DOJ Issues Guidelines on Corporate Monitors

The Department of Justice recently issued new guidelines for the selection of corporate monitors in deferred prosecution agreements with companies accused of breaking the law.

A March 7 memo drafted by former acting deputy attorney general Craig Morford sets forth nine basic principles governing the selection and scope of duties of corporate monitors. From now on, prosecutors will be required to consult with U.S. attorneys, the Criminal Division, and the Office of the Deputy Attorney General before selecting monitors, who must be selected from a pool of at least three candidates. The selection must be based on merit, with an emphasis on avoiding potential or actual conflicts of interest. Finally, the government must "obtain a commitment" from the company that it will not employ or be affiliated with the monitor for at least one year after the monitorship ends. (The memo does not mention the fact that corporate monitors are paid--often quite handsomely--by the company. In fact, the guidelines are completely silent on the issue of monitor compensation, even though it was this very issue that caused a public outcry and spurred Justice to act.)

Readers of this blog might be familiar with the events leading up to the new guidelines. As POGO noted last December and again in January, U.S. Attorney Christopher Christie raised eyebrows last year with his selection of his former boss, ex-Attorney General John Ashcroft, to be the monitor of a medical supply company Christie's office prosecuted for fraud. The arrangement will net Ashcroft and his consulting firm up to $52 million.

Hearings on this issue continue in Congress. Ashcroft was scheduled to testify today before the House Judiciary Subcommittee on Commercial and Administrative Law. In addition, both the House and Senate Judiciary Committees have requested a GAO inquiry into deferred prosecution agreements and corporate monitor appointments, and lawmakers have sent letters of inquiry to Attorney General Michael Mukasey.

POGO welcomes the additional oversight of corporate monitors and deferred prosecution agreements, but we hope it doesn't draw attention away from a more important goal: keeping corporations from breaking the law in the first place.