Corporate Crime Settlements Avoid Criminal Convictions

August 23, 2016
in Category: Business
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Corporate Crime Settlements Avoid Criminal Convictions

When there is evidence of possible criminal activity by a corporation, there is always the question of who to prosecute. It is not like an individual who commits a crime. The person or persons working for a corporation act on behalf of their employer. Their conduct further the purposes of the corporation. It may or may not create extra income and wealth for the corporation. In any event, it is generally the corporation, and not the individual, who benefits financially from any misconduct. An article by Sean Hecker (seanhecker.net) of Debevoise & Plimpton sheds light on the process.

A corporation needs to protect its reputation, and also has a duty to its shareholders to protect its value. A criminal plea by one or more of its employees will have a detrimental effect on both of those goals. A corporation needs to settle any criminal allegations against its employees, no matter what level they occupy in the corporate structure. Thus the incentive for corporations to settle corporate crime cases.

Corporate criminal crime settlements with the United States government through the Department of Justice involve deferred on non-prosecution agreements. These come in a variety of forms and terms. The corporation may well pay a fine which can be quite large in some cases. The purpose of the fine is to deter future bad behavior by making it expensive. The corporation may also be required to institute internal programs intended to educate its employees about proper behavior to avoid future criminal investigations. Compliance programs can be a means to show that the corporation is serious of about fixing the problem that lead to the criminal allegations.

The primary effect of these settlements is to avoid a criminal conviction. usually for top corporate officials. It allows the corporation to put the criminal investigation in the past, with the hope that the corporation can move forward and restore any lost value. Without a settlement, the corporation is faced with either the bad publicity of criminal pleas, or even worse, a lengthy trial where the corporate behavior is showcased over an extended period of time. From a corporate viewpoint, neither is acceptable. A settlement is almost always the way to proceed.

The Department of Justice has been criticized for letting corporations avoid a criminal conviction. Whatever the public good in reaching settlements, it is certainly in the best interests of corporations to seek and take these agreements, and then move forward with their business.