Judiciary Chairmen Release GAO Report on Criminal Corporate Settlement Agreements

(Washington, D.C.) - House Judiciary Committee Chairman John Conyers, Jr. (D-Mich.), Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), Commercial and Administrative Law (CAL) Subcommittee Chairman Steve Cohen (D-Tenn.), Rep. Linda Sánchez (D-Calif.), Rep. Frank Pallone (D-N.J.), and Rep. Bill Pascrell (D-N.J.) released a Government Accountability Office (GAO) report entitled Corporate Crime: DOJ Has Taken Steps to Better Track Its Use of Deferred and Non-Prosecution Agreements, but Should Evaluate Effectiveness. The report was prepared at the request of the chairmen of the House and Senate Judiciary Committees, later joined by Sánchez, Pallone, and Pascrell, encouraging GAO to investigate the use, award, and implementation of DOJ deferred prosecution agreements in criminal investigations.

In the report, GAO found:

• DOJ has taken some steps to improve its tracking of deferred and non-prosecution agreements, ("In response to our requests for information, DOJ has recently taken steps to better track its use of DPAs and NPAs, steps that will allow it to more accurately report on the number and terms of DPAs and NPAs to Congress and the public, and identify best practices and ensure consistency across agreements." – page 17)


• DOJ still lacks performance measures to evaluate how these agreements contribute to the department’s efforts to combat corporate crime, ("DOJ cannot evaluate and demonstrate the extent to which DPAs and NPAs – in addition to other tools, such as prosecution – contribute to the department’s efforts to combat corporate crime because it has no measures to assess their effectiveness."– page 20)


• Courts have had limited involvement in the deferred prosecution agreement process, "Judges report limited involvement in the DPA process."– page 25)

The GAO report was requested in response to concerns regarding inadequate safeguards in the selection of former prosecutors to become independent corporate monitors who receive millions of dollars in no-bid contracts. On March 11, 2008, the CAL subcommittee held a hearing in which former Attorney General John Ashcroft testified about his no-bid appointment as a monitor in the Zimmer Holdings deferred prosecution agreement, where he was to collect fees between $28 and $52 million. The CAL subcommittee held a follow-up hearing on June 25, 2009 in which former United States Attorney Christopher J. Christie testified about his appointment of Mr. Ashcroft, his former superior, as the monitor in the Zimmer case and his refusal to intervene when Zimmer complained about non-negotiable and excessive monitoring fees.

"Two years ago, the House Judiciary Committee began its investigation into deferred and non-prosecution agreements to shine a light on no-bid deals for corporate monitors," said Conyers. "In response to our oversight, the Justice Department implemented some reforms of the process of corporate settlement agreements and the appointment of independent monitors. I am pleased by the steps DOJ has taken to better track deferred and non-prosecution agreements, but remain troubled that the Department is not assessing the effectiveness of these agreements. As this report clearly illustrates, more needs to be accomplished. I hope the Department will continue its improvement efforts by developing performance measures to evaluate the contribution of deferred and non-prosecution agreements in combating public and corporate corruption."

"This report illustrates there must be diligent oversight to ensure that its use is appropriate and fair and transparent," said Cohen, author of H.R. 4283, the Transparency and Integrity in Corporate Monitoring Act of 2009. "The foundation of our judicial system is that justice is blind and that all who come before the bar are entitled to equal justice. After two years of extensive oversight by the Judiciary Committee, it is clear that deferred prosecution can be easily abused, and enhanced safeguards are necessary to improve the use, award and implementation of these agreements."

"Because so many questions remained unanswered, I held a subcommittee hearing two years ago to shed light on the use of pre-trial prosecution agreements in corporate crime cases," said Sánchez, of her previous tenure as CAL subcommittee chairwoman. "At the time of the hearing, this practice had been operating mostly in the shadows, without guidelines, and without oversight. White collar crimes shouldn’t be privy to sweetheart deals for friends to benefit from. I am pleased the GAO study has brought the issue of deferred prosecution agreements out of the shadows and look forward to seeing specific guidelines put in place."

"This report underscores the concerns I have raised over the last two years that there is inadequate information available regarding the use of federal monitors in deferred prosecution agreements," Pallone said. "The DOJ has certainly improved the oversight and execution of DPAs, but this report shows more can be done to make certain abuse and favoritism are eliminated from the process."

"The GAO’s report on deferred prosecution agreements provides even further evidence in the need for comprehensive reform legislation," stated Pascrell, author of H.R. 1947, the Accountability in Deferred Prosecution Act of 2009. "One cannot ignore the spike of 38 deferred prosecution agreements in 2007, up from a mere four agreements in 2003. That proves that what was supposed to be an option to be used in rare circumstances had become the norm at the Department of Justice. Evidence in the report also shows that the U.S. Department of Justice has made changes to their practices based upon our criticism of the expanding use of DPAs, including finally developing guidelines for and reducing the frequency of DPAs in the past two years. Furthermore, GAO’s report proves that more oversight, accountability and public disclosure are still needed. It is imperative that the Congress reign in the unmitigated power that federal prosecutors hold to serve as judge, jury and sentencer in the deferred prosecution process."

Full text of the report available here.