US: 30 Former Officials Became Corporate Monitors

Publisher Name: 
The New York Times

WASHINGTON
- The Justice Department has appointed at least 30 former prosecutors
and other government officials as well-paid corporate monitors in
arrangements that allow companies to avoid criminal prosecution,
according to government data released Thursday by Congress.

In
the last few years, the Justice Department has turned more and more
often to "deferred prosecutions" to get companies suspected of
wrongdoing to pay fines and change their practices without being
charged criminally. Often, a corporate monitor is brought in to check
on the company's progress and ensure compliance.

The practice drew attention this year after it was disclosed that John Ashcroft, the former attorney general, had been selected by Christopher J. Christie,
the United States attorney for New Jersey, as a corporate monitor for a
medical supply company. The job, assigned without competitive bidding,
would pay Mr. Ashcroft's consulting firm up to $52 million. Mr.
Ashcroft said at a contentious Congressional hearing in March that
there was nothing improper about the arrangement.

Since then,
Democrats in Congress have been pressing for more information about the
use of deferred prosecutions, and the Justice Department responded
Thursday by releasing documents showing that it had turned to the
corporate agreements 85 times in recent years. (Congressional
investigators said they had identified 12 agreements that were not
included in the Justice Department's list, for a total of 97.)

"This
is much greater than the number we originally knew existed," based on
the piecemeal information previously disclosed, said Representative
Linda T. Sanchez, Democrat of California, who leads the House Judiciary
subcommittee that has been examining the issue. She said in an
interview that the data would help Democrats pursue legislation to
ensure more accountability in the process of reaching the agreements
and selecting the monitors.

"There's no transparency as to how
the monitors are selected," Ms. Sanchez said. "These could be very
qualified people, and there could be impropriety going on. The problem
is, we don't know. There's no real selection process."

The
Justice Department has sought to blunt the push for legislative
solutions by imposing restrictions on its own. In March, on the eve of
Mr. Ashcroft's testimony on his contract, the Justice Department
announced guidelines requiring that monitors be chosen by a committee
and be approved by a senior official in Washington, rather than by a
local United States attorney.

And last week, the department
informed Congress that it was putting in place a restriction to prevent
deferred prosecution or other types of plea agreements from requiring
the defendant to pay restitution to a charity, school or other
institution that was not harmed by the company's misconduct. Democrats
on the House Judiciary Committee quickly dubbed the new guidance "the
Christie amendment" because it was seen as a response to the disclosure
that Bristol-Myers Squibb, as part of an agreement with Mr. Christie's
office in 2006 to avoid prosecution, was required to endow a chair in
business ethics at the law school at Seton Hall University, his alma mater.

But
Michael Drewniak, a spokesman for the United States Attorney's Office
in New Jersey, said that the link to Mr. Christie over the Seton Hall
endowment was unfair and that the endowment was first suggested by
lawyers for Bristol-Myers Squibb, not Mr. Christie. "It was an idea we
endorsed, but it was not something we came up with," Mr. Drewniak said.

In
a letter to members of Congress that accompanied the new data, the
Justice Department acknowledged that it had been using deferred
prosecutions and similar arrangements known as nonprosecution
agreements more frequently, but it defended the practice. It said the
agreements represented "an important middle ground" between not
bringing a criminal prosecution at all and charging a company and
hurting all its employees and shareholders, who might have had nothing
to do with the misconduct.

The Justice Department identified 40
corporate monitors appointed since 2000 to follow up on the agreements,
including Mr. Ashcroft. This group was made up overwhelmingly of former
government officials, at least 30 in all. They included 23 former
prosecutors, including two former United States attorneys
in the Bush administration: Debra Wong Yang in Los Angeles and David N.
Kelley in Manhattan. Several judges and federally appointed
commissioners, as well as James Doty, the former general counsel of the
Securities and Exchange Commission and a lawyer for the Bush family,
were named as monitors. In most cases, the amount of money received by
the monitors was not listed in the documents.

Mike McDonald, a former investigator for the Internal Revenue Service
who has studied and conducted seminars on deferred prosecutions, said
that many of the outside monitors chosen by the Justice Department were
probably well suited for their roles, but that the department risked a
credibility problem with the public because of its insular selection
process.

With dozens of former prosecutors on the list of
corporate monitors, "there's a problem if Justice appoints monitors
that come from the Justice camp," Mr. McDonald said.

"It looks
too much like the boys taking care of buddies, because these are
lucrative contracts," he said. "You have to avoid the appearance of
impropriety on either side."

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