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US: 30 Former Officials Became Corporate Monitors


by ERIC LICHTBLAU and KITTY BENNETTThe New York Times
May 23rd, 2008

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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