'Monitoring' Corporate Corruption: DOJ's Use of Deferred Prosecution Agreements
43 Pages Posted: 17 Dec 2008 Last revised: 10 Mar 2009
Date Written: December 16, 2008
The Department of Justice (DOJ) has added another weapon to its enforcement arsenal in its ongoing battle against corporate corruption, generally referred to as the pretrial diversion process. With increased frequency, especially in the health care arena with respect to both domestic and international fraud allegations, DOJ agrees to defer or not pursue a criminal prosecution, in exchange for the subject company paying significant fines, entering into a deferred or non-prosecution agreement, expanding its ethical and legal compliance programming, and, in some cases, agreeing to the appointment of a corporate monitor. Considered a less onerous alternative to a federal criminal indictment, this enforcement approach has been adopted with the aim of punishing and eliminating corporate corruption and reforming corporate ethos. While having the immediate benefit of avoiding a potentially fatal corporate criminal indictment and trial with the attendant exclusion from Federal Health Care Programs, this approach is not without considerable financial and operational consequences for the subject companies. Further, the effectiveness of this enforcement approach in achieving the DOJ's ultimate goal of eliminating corporate corruption, whether within a company or an entire industry, is wholly unknown. More to the point, there are no established metrics by which to measure the respective costs and benefits of this enforcement approach. Of additional concern to the reform effort is the lack of transparency in an area with vague statutory requirements and little case law. This article examines the DOJ's enforcement approach to corporate corruption and whether it's working and suggests that, given the tremendous costs involved, a measured analysis of respective costs and benefits is warranted. It also concludes that reform efforts are likely to be enhanced by greater transparency at all stages of the enforcement process, beginning with pre-settlement and continuing through an actual monitorship.
Keywords: corporate compliance, deferred prosecution agreement, transparency, corporate monitor, pretrial diversion
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