End of the Year Brings A Burst of Settlements With Justice Department
Friday, January 2, 2009
The Justice Department has reached more than a dozen business-related settlements since the presidential election, with more in the pipeline for January, prompting lawyers and interest groups to assert that companies are seeking more favorable terms before the new administration arrives.
The climate for business settlements could grow more harsh when Obama appointees seize the reins at the Justice Department, corporate lawyers say. They point to statements by Attorney General-designate Eric H. Holder Jr., who told an audience last month that he would expand the focus of federal prosecutors into corporate suites.
A review of 15 agreements involving corporations since early November suggests that much of the alleged misconduct dates back five years or more, provoking questions about why the cases took so long to mature and why resolutions are coming with only weeks left in President Bush's term.
"What they obviously are trying to do is take advantage of an administration that's deemed to be more friendly to business," said Cono R. Namorato, a Washington defense lawyer who ran the Internal Revenue Service's office of professional responsibility earlier in the Bush administration. "I know of no tax reason for doing it now."
Justice Department officials said there is nothing unusual about end-of-year settlements. They defend their record in investigating and prosecuting corporate misdeeds. In recent weeks, they announced indictments against five Blackwater Worldwide security guards for their role in a 2007 ambush that killed or injured 34 Iraqi civilians. Justice Department officials also rolled out their second-largest price-fixing settlement, a $585 million penalty shared by three companies that make high-tech liquid crystal display panels for computer monitors, televisions and cellphones.
"The department makes its enforcement decisions based solely on the facts and the law, after conducting a thorough investigation," spokesman Peter Carr said. "A look at previous months and years show a steady stream of cases that have been resolved by settlement or plea agreement. While the department reaches these kinds of agreements throughout the year, it's not unusual for parties to resolve enforcement matters by the end of the calendar year."
Since November, the Justice Department has announced 19 settlements or plea deals with companies, compared with 16 in the same time frame the year before. In 2006, department officials announced five business settlements in the same time frame.
Three lawyers who routinely represent companies before the Justice Department said they began to take notice shortly after the Nov. 4 election, when authorities announced a $725,000 environmental deal with Plantation Pipe Line. The number of settlements and plea agreements accelerated from there.
By mid-November, Britain's Aibel Group agreed to pay $4.2 million to resolve accusations that the oil and gas services company had flouted a probation agreement signed a year earlier, covering bribes its executives allegedly spread to Nigerian customs officials between 2002 and 2005.
A few weeks later came a case that authorities described as "unprecedented in scale and geographic reach." Siemens committed to pay $450 million in criminal fines, in a pact that left the German conglomerate eligible to bid for and win lucrative U.S. government contracts.
Two days before Christmas, Justice Department officials rolled out more settlements: a $1.7 million deal with Spartan Motors, which allegedly paid kickbacks to win a contract to make chassis for military vehicles; a $6.1 million deal with a subsidiary of Exxon Mobil, accused of violating the Clean Water Act in connection with a 15,000-gallon diesel oil spill in Massachusetts; and a $7.6 million pact with Yale University to settle charges that it overbilled federal agencies on research grants between 2000 and 2006.
Corporate lawyers and public interest groups pointed to several other reasons contributing to the burst in settlements, including a desire by businesses to avoid negative publicity by timing their deals to the holiday season, and a push by government attorneys to complete big cases before they leave for private-sector work.