showed that, overall, prosecutors in the District of Columbia have signed the most federal corporate agreements although there is some variation over time.

Research limitations/implications

This study is unable to determine the causes of changes in the geographic placement or number of agreements signed. It is also unable to determine the precise geographic locations of crimes, but only the location of the District Court that elected to pursue a federal agreement with the organization.

Practical implications

The wide discretion prosecutors have in the agreement process has led to an overall lack of transparency concerning prosecutors’ decision-making when signing agreements with organizations. This study helps to make the number and geographic location of agreements more transparent.

Originality/value

This study uses crime mapping techniques to visually depict the locations of signed agreements allowing for visual comparisons and analyzes for an extended period of time.

Article
Publication date: 1 December 2023

Claire Nolasco Braaten and Lily Chi-Fang Tsai

This study aims to analyze corporate mail and wire fraud penalties, using bounded rationality in decision-making and assessing internal and external influences on prosecutorial…

Abstract

Purpose

This study aims to analyze corporate mail and wire fraud penalties, using bounded rationality in decision-making and assessing internal and external influences on prosecutorial choices.

Design/methodology/approach

The study analyzed 467 cases from 1992 to 2019, using data from the Corporate Prosecution Registry of the University of Virginia School of Law and Duke University School of Law. It examined corporations facing mail and wire fraud charges and other fraud crimes. Multiple regression linked predictor variables to the dependent variable, total payment.

Findings

The study found that corporate penalties tend to be lower for financial institutions or corporations in countries with US free trade agreements. Conversely, penalties are higher when the company is a U.S. public company or filed in districts with more pending criminal cases.

Originality/value

This study’s originality lies in applying the bounded rationality model to assess corporate prosecutorial decisions, unveiling external factors’ influence on corporate penalties.

Details

Journal of Financial Crime, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 18 September 2007

Betty Santangelo, Gary Stein and Margaret Jacobs

The purpose of this article is to explain recent enforcement trends under the Foreign Corrupt Practices Act (FCPA), providing examples of recent cases.

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Abstract

Purpose

The purpose of this article is to explain recent enforcement trends under the Foreign Corrupt Practices Act (FCPA), providing examples of recent cases.

Design/methodology/approach

The paper describes recent trends in FCPA enforcement, including increased enforcement by US authorities, greater vigilance by private industry, and global anti‐corruption efforts. It provides an overview of the FCPA, including the original reason why the Act was passed, its anti‐bribery provisions, the need to show corrupt intent, the interstate commerce requirement, exceptions and affirmative defenses, record‐keeping and control provisions, and penalties. It describes recent FCPA prosecutions and enforcement actions and draws conclusions on how to reduce FCPA risk.

Findings

The FCPA is a Watergate‐era law that was passed in response to disclosures by a number of large US corporations that they had made illicit payments to foreign government officials. The FCPA applies to bribes by any US issuer or domestic concern, paid to any foreign official, foreign political party, official or candidate, or official of a public international organization in order to assist in obtaining, retaining, or directing business. To prosecute, the government must show corrupt intent. The FCPA also contains provisions that require accurate record‐keeping and internal controls of US issuers. Violations of the FCPA are subject to both criminal and civil penalties.

Originality/value

The paper presents a thorough explanation, practical advice, and examples of recent violations and penalties by experienced lawyers specializing in FCPA compliance as well as white‐collar defense, securities regulatory matters, internal investigations, and anti‐money laundering.

Details

Journal of Investment Compliance, vol. 8 no. 3
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 27 December 2021

Nadja Capus and Kei Hannah Brodersen

Corporate foreign bribery can have devastating consequences on communities and states. Over the past decade, there have been several promising developments, both national and…

Abstract

Purpose

Corporate foreign bribery can have devastating consequences on communities and states. Over the past decade, there have been several promising developments, both national and international, that might increase the chances of victim states to receive remediation for the harm they suffered from foreign bribery. In particular, awareness has risen that victim states must be considered and new innovative items have been added to the toolbox of prosecutors in the fight against corruption that is assumed to also improve victim states’ standing in these procedures. This study aims to assess whether indeed victim states receive compensation through these novel procedures.

Design/methodology/approach

This study uses the three case studies of Switzerland, France and England and Wales for a comprehensive empirical and normative analysis of settlement agreements between defendants and prosecution authorities and of court jurisprudence.

Findings

This study shows that although de jure, it seems warranted to order the payment of remedies to victim states within domestic criminal proceedings, in practice, this rarely happens. A number of legal and practical obstacles account for this situation. This study, therefore, calls for the formulation of international guidelines containing the obligation to inform victim states of ongoing criminal proceedings on corporate foreign bribery, and guidance on how to identify the victim of this crime, as well as the damage caused.

Originality/value

This is the first contribution to verify whether claims that settlement agreements, recently introduced in England and Wales and France (and similar procedures are available in Switzerland), are beneficial for victim states in their quest to receive compensation. As this study shows that this is – not yet – the case in practice, this study proposes solutions that could lead the way for remediation of the harm caused by corporate corruption – and thereby, ultimately, to a more just outcome.

Details

Journal of Financial Crime, vol. 29 no. 4
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 5 January 2015

Bryane Michael

– The purpose of this article is to assess the extent to which Hong Kong’s laws deter its companies from engaging in corruption and bribery abroad.

Abstract

Purpose

The purpose of this article is to assess the extent to which Hong Kong’s laws deter its companies from engaging in corruption and bribery abroad.

Design/methodology/approach

A mix of economics, public administration, management and legal analysis was used to assess weaknesses in Hong Kong’s laws governing the prohibition of bribe payments abroad.

Findings

Hong Kong does not explicitly criminalise corporate bribery abroad. Companies – as legal persons – can not be found guilty of corruption. It is argued that Hong Kong’s Legislative Council should amend various laws to modernise Hong Kong’s approach to tackling corruption committed by its companies abroad. The various approaches lawmakers can take towards assigning responsibility for corruption to companies are presented. The approaches that prosecutors at the Department of Justice can take to adopt prosecutorial methods like those used in other upper-income jurisdictions and the ways that Independent Commission Against Corruption (ICAC) can assist in this work are also described.

Practical implications

This research has practical findings for Hong Kong’s policymakers, law firms and companies which operate in Hong Kong. For policymakers, we describe legal changes Hong Kong’s legislators will likely make in the years ahead and the preferred ways of engaging in such change. For law firms, we describe the legal changes coming to Hong Kong which legal advisors will need to advise their clients on. For companies, we describe changes that companies operating in Hong Kong will likely need to comply with in the future.

Social implications

This paper shows that when Hong Kong adopts best practice in the field of corporate criminalisation, Hong Kong’s role in “exporting” corruption will likely fall.

Originality/value

This article describes a set of legal changes which will change the way Hong Kong treats corruption. The literature tends to glamorise Hong Kong’s anti-corruption work. It is shown that its law falls far behind other jurisdictions, as well as how “treating companies like people” in the case of Hong Kong will likely change the way Hong Kong’s prosecutors think about crime and criminal perpetrators.

Details

Journal of Financial Crime, vol. 22 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 7 October 2013

Virginia Gallaher Maurer and Ralph Emmett Maurer

This paper, presented at the 2012 International Symposium on Economic Crime, Jesus College, Cambridge, identifies four serious problems that affect enforcement of the US Foreign…

636

Abstract

Purpose

This paper, presented at the 2012 International Symposium on Economic Crime, Jesus College, Cambridge, identifies four serious problems that affect enforcement of the US Foreign Corrupt Practices Act (FCPA) the awkwardness of using the prosecutorial system as a de facto regulatory agency; the uncertainties imposed on corporate capital budgeting systems in determining how much to spend on compliance; the paucity of judicial interpretation of the law, and thus the interpretations of prosecutors as de facto law that may not be law; and the ambiguous benefits of compliance with the law that leads to inadequate compliance. The paper aims to discuss these issues.

Design/methodology/approach

The paper employs traditional legal research methodology, analysing case law, statutory interpretation, legal literature, and textual analysis of aggregated deferred prosecution agreements and non-prosecution agreements between the US Department of Justice (DOJ) and national and multinational corporations between 2000 and 2011.

Findings

Several boundaries require clearer definition in US enforcement of the FCPA.

Research limitations/implications

The paper defines areas for fruitful comparative legal analysis between enforcement of the US FCPA and enforcement of the UK Bribery Act of 2010.

Practical implications

The paper has practical implications for UK policy makers addressing issues of the Bribery Act of 2010.

Social implications

The paper provides cautionary notes to public policy makers in the UK as the Serious Fraud Office designs alternative prosecution approaches to enforce the Bribery Act of 2010.

Originality/value

Other various signatory nations of anti-corruption treaties, and in particular the UK, can benefit by observing the experience of the US DOJ's enforcement regime and building more clarity into implementing anti-corruption legislation.

Details

Journal of Financial Crime, vol. 20 no. 4
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 13 March 2020

Dominic Peltier-Rivest

This study aims to analyse Rolls-Royce’s (RR) recent corruption case, its 2017 global anti-bribery and corruption (ABC) manual, and its 2017 annual report to assess whether it has…

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Abstract

Purpose

This study aims to analyse Rolls-Royce’s (RR) recent corruption case, its 2017 global anti-bribery and corruption (ABC) manual, and its 2017 annual report to assess whether it has put the best corruption prevention strategies into place.

Design/methodology/approach

This is a legal case study based on RR’s 2017 deferred prosecution agreement (DPA) with the UK serious fraud office. It uses the new ISO 37001 standard as a theoretical framework.

Findings

RR’s DPA suspends an indictment covering 12 counts of conspiracy to corrupt, false accounting and failure to prevent bribery. RR’s ABC manual exhibits significant shortcomings as compared to ISO 37001’s requirements. RR’s ABC manual does not provide any reference to the setting, reviewing and achievement of measurable anti-bribery objectives; does not state that anti-bribery training is provided at planned intervals to employees and external business associates that pose more than a low risk of bribery; does not explain the authority and independence of its head of ethics and compliance; does not state any maximum for gifts and hospitality given or received; does not provide clear assurances that reports made through its main internal channels will be treated confidentially and that complaints about senior management will be investigated by an outside firm; and does not subject its advisers to a formal due diligence process. RR’s annual report notes that it operates in an industry prone to corruption. Finally, internal control failure and compliance fatigue mean that no anti-bribery management system can be completely effective.

Research limitations/implications

This paper extends previous research by analysing the best corruption prevention strategies that organizations can implement. It does not endeavour to certify whether RR is ISO 37001 compliant, and it analyses only publicly available documents.

Practical implications

This study’s prevention strategies will help deter corruption and improve internal controls within organizations.

Originality/value

No previous study has used the new ISO 37001 standard as a framework for such corruption case analysis.

Details

Journal of Financial Crime, vol. 28 no. 2
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 4 May 2012

Robert Mazur

The objective of this article is to examine the criminal conduct of convicted bankers and institutions for the purpose of identifying any measurable factor that can determine the…

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Abstract

Purpose

The objective of this article is to examine the criminal conduct of convicted bankers and institutions for the purpose of identifying any measurable factor that can determine the degree of risk an organization faces from the threat of organized crime.

Design/methodology/approach

Primary research was conducted of the money laundering related acts of bankers and banks charged with criminal offenses. In addition, interviews were conducted of professionals with first‐hand knowledge, directly involved in the events related to these prosecutions.

Findings

Although maintenance of a competent anti‐money laundering compliance program is required by law, the real measure of a financial institution's risk from organized crime is directly proportional to the degree with which the business line of an institution genuinely embraces, participates in, and benefits from the anti‐money laundering protocols established by the institution's compliance function.

Originality/value

This paper is original research conducted and presented from the viewpoint of a specialist.

Details

Journal of Money Laundering Control, vol. 15 no. 2
Type: Research Article
ISSN: 1368-5201

Keywords

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