Corporate Crime Probes To Get New Guidelines

By Carrie Johnson
Washington Post Staff Writer
Thursday, July 10, 2008

Justice Department officials yesterday agreed to revise guidelines that govern how prosecutors investigate corporate crimes, handing a significant victory to business groups and defense lawyers who claim the existing policy tramples on defendants' rights.

Under intensifying pressure from lawmakers who threatened to pass legislation that would limit prosecutors' authority, Deputy Attorney General Mark Filip assured the Senate Judiciary Committee that he will move forward with his own overhaul.

Filip is preparing revisions to the guidelines, known as Principles of Federal Prosecution of Business Organizations, after years of criticism from the U.S. Chamber of Commerce, the American Civil Liberties Union and the National Association of Criminal Defense Lawyers.

The groups argue that prosecutors have gone too far in their effort to police crimes on Wall Street and in corporate suites. Citing the collapse of accounting firm Arthur Andersen after it was charged with obstructing justice six years ago, business leaders say they have little choice but to yield to government demands.

In another prominent case, U.S. District Judge Lewis A. Kaplan ruled that prosecutors had violated the rights of former officials at KPMG, who had been accused of marketing abusive tax shelters, by pressing the accounting firm to stop paying the employees' legal fees. The judge ultimately dismissed indictments against several defendants. That ruling is on appeal.

Filip sent a letter to Sens. Patrick J. Leahy (D-Vt.) and Arlen Specter (R-Penn.) yesterday setting out his proposal, which is considered a significant concession by lawyers who have closely followed the controversy. Internal changes at the Justice Department, Filip wrote, "are preferable to any legislation, however well intentioned and diligently drafted."

The new guidelines will direct prosecutors to consider whether businesses under scrutiny have disclosed relevant facts about wrongdoing, rather than award credit based on a business's agreement to waive attorney-client privilege. The revised policy also would make clear that when evaluating whether companies have cooperated with a government investigation, prosecutors will not take into account whether companies have paid attorneys' fees for employees or whether they have refused to fire or punish workers.

Pete Lawson, a lobbyist for the Chamber of Commerce, said the Justice Department proposals do not go far enough, in part because they would not apply to government investigators at the Securities and Exchange Commission and the Department of Housing and Urban Development. The changes, he said, would mark the fifth adjustment to business guidelines in the past 10 years, underscoring the need for Congress to intervene.

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