The U.S Justice Department has outlined back breaking guidelines on the prosecution of corporate executives in criminal matters. Long condemned for their lackluster lenience in going after Wall Street executives, the department is now launching an improved plan to better bring company executives to book for their roles in financial fraud.
A memo to federal prosecutors outlined a change of policy by the Justice Department with regard to the prosecution of company executives. The policy marks the first major announcement by Attorney general Loretta E. Lynch since taking over in April.
Deputy Attorney general and author of the memo, Sally Q. Yates, said on Wednesday, “Corporations can only commit crimes through flesh-and-blood people. It’s only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom.”
Previously, the Justice department only went after companies and turned its heads to business executives once corporate settlements were made. More often than not, this meant the executives went scot free.
The memo though limited in reach, can erase a few barriers in the prosecution of fraudulent executives who hide behind their companies. It instructs criminal investigators to narrow down to individual employees from the beginning. Also, in company settlements, corporates will not be able to get credit for their cooperation unless they specifically identify errant employees and provide evidence against them. The evidence will include all employees “regardless of their position, status or seniority.”
The credits offered to companies can save them from paying billions of dollars and are often the difference between a criminal and civil charge. Yates said, “We mean it when we say, ‘You have got to cough up the individuals.”
Yates also affirmed that the Justice Department would not be settling for low level employees used as fall guys for the big executives. “We’re not going to be accepting a company’s cooperation when they just offer up the vice president in charge of going to jail.”
The policy paper, a tacit acknowledgement of criticism for corporate leniency, has been criticized by analysts for being more symbolic than substantive. University of Virginia law professor Brandon L. Garrett said, “It’s a good memo, but it states what should have been the policy for years. And without more resources, how are prosecutors going to know whether companies are still burying information about their employees?”
The need for corporate’s responsibility over their actions cannot be understated especially since their actions or inactions do have disastrous effects. After the 2008 financial crisis, not a single Wall Street executive was jailed, despite the economy reeling in debt years afterwards. The new emphasis on culpable individuals by the justice department will mean getting to the culprits behind the big doors and not merely settling for ineffective settlements.