April, 2020

Versão em português

What is your opinion on compliance programs spread around the world from the North American experience?

Compliance programs have spread around the world.  Whether these compliance programs successful prevent or detect crime is more doubtful, because typically they are not tested. In my “Too Big to Jail” book I described how in the U.S., federal prosecutors often did not require that a company audit its compliance or require that a monitor independently assess it.  Indeed, prosecutors often discourage companies from making public reports of compliance audits. Greg Mitchell and I, in a new article, argue that compliance that is not tested should not be encouraged.

Corporations must comply with a dizzying array of laws and regulations. To accomplish this complex task, corporations increasingly turn not just to the legal department and outside counsel but also an in-house group composed of non-lawyer specialists who seek to educate and motivate personnel with respect to their obligations under the law and the corporation’s code of conduct. How can prosecutors, enforcers, companies, or the public know whether compliance is effective or merely cosmetic? In this Article, we argue that hope-based compliance — a mentality that leads insiders and outsiders to assess compliance programs by examining how many resources organizations are devoted to the effort and whether the programs appear well-intentioned or comply with accepted “best practices” within an industry — predictably arises from the incentives and practices evident under current laws.

We describe the “compliance trap”: that efforts to validate compliance are not encouraged by enforcers or regulators. Such entities should want companies to share sound compliance practices to improve standards in industry. Individual companies, however, have incentives not to share information about compliance failures, lest they risk liability. Nor do companies have strong incentives to share information about compliance successes, lest competitors use their strategies too. Rather than address this problem, regulators and enforcers have exacerbated it. We propose a set of legal reforms that would create the conditions for a move to evidence-based compliance. We describe a range of ways that companies can audit employees, using data analytics but also inexpensive and simple experimental approaches drawn from organizational psychology. We call for a scientific approach towards regulating compliance through testing, in which corporate compliance data must be made public, and empirically validated.

What is your point of view about the US Prosecutor’s Office effectiveness on dealing with corporate crimes?

In the aftermath of the Global Financial Crisis, people across the United States protested that “too big to jail” banks were not held accountable after the financial crisis. Little has changed, as I describe in a recently published article that updates data from my Corporate Prosecution Registry maintained by Duke and UVA Law SChools. Newly collected data concerning enforcement during the Trump Administration has made it possible to assess what impact a series of new policies has had on corporate enforcement. To provide a snapshot comparison, in its last twenty months, the Obama Administration levied $14.15 billion in total corporate penalties by prosecuting seventy-one financial institutions and thirty-four public companies. During the first twenty months of the Trump Administration, corporate penalties declined to $3.4 billion in total penal- ties, with seventeen financial institutions and thirteen public companies prosecuted. These trends build over time. In each year, blockbuster cases come and go, creating swings in fines. However, consistent with these data, this Article describes changes in written policy, practice, and informal statements from the Department of Justice that have cumulatively softened the federal approach to corporate criminals.

I also observe continuity between administrations. A rise in corporate declinations, for example, represents a continuation of Obama Administration policy. A decline in use of corporate monitors similarly reflects prior policy. The steady and low level of individual charging in corporate cases reflects an ongoing lack of success in efforts to prioritize individual prosecutions, exemplified by the 2015 “Yates Memo.” That policy, like others, has been formally relaxed. The series of DOJ corporate prosecution policy changes has also been accompanied by institutional shifts. For example, high-level vacancies within the DOJ and other enforcement agencies may compromise ability to coordinate resolution of complex cases. This Article concludes by proposing structural changes, such as independent corporate enforcement functions, to enhance capacity and prevent pendulum shifts in enforcement. How we handle corporate crime goes to the root of power imbalances in the economy that produced the financial crisis. If we still have not learned the lessons of the last financial crisis, the next one cannot be far ahead.

In your opinion, how can Academia and Criminological Research help in corporate crime prevention?

In the past, corporate prosecutions were not tracked in the United States.  My work, in creating a Corporate Prosecution Registry, has added more transparency to these massive prosecutions and some element of accountability.  It would be far better if the government itself tracked corporate crime, including the compliance process once companies are prosecuted. Academia can insist on an open science approach in which data is made public and empirically  validated methods are used to conduct compliance and detect wrongdoing.  Instead, under-resourced prosecutors have often settled cases on lenient terms and without careful oversight and monitoring.  The predictable result has been major corporate recidivism.