I participated in the University of Maryland School of Law’s Roundtable on the Criminalization of Corporate Law today. Others participating included the organizer, Lisa Fairfax, the U of M’s Rich Booth and, in alphabetical order, Doug Branson, Darryl Brown, Jill Fisch, Joan Heminway, Peter Henning, Christine Hurt, Mike Klausner, Don Langevoort, Stephanie A. Martz (Director, White Collar Crime Project, NACDL), Brett McDonnell, David Millon, Geraldine Moohr, Donna Nagy, Lisa Nicholson, Jennifer O’Hare, Alan Palmiter, Troy Paredes, Ellen Podgor, and David Skeel.
For me, the most interesting part of the day was the keynote speech by David Anders, former prosecutor in the WorldCom and Quattrone cases, now with Wachtell. Here’s some of what Anders had to say.
Corporations help the government convict corporate agents. Why? Because “being a good corporate citizen means helping the government.” Anders noted that, so anxious are corporations to cooperate that they usually “exceed the government’s expectations” in pulling documents together. Firms don’t try to keep costs down. For them, “costs cannot be an issue.” “How much does it cost to produce documents?” He doesn’t know.
Anders never had a case where a current employee refused to talk to the government. He thought it was an “interesting question what happens to get to an employee to that point.” At least Anders thought it was "interesting." I was wondering whether corporations' zeal to cooperate that Anders had just described might have rubbed off in some way on their employees. Anders's curious distance here reminded me a little of Tom Cruise’s hit man character in the film “Collateral,” who explained that he didn’t kill people, the bullets from his gun did.
Though defending these cases is very burdensome for defendants, under the Thompson memorandum prosecutors discourage firms from advancing expenses. I thought that statement might interest lawyers for the KPMG defendants in the forthcoming hearing in that case.
Corporations’ cooperation continues through the trial in connection with witnesses, documents, and so forth. Companies do this “without hesitation” because “their own fate” is on the line. Even after trial, firms' cooperation may continue in rounding up assets. In the Ebbers case, Anders noted that the government was able to “bypass Worldcom’s priority interest” to get most of the money to the victims. Because of the government’s ongoing investigation of the corporate entity, the firm was willing to give up its its right to the assets.
Anders concluded that the government has had lots of success in corporate crime cases and that this has “restored confidence in the markets.” No word on how he reached that determination.
Anders was evidently proud of his work. However, the comments at the Roundtable for the next four hours or so generally expressed a lot less comfort with the work of Anders and his colleagues, and its impact on the criminal justice system and corporate governance, than Anders did.
Did any of that discomfort of the Roundtable leave Anders the least bit uncomfortable about the merest possibility that he is stripping the ability of at least some innocent businessmen to keep from being just another notch in his belt?
Bigger question: where is the brake on the institutional incentive for any intelligent, aggressive person in Anders' position to do any differently?
Posted by: Marc Hodak | April 25, 2006 at 09:07 AM
Perhaps I should clarify that Anders was gone when the Roundtable convened in a separate room. It would have been great to have him there, but that wasn't the format. My subjective impression of the talk is that Anders wasn't the least uncomfortable -- he was, after all, saving the securities markets. But the problem is, indeed, the institutions and laws, not Anders personally.
Posted by: Larry Ribstein | April 25, 2006 at 09:17 AM