When Prosecutors are the Little Guys: Recent Developments in Prosecuting Corporations

On 30 April 2015, Brandon Garrett gave a very lively and eye-opening All Souls seminar on some of the themes covered in his recently-published book, Too Big to Jail: How Prosecutors Compromise with Corporations (Harvard University Press, 2014).

Garrett began his presentation by noting that artificial persons can be responsible for very significant crimes. Using the example of an investigation into criminal wrongdoing by banking giant HSBC in the United States, he also showed the audience how clear the evidence of corporate crime can sometimes be.

In high-profile corporate cases, including the HSBC case, US prosecutors are increasingly making use of Deferred Prosecution Agreements (DPAs), in which the prosecution and the offender corporation agree on certain terms (including an admission of guilt, usually a fine, and some rehabilitative measures such as the appointment of new compliance officers) in exchange for eventually erasing the case from the docket. A British audience has reason to be interested in this narrative as DPAs are now being used in this country as well. A DPA may sound similar to a guilty plea, but no conviction is recorded. This difference is crucial, and not just for symbolic reasons. As Garrett explained, in many areas of enterprise in the US, a conviction means that the corporation will no longer be able to transact business. For instance, a bank convicted of money laundering in the US would automatically have its charter revoked in that country, and have to close up shop completely. Prosecutors engage in a variety of measures, including DPAs and charging under alternate statutes, in order to keep the offending business in good health. Garrett didn’t draw this parallel during the talk, but this series of contortions to avoid the automatic consequences attached to a conviction remind me of mandatory minimum sentences and the sometimes perverse effects of binding judicial discretion in sentencing.

In addition to explaining the mechanism and increasing prevalence of DPAs, Garrett also spoke about fines and other measures imposed on corporations. These often sound large, occasionally being in the billion-dollar range (or a mind-boggling US$9 billion for French bank BNP Paribas this week as part of a guilty plea). Nonetheless, Garrett’s emphasis seemed to be that the measures were in general not enough to deter corporate offending or to rehabilitate past offenders.

Garrett is an engaging speaker and the facts presented were fascinating. One missing element in the talk for me was that there was very little in the way of normative or theoretical comment. This isn’t to say that all research needs to have a normative element, but the way he spoke indicated that he had a strong opinion on what he was describing, but one that I felt was insufficiently explored in the talk. I was left wondering whether Garrett has proposals for reform or for future prosecutions, beyond a lucid explanation that these prosecutions are complicated politically as well as legally and that there aren’t clear-cut right answers in many cases. During the post-presentation discussion, Garrett opined that perhaps what’s really needed is more prosecution of individuals in connection with these corporate offences. That’s an interesting point and one that could use further study, but it doesn’t address the main subject of his talk, unless by undercutting it—if corporations aren’t too big to jail, they could be too irrelevant to jail. But I don’t think that this is Garrett’s real point, and it is certainly consistent to hold both that individuals ought to be prosecuted for their roles and that the corporate entity should be held accountable (as Garrett clearly does). Garrett’s great description of the current situation made me curious to hear his views on what corporate prosecutions and sentences ought to look like. I’m going to check out the book and see if I find some of the answers to these further questions there.

The next Criminology Seminar at All Souls College is with Dr Rachel Condry (Centre for Criminology, University of Oxford) and Dr Caroline Miles (School of Law, University of Manchester) on ‘Uncovering Adolescent to Parent Violence,’ on Thursday, 14 May 2015.