"Deferred prosecutions" clear way for corporate crimes

When it comes to lawbreaking by companies, the Bush administration isn't especially fond of enforcing the law.

Published April 10, 2008 2:06PM (EDT)

The Bush administration not only has trouble following the law, it also doesn't seem especially fond of enforcing the law, either. Through something called "deferred prosecutions," the administration is neglecting to prosecute corporate crimes that that would have resulted in indictments in previous administrations.

In a major shift of policy, the Justice Department, once known for taking down giant corporations, including the accounting firm Arthur Andersen, has put off prosecuting more than 50 companies suspected of wrongdoing over the last three years.

Instead, many companies, from boutique outfits to immense corporations like American Express, have avoided the cost and stigma of defending themselves against criminal charges with a so-called deferred prosecution agreement, which allows the government to collect fines and appoint an outside monitor to impose internal reforms without going through a trial. In many cases, the name of the monitor and the details of the agreement are kept secret.

Deferred prosecutions have become a favorite tool of the Bush administration. But some legal experts now wonder if the policy shift has led companies, in particular financial institutions now under investigation for their roles in the subprime mortgage debacle, to test the limits of corporate anti-fraud laws.

Of course companies are testing what they can legally get away with -- they know they have a Justice Department that doesn't mind taking a pass when confronted with evidence of corporate bribery, fraud and other crimes.

"Deferred prosecutions" are billed as a way to save time and money for federal prosecutors, and prevent companies suspected of wrongdoing from going under. But as the New York Times noted in an editorial today, "The cost to the public and the rule of law is too high."

Remember, back in the day, when Republicans presented themselves as the "law and order" party? Good times, good times.

By Steve Benen

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