Surprise me! No High Level Prosecutions over the GFC???

This excerpt from a brilliant article by Jed S. Rakoff – from the New York Review of Books – is essential reading. I do look forward to comments from many denizens of The Pub.

(Image Credit: Throwing stones from the glasshouse)

The final factor I would mention is both the most subtle and the most systemic of the three, and arguably the most important. It is the shift that has occurred, over the past thirty years or more, from focusing on prosecuting high-level individuals to focusing on prosecuting companies and other institutions. It is true that prosecutors have brought criminal charges against companies for well over a hundred years, but until relatively recently, such prosecutions were the exception, and prosecutions of companies without simultaneous prosecutions of their managerial agents were even rarer.

The reasons were obvious. Companies do not commit crimes; only their agents do. And while a company might get the benefit of some such crimes, prosecuting the company would inevitably punish, directly or indirectly, the many employees and shareholders who were totally innocent. Moreover, under the law of most US jurisdictions, a company cannot be criminally liable unless at least one managerial agent has committed the crime in question; so why not prosecute the agent who actually committed the crime?

In recent decades, however, prosecutors have been increasingly attracted to prosecuting companies, often even without indicting a single person. This shift has often been rationalized as part of an attempt to transform “corporate cultures,” so as to prevent future such crimes; and as a result, government policy has taken the form of “deferred prosecution agreements” or even “nonprosecution agreements,” in which the company, under threat of criminal prosecution, agrees to take various prophylactic measures to prevent future wrongdoing. Such agreements have become, in the words of Lanny Breuer, the former head of the Department of Justice’s Criminal Division, “a mainstay of white-collar criminal law enforcement,” with the department entering into 233 such agreements over the last decade. But in practice, I suggest, this approach has led to some lax and dubious behavior on the part of prosecutors, with deleterious results.

If you are a prosecutor attempting to discover the individuals responsible for an apparent financial fraud, you go about your business in much the same way you go after mobsters or drug kingpins: you start at the bottom and, over many months or years, slowly work your way up. Specifically, you start by “flipping” some lower- or mid-level participant in the fraud who you can show was directly responsible for making one or more false material misrepresentations but who is willing to cooperate, and maybe even “wear a wire”—i.e., secretly record his colleagues—in order to reduce his sentence. With his help, and aided by the substantial prison penalties now available in white-collar cases, you go up the ladder.

But if your priority is prosecuting the company, a different scenario takes place. Early in the investigation, you invite in counsel to the company and explain to him or her why you suspect fraud. He or she responds by assuring you that the company wants to cooperate and do the right thing, and to that end the company has hired a former assistant US attorney, now a partner at a respected law firm, to do an internal investigation. The company’s counsel asks you to defer your investigation until the company’s own internal investigation is completed, on the condition that the company will share its results with you. In order to save time and resources, you agree.

Six months later the company’s counsel returns, with a detailed report showing that mistakes were made but that the company is now intent on correcting them. You and the company then agree that the company will enter into a deferred prosecution agreement that couples some immediate fines with the imposition of expensive but internal prophylactic measures. For all practical purposes the case is now over. You are happy because you believe that you have helped prevent future crimes; the company is happy because it has avoided a devastating indictment; and perhaps the happiest of all are the executives, or former executives, who actually committed the underlying misconduct, for they are left untouched.

I suggest that this is not the best way to proceed. Although it is supposedly justified because it prevents future crimes, I suggest that the future deterrent value of successfully prosecuting individuals far outweighs the prophylactic benefits of imposing internal compliance measures that are often little more than window-dressing. Just going after the company is also both technically and morally suspect. It is technically suspect because, under the law, you should not indict or threaten to indict a company unless you can prove beyond a reasonable doubt that some managerial agent of the company committed the alleged crime; and if you can prove that, why not indict the manager? And from a moral standpoint, punishing a company and its many innocent employees and shareholders for the crimes committed by some unprosecuted individuals seems contrary to elementary notions of moral responsibility.

These criticisms take on special relevance, however, in the instance of investigations growing out of the financial crisis, because, as noted, the Department of Justice’s position, until at least recently, is that going after the suspect institutions poses too great a risk to the nation’s economic recovery. So you don’t go after the companies, at least not criminally, because they are too big to jail; and you don’t go after the individuals, because that would involve the kind of years-long investigations that you no longer have the experience or the resources to pursue.

In conclusion, I want to stress again that I do not claim that the financial crisis that is still causing so many of us so much pain and despondency was the product, in whole or in part, of fraudulent misconduct. But if it was—as various governmental authorities have asserted it was—then the failure of the government to bring to justice those responsible for such colossal fraud bespeaks weaknesses in our prosecutorial system that need to be addressed.

465 thoughts on “Surprise me! No High Level Prosecutions over the GFC???

  1. We will have to bear the brunt of this most disgraceful act. We are at the mercy of a ship of fools sailing, like amateurs, into dangerous waters and they have no idea of the dangerous waters ahead.
    These pampered sons and daughters of pampered adults are but children in an adult world. Their brat-like behaviour is bringing shame to the national community. They are the the epitome of the vandalistic, delinquent children of the leisure classes: all presumption, no responsibility.

  2. When I see the faces of IPA people like Tim Wilson and Chris Berg, I ask: ‘Who are these children who think they have a clear picture of the political world and then proceed to give the most dumbarsed opinions of their perceptions!..jeezus!…they’re still shitting yellow!

  3. Seems work starts at 7:00

    Shades of the Civil Service?

    No Fiona…THAT time [7:00] is just for “appearence money” 🙂

  4. One of the regulars at the Seacliff Hotel used to say that he “liked to wake ‘naturally’ “……..when was that?…..” “oh…about 1pm.”

  5. Hopefully, our current ship of state will founder on the Scylla of the Fifth Estate or in the Charybdis of their own greed.

  6. And the Australian customs ship the Ocean Protector prepared to leave Singapore, understood to be carrying 10 large lifeboats that will be used to send asylum seekers back to Indonesia if their own boats are unseaworthy.


    Ocean Protector has been in Singapore for a couple of weeks, there has been a lot of chatter among boat watchers about what it was doing there. Now we know. The Abbott government sent it there to pick up those lifeboats. So this incredibly stupid brainfart is not a recent one, it’s been in progress for some time. Ocean Protector is supposed to patrol the Southern Ocean. During the winter it has been used for border protection duties. Not any more. Morrison and Abbott have it on full-time duty chasing asylum seekers. Or they did. Now it’s just a cargo ship, used to pick up lifeboats. It’s going to be a familiar sight in Singapore because we’ll need lots more lifeboats if this lousy government is going to intercept every boat, hand the passengers a free lifeboat and send them back. Remember, it’s the off-season for boats, things will start up again in a few months.

    Some information on Ocean Protector, from the previous government. Grab it while you can, it will most likely be taken down soon.

    Click to access SouthernOceanPatrolVesselACVOceanProtectorFactSheet.pdf

  7. The Ocean Protector is only 106 metres long and 21 wide. I wonder how big those lifedeathboats are.

  8. Well it all fits together now.

    Abott can kinda-sorta put up with a few boats arriving at Christmas Island, but boats arriving near Darwin – or anywhere else on the mainland – will not be tolerated.

    They made a song and dance about the one that arrived in Geraldton last year – remember the simple WA townsfolk, some in tears, telling us of their fear of invasion? – and weren’t going to let this one out of the bag.

    Ardent ship spotters knew something was up. Some of our ships were noted proceeding at speed either towards or out of Darwin at the time, but none of that mattered.

    No boat will reach the Australian mainland. Period.

    That’s what all the kerfuffle has been about.

  9. Maybe Ocean Protector is going to tow the lifeboats back to Australia. Or they could always stack them on the helipad.

  10. So now it’s possibly five boats turned or towed back in the last month.

    Australian Defence Force personnel involved in Operation Sovereign Borders have been warned not to reveal any details of what is happening on the oceans to Australia’s north, but The Australian has learned that two asylum-seeker boats were towed to Rote Island, near Indonesian West Timor, while the Indonesian crews of two, and possibly three, other vessels were persuaded to head home without being towed.

    Now we know what the lifeboats will coat us. $70,000 each. Plus the cost of having Ocean Protector hanging around Singapore for weeks.

    As Morrison has sworn on a stack of Bibles that the navy will not violate Indonesian territorial sovereignty by entering ther waters it’s clear that these lifeboats will not be crewed by naval personnel who can bring them back. They will be throw-aways. We will need more and more lifeboats.

  11. It looks like those lifeboats can’t be used unless Abbott wants to start a war with Indonesia. The Indonesians have got their act together and have ended the ‘It’s OK with the military’ lie Abbott, Morrison and Hurley have been pushing.

    Indonesia’s government and military close ranks against Australia’s boat turn-backs

    Indonesia’s government and military are closing ranks against Australia’s policy of turning back asylum seeker boats, after claims two boats were recently forced back to Indonesia.

    The Indonesian president’s office has backed his foreign minister’s rejection of Australia policy, saying turning boats back to Indonesia is “unhelpful”.

    And Indonesia’s military chief General Moeldoko, who was quoted in the Jakarta Post as saying he had “agreed” to Australia’s policy, now says his words have been “twisted”.

    Earlier this week General Moeldoko was reported as saying that his Australian counterpart, General David Hurley, called him to explain that Australia would be turning boats back.

    “I have agreed. Therefore, we don’t need to feel offended,” The Jakarta Post reported him as saying.

    But General Moeldoko now says he does not support Australia sending asylum seeker boats back to Indonesia.

  12. Those lifeboats should be pretty easy to sabotage, I would have thought. Maybe the Abbottistas are looking to create some kind of Tampa incident to rouse public anger against AS? I take it this lifeboat plan is supposed to look like some of of ‘generous’ gesture, to demonstrate that turning boats around is not the limit of what we do, that we don’t just abandon them at sea.

  13. While everyone is talikng about boats and Corgi Bernardi …….
    Christopher Pyne appoints critics of school curriculum to review system

    Education Minister Christopher Pyne has taken the first step towards reforming the national school curriculum, by appointing two staunch critics of the current system to head up a government review.

    On Friday, Mr Pyne announced that former teacher and Coalition advisor Kevin Donnelly and business academic Ken Wiltshire would lead the review, which is due to report back by mid-year.

    The curriculum review was part of the Coalition’s 2013 election platform and Mr Pyne has previously criticised what he describes as too little emphasis on ”the non-Labor side of our history”.

    In an opinion piece in The Australian newspaper on Friday, Mr Pyne added that ”concerns have been raised about the history curriculum not recognising the legacy of Western civilisation and not giving important events in Australia’s history and culture the prominence they deserve, such as Anzac Day”

    ‘Mr Donnelly is a former CoS for Kevin Andrews and he writes regularly for the Oz.. Enough said.
    Mr Wiltshire is a Liberal toady. After the 2010 election he wrote a nasty piece for The Oz demanding the independents support the Coalition. I’m not giving the link, you can Google for it if you are keen.

  14. “I don’t think David Hurley is emerging with much credit.”

    Maybe the major is not to blame. Maybe the Indonesian counterpart, said, I see where you are coming from, but I do not agree.

    Maybe this is what Hurley reported.

    The right doing as they always do, taking words out of a sente4nce and context, to convey what they want to hear.

    Same as when Ms. Gillard said there will be no carbon tax, but I will be addressing carbon emissions, by putting a cost on those emissions. My words.

    We will be keeping Gonski, but will be changing everything. Pyne today, setting up a new inquiry, seeking to change the curriculum and other teachers how to reach. Why not just follow the extensive report that Gonskin bought down. NO need for further inquiries. Once again, this government jettison the advice of experts. Following their own prejudices.

  15. It is no longer turning the boats back. It is doing what Abbott said they would not do under any circumstances, towing boats back

    Important difference thanks to Abbott’s statement last year.

    Abbott seems to be challenging Indonesia to take action, Is on the commercial airwaves again this morning.

    Wonder if there is really the votes he thinks on this issue. Maybe there is a danger, that Abbott could stir up a backlash against his actions. Will people really care or remember three years down the track. Will they be more concerned about what Abbptt has taken from them instead?

    Will the back the actions that Pyne is taking with the education of their kids. Suspect not.

    Something wrong with playing politics with the lives of refugees.

  16. Did the navy enter Indonesian waters, to get that close to Rote Island. What happens if the Indonesian navy diverts their ships in the area?

    I can see a ban on live import of beef coming on.
    What does Indonesia mean, when they say, if Abbott continues, both countries will suffer?

  17. Tony Abbott, Jakarta, 1 October 2013.
    “Can I just scotch this idea that the Coalition’s policy is or ever has been tow-backs. Our policy… is that we reserve the right to turn boats around where it is safe to do so. There is a world of difference between turning boats around in Australian waters and the Australian Navy towing them back to Indonesia.”

    Now we have a video proving that our navy is towing back boats. It can be added to the unfortunate incident last November when the bow of an asylum seeker boat was ripped off while it was being towed. Scott Morrison refused to answer questions asked in parliament.

  18. The real story, is not the one Abbott is out promoting, but what Pyne is up to.

    Towing back boats are little more than a smoke screen. This government is so obsessed with the issue, they care not what damage they cause elsewhere.

    The PNG should be taking all their attention,. Making that work, and working with all in the area to come up with a regional solution.

    Reversing their decision to only take 13.700 refugees would be a good place to start. The best way of convincing people not to get on leaky boats, is to give them some hope of a better life. I am sure most are happy to wait, if there is some possible future for them and their kids.

    Indonesia is correct. Towing back boats is not the answer. Much more still needs to be done.

    Where are all those, who stood up in both houses, with tears in their eyes, condemning the Malaysian Soultion put forward by PM Gullard.

  19. If the boats have slowed down, according to Morrison, could it mean eventually that people who wish to seek asylum – Iraqis, Iranians, Pakistanis, etc – will no longer travel to Indonesia? I mean, once these people know the full extent of Morrison’s policy, they might think twice before spending all that money to the smugglers. This in turn might suit the Indonesian govt which might then approve of Morrison’s towing back solution.

  20. If God is The Creator it has a few things to answer for, including this:

    Jewel wasps implant a stinger into the brain of cockroaches which turn them into zombies. It then uses one of the cockroach’s antenna to lead it to its nest, where it is then barricaded in with the wasps’ eggs. The larvae of the wasp then, when hatched, eat the cockroach alive in a specific order to keep the insect alive because cockroach meat goes off and loses its warmth very quickly.


  22. Fed up

    Emu Creek in W.A. will possibly hit 50 C today whilst coastal Onslow has just melted after two days of 48 C + temperatures.

  23. The fourth estate seems to be questioning a few of The Idiot’s policies and actions. Pity they didn’t listen to what the Fifth Estate was saying long before the election, or analyze and report it.

  24. 2gravel,

    Indeed I did. Good to have something interesting on the ABC during the silly season.

  25. I’ve always been strongly opposed to home schooling unless it’s necessary for reasons of distance, health and a couple of other legitimate purposes. I’ve always thought the majority of people who did it were simply keen to keep their kids from what they saw as contamination by ideas tthey didn’t like, or were religious nutters.

    But now I’m changing my mind. If I had school aged kids I’d be looking into home schooling as a way to keep my kids from the neo-Nazi indoctrination Pyne obviously has in mind.

    Here’s a thought. Abbott is going to push state schools towards independence. What’s to stop any such school becoming a refuge for those who want their kids to get a decent, proper education that isn’t founded on the views of the Liberal Party. Could we be heading for community-based schools that secretly teach subversive ideas?

  26. Government urged to turn back whaler

    Anti-whaling group Sea Shepherd is calling on the federal government to ensure a Japanese whaling ship headed towards an island near Tasmania doesn’t enter Australian waters.

    The Yushin Maru No.3, one of three harpoon ships, is about 200 nautical miles from Australia’s exclusive economic zone around Macquarie Island, about 1500 kilometres south-east of Tasmania, Sea Shepherd says.

    And just how is Greg Hunt supposed to do that? Buzz the ship with his special plane? The only suitable ship we have for whaling patrol is being used to ferry lifeboats from Singapore, it’s no use. Labor managed to stop a previous ship by taking the sensible action of talking to the Japanese government. I can’t see Grunt doing that. Maybe Tony the Warrior could hop down south on a jetski and turn the thing around all by himself.

  27. Somewhere, inside that “broad church” that is the Liberal Party…perhaps in the sacristy..inside a cupboard in the sacristy..behind the old dusty vestments, in a shoe-box, at the back of the cupboard, underneath a clutter of hymn-music sheets….is the husk, the shell of the soul of the Party founded on some vague principles of decency, honesty and the “forgotten majority” of Australia…an inside that shell is left a small “voice”..barely now a whisper that is crying out for it’s basic decency to be heard….BUT!…are there still ears within the Liberal cogniscenti open to heed it’s cry!…or will all decency that was left in the Party be extinguished forever?

  28. Shame on each of you Pubsters. You are endangering national security with your constant and unrelenting argument against Government policy and endeavour against all those illegals seeking to invade our shores. None other than our Prime Minister says he will not let “idle curiosity” of some Australians put our security at grave risk. For the sake of our national standing and all our futures, please do as he asks.

  29. I think any Liberal Party decency was chucked out with the unwanted rubbish a long time ago. Malcolm Fraser might have found the last shreds, perhaps when he was cleaning up after he resigned from the party in 2009.

    Now he has actually called for us to rebel, last month, with this tweet.

    Morrison retreats from media on asylum seekers. When will people rebel, too many sins done in our name byGov— Malcolm Fraser (@MalcolmFraser12) December 28, 2013

  30. Gigeline…; “”

    That’s easy for you to say!

  31. jaycee

    Le Monde is not quite up to date with what you and I already know. The paper is talking about the boats turned back but not Abbott’s intention of buying life-boats. So you’re not missing anything. All I wanted to show is that the world outside Australia is keeping in touch with this indecent govt.

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