Justice Dept. Urged To Revise Stance On Corp. Cooperation


	Print or Email This Page Justice Dept. Urged To Revise Stance On Corp. Cooperation Sept. 12, 2006 Dow Jones By Judith Burns WASHINGTON -(Dow Jones)- The U.S. Justice Department is revisiting a controversial policy to reward companies that cooperate during criminal investigations, but a senior agency official said any changes that would chill cooperation "would not be a good thing." Deputy Attorney General Paul McNulty told the Senate Judiciary Committee on Tuesday that corporations are anxious to cooperate with federal prosecutors and expect to be rewarded for doing so, with or without an explicit federal policy to that effect. In comments to reporters after the hearing, McNulty said the Justice Department is open to changes that "improve the process we have," but he raised concerns about inhibiting executives from sharing information with prosecutors. "Any changes in the policy which would discourage cooperation would not be a good thing," McNulty told reporters. Business and legal groups have been sharply critical of the Justice Department policy, outlined in a 2003 memo on business prosecutions by then-Deputy Attorney General Larry Thompson. In testimony to the Senate panel Tuesday, U.S. Chamber of Commerce President Thomas Donohue said the Thompson memo "emboldened federal prosecutors" to demand that companies and employees forgo basic rights, including the right to confidential discussions with lawyers, if the company wants credit for cooperating in an investigation. American Bar Association President Karen Mathis said the policy has eroded basic constitutional protections and is discouraging firms and individuals from talking to lawyers. The ABA complained in a letter to Attorney General Alberto Gonzales this spring, and a bipartisan group of 10 former Justice Department officials did the same last week, calling for a revised policy telling prosecutors that waiving attorney-client privilege and work-product protections "should not be a factor" in determining whether a company has cooperated with the government in an investigation. Senate Judiciary Committee Chairman Arlen Specter, R-Pa., agreed Tuesday that federal prosecutors should be neutral on corporate cooperation, saying he doesn't think anyone should get credit for waiving a constitutional right or be penalized for asserting it. He urged the Justice Department to revise its stance, saying he'd like to see "if we can solve the problem without legislation." McNulty said he doesn't believe the federal policy compels companies to waive attorney-client privileges, describing the Thompson memo as a nonbinding statement meant to help prosecutors decide whether to charge a company, with cooperation being only one of nine factors to be considered. He said federal prosecutors chiefly are interested in obtaining reports of internal corporate investigations into wrongdoing, not confidences shared with lawyers. "I really don't see this as the kind of coercive practice that is being described," McNulty said, adding that the perception of the policy "is different from the reality." Still, since fighting criminal charges can be a death sentence for companies, the government's policy to reward cooperation gives enormous leverage to federal authorities, testified former Enron Corp. task force head Andrew Weissmann, now a partner with the law firm Jenner & Block LLP in New York. Weissmann said the policy isn't interpreted uniformly, with some prosecutors seeking waivers of privileges only as a last resort, while others demand blanket waivers at the start of corporate probes as a short cut to information they could get through other means. Sen. Patrick Leahy, D-Vt., said he worries that "a dangerous culture of waiver" has taken hold, and he compared the Justice Department's stance to a "sledgehammer" that compels companies and employees to forgo legal rights. "What you're saying is, 'You either cooperate and give us what we want, or you're in deep trouble,'" Leahy complained. The policy also is under attack by federal judges. in a recent ruling, a federal judge in Manhattan struck down criminal charges against former KPMG employees accused of selling fraudulent tax shelters, ruling that it was unconstitutional for prosecutors to demand that KPMG only advance legal fees to those who cooperated with the investigation. McNulty said the Justice Department disagrees with the decision and is appealing it.
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