Monitorships are a common part of the suite of sanctions for corporate misconduct. Prosecutors show an increasing interest in actively reforming corporate criminals and seem to favour using monitors for the job. Judges, too, can and do impose sentences that involve monitor-directed reform. The role of the corporate monitor, in light of its new-found prominence, has come under increasing scrutiny by academics. The general tenor of the resulting discourse has been one of concern, namely that monitors do too much or too little, the wrong thing, or the right thing in the wrong way. Corporate lawyers and academics generally incline towards the efficiencies of private ordering, which is reflected in their preference for relatively hands-off sanctions, such as fines. Monitor-directed corporate reform is anything but hands-off.
This chapter, however, sounds a relatively rare note of enthusiasm for the criminal justice potential of the corporate monitor. When private ordering becomes corrupted by familiar pathologies of the organisational setting – agency costs, collective action barriers or ineffective information channels – a more hands-on approach may be the most effective remedy. As instruments of criminal justice, monitors and the promise of reform they bring should be evaluated in light of the goals of corporate criminal law. As argued below, monitors may be uniquely situated as the most promising agents for achieving the goals of corporate criminal law (see ‘Criminal justice advantages of monitors and reform’). In fact, when corporate monitors are used effectively, they may obviate the need for any other form of criminal sanction (see ‘Implications of monitorships for other sanctions’). To achieve these goals, prosecutors, judges and monitors must bear in mind some of the unique weaknesses of monitorships as a criminal justice solution (see ‘Addressing the unique criminal justice challenges of monitorships’).
Criminal justice advantages of monitors and reform
Criminal law finds itself in the embarrassing position of having punished corporations for more than a century without a defensible theory of what corporate punishment is supposed to accomplish. Consequently, corporate sanctions often involve a range of terms grasping ineffectively at crossed purposes. A more effective approach would adopt a single coherent theory of corporate justice. The main alternatives that academics have embraced are retribution and deterrence. As explained below, neither is suitable to the corporate context. While corporate rehabilitation is rarely discussed as a stand-alone goal of corporate punishment, it alone offers a coherent purpose for corporate criminal law. With rehabilitation comes the crucial role of the corporate monitor.
According to retributive theories of punishment, criminals should suffer their just deserts. Retributivist themes are prominent in public and political discourse about corporate wrongdoing. Retributivism is socially salient owing to a feature of human psychology that disposes people to see corporations as (what cognitive scientists call) ‘entitative’ groups. Once viewed as entities rather than mere collections of people, these groups occupy a similar place in human cognition to other moral agents. This means that people are disposed to blame and wish harm upon corporations that behave in ways people perceive to be wrong.
The trouble with retributivism as a framework for corporate punishment is that corporations cannot experience suffering. Since corporations have ‘no body to be kicked’, the punishment the law imposes typically takes the form of monetary fines. But fines flow through the corporate fiction to harm shareholders and employees, who, more often than not, will be innocent of their corporation’s misconduct. Shareholders and employees, as natural people, do suffer. So the unresolved paradox of retributive corporate punishment is that the bulk of the suffering that corporate punishment inflicts affects those who do not deserve it.
Deterrence as a framework for corporate punishment has a similarly fundamental shortcoming. Corporate sanctions, according to deterrence theorists, are supposed to alter corporate incentives so that criminal conduct becomes unappealingly costly. Corporations may seem to be particularly appropriate targets for deterrence because they excel at the sort of cost–benefit analysis that deterrence theory relies on. However, just as corporations do not suffer, they do not have the psychological structures capable of supporting independent incentives. People sometimes say that corporations ‘want’ profit but this is just shorthand for pointing out that the individuals who own and operate corporations want profit. Since corporations do not have their own incentives, there is no direct mechanism for corporate sanctions to have a deterrent effect.
It might be possible to deter corporations indirectly by targeting the individuals who act on their behalf. These individuals have their own incentives, yet corporate punishment is a poor tool for getting at them. Each shareholder and employee suffers, at most, a fractional share of any corporate-level sanction. These diluted sanctions cannot hope to outweigh whatever private gains – reputation, bonus, promotion – induce individual employees to commit crime. Deterrence theory and corporate fines cannot overcome the inescapable economic fact of agency costs. Indeed, available empirical evidence shows that corporate fines are ineffective at reducing corporate misconduct.
Retribution and deterrence both fail because they get lost in the fiction that corporations are people. These two theories forget that corporate ‘suffering’ and ‘incentives’ are just as illusory as the corporate ‘people’ who are said to have them. Rehabilitation is different. It offers a framework within which there is something corporate sanctions can actually achieve without assuming corporations have human psychological attributes – preventing corporate recidivism and modelling good corporate citizenship.
Organisational theorists have long recognised that corporate-level features (culture, processes and procedures, compensation rubrics, etc.) influence how employees behave. Corporate culture in particular has garnered the attention of policymakers and academics in business and law. Some aspects of corporate culture are, as with culture generally, premised on shared understandings, practices and histories that bring some features of the environment to social salience. Other factors that influence corporate culture include a corporation’s hierarchy, goals and policies, treatment of prior offences, efforts to educate employees on compliance with the law and compensation scheme. Corporate culture affects how employees behave. For example, a high-pressure environment oriented towards quotas and production goals with little emphasis on legal or ethical limits can foster malfeasance, even among individuals not otherwise disposed to it.
Compliance programmes are another feature at organisation level that influences the occurrence (and recurrence) of crime within a corporation. By definition, compliance programmes seek to prevent misconduct within corporations. They involve formal operational procedures designed to prevent, detect and remedy criminal conduct. The sorts of techniques currently emphasised in compliance literature are mostly common sense: ‘promulgation of codes of behavior, the institution of training programs, the identification of internal compliance personnel and the creation of procedures and controls to insure company-wide compliance with legal mandates’. But they need not stop there. Some scholars are calling for a more progressive, data-driven and technically sophisticated approach to compliance.
If criminal corporations have criminogenic traits – such as defective corporate culture or poorly structured compliance – these are distinctly corporate features that the criminal justice system can actually work on. For this reason, corporate rehabilitation is uniquely situated as a framework for corporate punishment. As argued in the ‘Implications of monitorships for other sanctions’ section below, it is a criminal justice goal that everyone can endorse.
In the effort to rehabilitate corporations, monitors have a crucial role. The fact that misconduct has taken place within a corporation is itself likely evidence of some organisational deficiency. The pervasiveness of the misconduct, the corporation’s history of that type of misconduct and any involvement of higher-ranking corporate officers are all factors that have a bearing on the magnitude of the deficiency. The question then concerns how it can be repaired. The corporation cannot be left to fix its own defects. It was already entrusted to obey the law upon incorporation and yet the defects still arose. The deficiency may have come about by design – perhaps some higher-ranking managers stood to benefit from the misconduct – but defects may also arise inadvertently because of incompetence, lack of will, inattention or poor communication about where risk resides. Whatever the case, the corporate structure and those running it were insufficient to keep the corporate house in order. Such a situation calls for an external party, with different expertise and incentives, and with the power to implement reform. And so, enter the monitor.
Implications of monitorships for other sanctions
When judges and prosecutors impose a corporate monitorship, it is typically alongside other corporate sanctions. Ideally, the various sanctions should hang together as a coherent, mutually reinforcing punitive package. Getting to the question of coherence presupposes that there is some legitimate function the other sanction terms need to perform. So it is worth asking, if monitors can effectively rehabilitate criminal corporations (see ‘Addressing the unique criminal justice challenges of monitorships’, below), is there any criminal justice residue for other penalties to address?
The answer is likely to be ‘no’. As already discussed in the ‘Criminal justice advantages of monitors and reform’ section, it is far from certain that there are any legitimate corporate criminal justice goals aside from rehabilitation. To the extent that other goals, such as modified versions of retribution and deterrence, should still have some purchase in criminal law, corporate rehabilitation may be the best way to achieve them too.
Consider deterrence. As already argued, corporate fines are ineffective at deterring corporate misconduct because they cannot single out the individual employees whose incentives matter. Coerced reform, however, is also something corporations seek to avoid, especially when authorities appoint monitors to oversee it. Presumably this is because corporations are particularly averse to the intervention of external parties. So the threat that monitors pose to corporate autonomy has its own deterrent effect. What is more, unlike fines, intervention by a monitor strikes directly at the individual autonomy interests of the employees within a corporation who are in the best position to prevent corporate misconduct. Monitors, then, can accomplish what corporate fines cannot – targeted deterrence.
Most deterrence theorists do not care about deterrence for its own sake but for the ultimate goal of reducing the incidence of corporate crime. Here, reform and monitorships can beat typical deterrent sanctions at their own game. Successful rehabilitation directly reduces the incidence of corporate crime by forcing corporations to restructure operations so as to minimise the risk of recidivism. Deterrent sanctions hope to prevent crime indirectly by adjusting corporate incentives. Corporations whose goal is to avoid future sanctions have two options about how to proceed. They might choose to invest in reforming themselves and preventing future offences. This is the option that deterrence theorists hope corporations will take. But corporations might also choose to invest in better ways of concealing future offences. Which option will be in any corporation’s best interest – reform or conceal – will depend on contingent circumstances. When used effectively, monitors take the second option off the table – criminal corporations have no choice but to reform as their monitors direct.
Using monitors to implement reform may also vindicate the underlying value that retributivists care about in corporate criminal law. As already discussed, a straightforward translation of traditional retributivism to the corporate context is nonsensical. It would require, impossibly, that corporate criminals suffer for their crimes. A modified version of retributivism may be more appropriate, one that sees punishment as communicating society’s condemnation and helping to establish standards for appropriate behaviour. On this expressive form of retributivism, corporate punishment is a way for society to repudiate corporations that unduly prioritise profit over individual or social interests.
To the extent that authorities have a retributive goal with corporate punishment, it must be responsive to the public’s politically powerful demand for condemnation. If that is right, retributivists should want to assure that their approach to corporate punishment draws on whatever methods best align with and express this condemnatory impulse. An impressive body of evidence suggests that the human psychology of blame responds to the characterological traits of offenders that produce bad action rather than merely to bad action itself. This would suggest that people care most – morally speaking – about the organisational defects that encourage, facilitate or permit employee misconduct. Coercively reforming these should be the best way to satisfy the need society has to blame corporate malfeasance. Fines are too easily dismissed as a cost of doing business. With better publicity about how monitorships work and what they accomplish, the public might come to see them as the most fitting vehicle for shared retributive sentiments.
Addressing the unique criminal justice challenges of monitorships
Monitorships and corporate reform introduce a unique set of criminal justice challenges. While calculating the right size of a fine for retributive or deterrent purposes may be difficult, imposing a fine should be relatively easy. The magnitude of the fine conveys the retributive message and the deterrent effects (i.e., how to avoid another fine in the future) are left for the corporate target to sort out for itself. Data, though, has suggested that federal authorities are actually not very good at ensuring that fines imposed on corporations are paid. If the simple act of collecting a fine poses a challenge, what can we expect by way of follow-through on the much more complicated process of imposing reform through corporate monitorships? The fact that the US Department of Justice (DOJ) has only once found a corporation out of compliance with a pretrial diversion agreement (through which prosecutors typically impose monitorships) is not encouraging. All the beneficial criminal justice effects of monitorships can materialise only if the monitorships are well designed and properly implemented.
The inept implementation of prosecution-imposed monitorships is illustrative of a broader problem. Prosecutors lack the expertise necessary to design effective monitorship terms and programmes of corporate reform. This is reflected in the open-ended nature of the reforms prosecutors require in pretrial diversion agreements. This is not because of any aversion prosecutors may have to detail. The terms of monitorships are quite specific when it comes to compensation, length of appointment, powers and reporting. However, so far as substance is concerned, prosecutors tend to give monitors carte blanche to design and implement reforms. Though accountability should be assured through the regular reports monitors must send to prosecutors, the latter lack the experience necessary to evaluate them properly. In any case, these progress reports effectively function as self-graded report cards, since the monitors are reporting on their own handiwork.
To a large extent, the lack of direction prosecutors provide to monitors is symptomatic of a broader problem with monitors and corporate rehabilitation – there is global ignorance about how to reform corporations and what effective compliance looks like. To be sure, the base of knowledge among organisational scientists and business scholars is expanding rapidly but it is far from complete. Efforts to advance the understanding of corporate compliance are stunted by the fact that monitors’ reports are generally withheld from the public. As a result, the actual details and results of monitors’ efforts at reform remain secrets between corporate criminals and prosecutors. There is no evidence that prosecutors are keeping any kind of scorecard. Shockingly, after decades of relying on corporate monitors to help rehabilitate corporations, the US Government Accountability Office concluded that the ‘DOJ . . . has no measures to assess their effectiveness’.
These vulnerabilities of monitorships suggest some general policy changes that could help monitors achieve their criminal justice objectives. It should go without saying that monitors should be compliance experts in the relevant industry. This seemingly obvious point calls into doubt the DOJ’s habit of appointing former prosecutors as monitors. Further, even with expert monitors, authorities should do more to direct monitors about the types of reforms that would best further criminal justice goals. Currently, the DOJ ‘has no formal guidelines for corporate compliance programs’. Overly detailed guidelines would probably be counterproductive, given the idiosyncratic compliance needs of any particular corporate criminal. However, the half-baked format of present monitor provisions suggests the DOJ should draw more generously from the ‘considerable experience [that regulatory agencies have] with compliance programs’.
While present-day organisational science is far from complete, all legal authorities should be drawing on the most up-to-date insights. Present indications are that prosecutors and judges are largely ignorant of recent data and technologies. By tying projects of reform to the best present-day understandings of what works, authorities can maximise the prospect that monitors will succeed in rehabilitating corporations. A data-driven approach would also help to secure more cooperation and confidence from the corporations who are undertaking the effort and expense of complying with monitors’ instructions.
In addition to having more detailed and informed terms for monitorships, more effort should be made to make monitors’ progress reports publicly available. Part of the rationale behind keeping reports secret is to protect corporate business secrets. These should be protected. However, to the extent not absolutely necessary for that goal, publicising monitor reports would have three distinct advantages. First, it would help advance organisational science. With more available data about what corporations have tried in various industries, scholars and authorities could get more insight into what works and what does not. Once these insights filter into the work that monitors undertake, the prospect for successful reform would improve. Second, publicised reports would give the public more exposure to and a better understanding of what monitorships involve. With this, the public may come to see that monitorships adequately satisfy the expressive interests society has in corporate criminal justice. Third, publicised reports may help authorities to keep tabs on monitors. Prosecutorial follow-through is an enduring weakness of corporate sanctions. Bringing the light of day to monitor’s reports could effectively crowdsource the work by allowing the public and media to follow a corporate criminal’s progress towards reform.
1 Mihailis E Diamantis is an associate professor at the University of Iowa, College of Law.
2 Lisa Kern Griffin, ‘Inside-Out Enforcement’ in Prosecutors in the Boardroom: Using Criminal Law to Regulate Corporate Conduct, 110, 119 (Anthony S Barkow and Rachel E Barkow, eds., 2011) (‘Most DPAs mandate remedial measures, including prosecutor-designed compliance programs and, in some cases, personnel changes and structural reforms.’).
3 id., at 119 (‘About half of all DPAs also include monitoring provisions that effectively install government representatives within corporations to review and evaluate internal controls.’).
4 US Sentencing Guidelines, 8D1.1(a)(6) (providing judges with broad discretion to design terms of corporate probation ‘to ensure that changes are made within the organization to reduce the likelihood of future criminal conduct’).
5 Vikramaditya Khanna, ‘Reforming the Corporate Monitor?’ in Prosecutors in the Boardroom: Using Criminal Law to Regulate Corporate Conduct, 226, 230 (Anthony S Barkow and Rachel E Barkow eds., 2011) (‘courts have relied on a variety of supervisors, including trustees in bankruptcy, corporate probation officers and special masters’).
6 See generally Prosecutors in the Boardroom: Using Criminal Law to Regulate Corporate Conduct (Anthony S Barkow and Rachel E Barkow, eds., 2011); Vikramaditya Khanna and Timothy L Dickinson, ‘The Corporate Monitor: The New Corporate Czar?’, 105 Mich. L. Rev. 1713 (2007).
7 See John Hasnas, ‘The Centenary of a Mistake: One Hundred Years of Corporate Criminal Liability’, 46 Am. Crim. L. Rev. 1329 (2009).
8 See Immanuel Kant, Metaphysical Elements of Justice, 138 (John Ladd trans., 1999); Stanley I Benn, ‘Punishment’, in 7 The Encyclopedia of Philosophy, 29, 30 (Paul Edwards ed., 1967) (noting that retributivists maintain that ‘the punishment of crime is right in itself, that it is fitting that the guilty should suffer, and that justice, or the moral order, requires the institution of punishment’); Andrew Weissmann and David Newman, ‘Rethinking Criminal Corporate Liability’, 82 Ind. L. J., 411, 429 (2007) (‘The corporation that transgresses that boundary can be as subject to retribution as an individual.’)
9 See Miriam Hechler Baer, ‘Choosing Punishment’, 92 B. U. L. Rev., 577, 612 (2012) (‘The public has increasingly registered greater moral outrage in response to corporate governance scandals. Moral outrage, in turn, fuels retributive motivations and therefore supports those institutions best poised to take advantage of such motivations.’ ).
10 Mihailis E Diamantis, ‘Corporate Criminal Minds’, 91 Notre Dame L. Rev., 2049, 2077 to 2080 (2016).
11 See Dynamic Image Techs, Inc v. United States, 221 F.3d 34, 37 n.2 (1st Cir. 2000) (‘corporations, unlike natural persons, have no emotions’).
12 John C Coffee Jr, ‘No Soul to Damn: No Body to Kick: An Unscandalized Inquiry into the Problem of Corporate Punishment’, 79 Mich. L. Rev., 386, 386 (1980) (footnote omitted) (attributing the quote to Lord Chancellor Baron Thurlow).
13 See Texas Trading & Mill. Corp v. Fed. Republic of Nigeria, 647 F.2d 300, 312 (2d Cir. 1981), overruled by Frontera Res. Azerbaijan Corp v. State Oil Co of Azerbaijan Republic, 582 F.3d 393 (2d Cir. 2009) (‘Unlike a natural person, a corporate entity is intangible; it cannot be burned or crushed. It can only suffer financial loss.’).
14 See Albert W Alschuler, ‘Two Ways To Think About the Punishment of Corporations’, 46 Am. Crim. L. Rev., 1359, 1366, 1367 (2009) (‘This punishment is inflicted instead on human beings whose guilt remains unproven. Innocent shareholders pay the fines, and innocent employees, creditors, customers, and communities sometimes feel the pinch too.’)
15 See Darryl K Brown, ‘Street Crime, Corporate Crime, and the Contingency of Criminal Liability’, 149 U. Pa. L. Rev., 1295, 1325 (2001) (‘Corporate criminal law . . . operates firmly in a deterrence mode.’); Cindy R Alexander and Mark A Cohen, ‘The Causes of Corporate Crime: An Economic Perspective’ in Prosecutors in the Boardroom: Using Criminal Law to Regulate Corporate Conduct, 11, 14, 15 (Anthony S Barkow and Rachel E Barkow eds., 2011) (‘Within [deterrence theory’s] rational-choice “deterrence” framework, individuals weigh the costs and benefits of crime-related activity against the expected sanction to maximize their private utility under the constraints of the organization in which they find themselves (or select into).’); Jennifer Arlen, ‘The Potentially Perverse Effects of Corporate Criminal Liability’, 23 J. Legal Stud., 833 (1994).
16 Harvey M Silets and Susan W Brenner, ‘The Demise of Rehabilitation: Sentencing Reform and the Sanctioning of Organizational Criminality’, 13 Am. J. Crim. L., 329 (1986).
17 See Lynn Stout, ‘The Problem of Corporate Purpose’, 48 Brookings Governance Stud., 1, 5, 7 (2012).
18 See Alexander and Cohen (footnote 8 15, above), at 15 (examining causes of corporate crime ‘through the lens of an economic model in which corporate crime is the outcome of decisions by rational utility-maximizing individuals who have the ability to incur criminal liability on behalf of the corporation’).
19 See Cindy R Alexander and Mark A Cohen, ‘Why Do Corporations Become Criminals? Ownership, Hidden Actions, and Crime as an Agency Cost’, 5 J. Corp. Fin., 1 (1999).
20 Alexander and Cohen (footnote 15, above), at 24 (‘There is little evidence that increasing the magnitude of monetary sanctions has a deterrent effect.’).
21 See Int’l Shoe Co v. Washington, 326 U.S. 310, 316 (1945) (‘the corporate personality is a fiction, although a fiction intended to be acted upon as though it were a fact’).
22 See Mihailis E Diamantis, ‘Clockwork Corporations: A Character Theory of Corporate Punishment’, 103 Iowa L. Rev., 507 (2018).
23 I am not aware of statistics for corporate recidivism and it is likely they would be unreliable in light of the very small fraction of corporate crime that is ever caught. Recidivism rates for individual white-collar criminals are very high. See Mihailis E Diamantis, ‘White-Collar Showdown’, 103 Iowa L. Rev., Online 320, 328 to 329 (2017).
24 e.g., Fiona Haines, ‘Corporate Regulation’ 25 (1997) (‘Organizational culture forms the ‘touchstone’ by which individuals behave and act.’); Martin L Needleman and Carolyn Needleman, ‘Organizational Crime: Two Models of Criminogenesis’, 20 Soc. Q., 517 (1979) (introducing and exploring the concept of crime-facilitative corporate systems in which participants are not compelled to perform illegal acts, but rather face extremely tempting structural conditions that encourage or facilitate crime).
25 US Dep’t of Justice, United States Attorneys’ Manual, 9-28.600 (2008) <https://www.justice.gov/archives/usam/archives/usam-9-28000-principles-federal-prosecution-business-organizations> (‘A corporation, like a natural person, is expected to learn from its past mistakes. A history of similar misconduct may be probative of a corporate culture that encouraged, or at least condoned, such misdeeds, regardless of any compliance programs.’)
26 J P Cornelissen et. al., ‘Social Identity, Organizational Identity and Corporate Identity: Towards an Integrated Understanding of Processes, Patternings and Products’, 18 Brit. J. Mgmt., S1, S7 (2007) (‘Among the most important traits identified by scholars are those relating to strategy, structure, culture and company history.’); see T C Melewar and E Karaosmanoglu, ‘Seven Dimensions of Corporate Identity: A Categorization from the Practitioner’s Perspectives’, 40 Eur. J. Mktg., 846 (2006).
27 Pamela H Bucy, ‘Corporate Ethos: A Standard for Imposing Corporate Criminal Liability’, 75 Minn. L. Rev., 1095, 1099, 1100 (1991); Brent Fisse, ‘The Attribution of Criminal Liability to Corporations: A Statutory Model’, 13 Sydney L. Rev., 277 (1991); Ann Foerschler, ‘Comment, Corporate Criminal Intent: Toward a Better Understanding of Corporate Misconduct’, 78 Cal. L. Rev., 1287, 1300 to 1302 (1990); Jennifer Moore, ‘Corporate Culpability Under the Federal Sentencing Guidelines’, 34 Ariz. L. Rev., 743, 759, 760 (1992).
28 See Edwin H Sutherland, White Collar Crime (1949).
29 Bucy (footnote 27, above), at 1101.
30 Alexander and Cohen (footnote 15, above), at 18 (‘the corporation can influence the probability of internal detection and punishment’).
31 e.g., E Scott Reckard, ‘Wells Fargo’s pressure-cooker sales culture comes at a cost’, Los Angeles Times (21 December 2013) <www.latimes.com/business/la-fi-wells-fargo-sale-pressure-20131222-story.html> (discussing how the high-pressure sales environment of Wells Fargo led to large-scale moral and ethical breaches).
32 Samuel W Buell, ‘Potentially Perverse Effects of Corporate Civil Liability’, in Prosecutors in the Boardroom: Using Criminal Law to Regulate Corporate Conduct, 87, 93 (Anthony S Barkow and Rachel E Barkow, eds., 2011). (‘Criminal [deferred prosecution agreements] now routinely require firms to reorganize business operations, adopt compliance measures, submit to enhanced monitoring for legal violations, and create systems to encourage and protect whistle-blowers.’).
33 Miriam Hechler Baer, ‘Governing Corporate Compliance’, 50 B. C. L. Rev., 949, 958 (2009) (‘“Compliance” is a system of policies and controls that organizations adopt to deter violations of law.’); William S Laufer, ‘Corporate Liability, Risk Shifting, and the Paradox of Compliance’, 52 Vand. L. Rev., 1343, 1345 (1999) (‘An elaborate cottage industry of ethics compliance and preventive law experts lay claim to dramatically reducing the likelihood of criminal liability by maintaining an organizational commitment to ethical standards.’).
34 Tanina Rostain, ‘General Counsel in the Age of Compliance: Preliminary Findings and New Research Questions’, 21 Geo. J. Legal Ethics, 466 to 467 (2008).
35 William S Laufer, ‘The Missing Account of Progressive Corporate Criminal Law’, 14 N. Y. U. J. L. & Bus., 71 (2017).
36 These are among the features that federal prosecutors consider in their corporate charging decisions. Memorandum from Larry D Thompson, Deputy Attorney General, US Department of Justice, to Heads of Department Components and United States Attorneys, Principles of Federal Prosecution of Business Organisations (12 December 2006).
37 See Jennifer Arlen and Marcel Kahan, ‘Corporate Governance Regulation Through Non-Prosecution’, 84 U. Chi. L. Rev., 323 (2017).
38 Khanna (footnote 5, above), at 237 (‘the monitor’s primary task should be to ensure compliance and reduce the chances of future wrong-doing’).
39 id., at 231 (‘relying on a monitor as sanction may prove desirable when the deterrent effects of cash fines are exhausted and we desire more deterrence’).
40 Brent Fisse, ‘Reconstructing Corporate Criminal Law: Deterrence, Retribution, Fault, and Sanctions’, 56 S. Cal. L. Rev., 1141, 1155 (1983). (‘A recent discussion of the potential use of probation as a sanction against corporations pointed out that probationary orders requiring corporations to rectify defective standard operating procedures or to make other structural changes within the organization may have a significant deterrent as well as rehabilitative effect because such intervention detracts from managerial autonomy.’).
41 See Ramsey Clark, Crime in America: Observations on Its Nature, Causes, Prevention and Control, 220 (1970) (‘Rehabilitation is also the one clear way that criminal justice processes can significantly reduce crime.’)
42 e.g., Miriam H Baer, ‘Too Vast To Succeed’, 114 Mich. L. Rev., 1109, 1119 (2016); Chris William Sanchirico, ‘Detection Avoidance’, 81 N.Y.U. L. Rev. 1331, 1361 (2006).
43 HLA Hart, Punishment and Responsibility, 235 (1968) (‘[Some] modern retributive theory has shifted the emphasis . . . to the value of the authoritative expression, in the form of punishment, of moral condemnation for the moral wickedness involved in the offense.’)
44 Lawrence Friedman, ‘In Defense of Corporate Criminal Liability’, 23 Harv. J.L. & Pub. Pol’y, 833, 843 (2000) (‘Criminal liability in turn expresses the community’s condemnation of the wrongdoer’s conduct by emphasizing the standards for appropriate behavior – that is, the standards by which persons and goods properly should be valued.’).
45 See Dan M Kahan, ‘Social Meaning and the Economic Analysis of Law’, 27 J. Legal Stud., 609, 618, 619 (1998) (‘Just as crimes by natural persons denigrate societal values, so do corporate crimes. Members of the public show that they feel this way, for example, when they complain that corporations put profits ahead of the interests of workers, consumers, or the environment. Punishing corporations, just like punishing natural persons, is also understood to be the right way for society to repudiate the false valuations that their crimes express. Criminal liability “sends the message” that people matter more than profits and reaffirms the value of those who were sacrificed to “corporate greed”.’).
46 See Baer (footnote 9, above), at 612.
47 As many think it should. See Emile Durkheim, The Division of Labor in Society, 47 (1983) (‘[Through criminal punishment] we are avenging . . . the outrage to morality.’); George Vuoso, ‘Background, Responsibility, and Excuse’, 96 Yale. L. J., 1661, 1663 (1987) (‘Only a criminal law that incorporated to some extent the morality of the society it was supposed to serve, could hope to endure and effectively achieve general deterrence and the other societal benefits that are thought to justify criminal punishment.’).
48 See Mark D Alicke, ‘Culpable Control and the Psychology of Blame’, 126 Psychol. Bull., 556, 569 to 571 (2000); Michael D Bayles, ‘Character, Purpose, and Criminal Responsibility’, 1 Law & Phil., 5, 7 (1982) (arguing that moral blame and punishment are ordinarily responsive to assessment of the character of a wrongdoer, not his acts); Janice Nadler and Mary-Hunter McDonnell, ‘Moral Character, Motive, and the Psychology of Blame’, 97 Cornell L. Rev., 255, 257 (2012) (‘In ordinary social life, therefore, an actor’s perceived character and reasons for acting are of primary importance to the process of administering blame for that actor’s harmful action.’).
49 See US Government Accountability Office, ‘Criminal Debt: Court-Ordered Restitution Amounts Far Exceed Likely Collections for the Crime Victims in Selected Financial Fraud Cases’ 2005.
50 Brandon Garrett, Too Big to Jail: How Prosecutors Compromise with Corporations, 78 (2014) (‘Only once have prosecutors declared a company in breach of a deferred prosecution agreement, resulting in a guilty plea.’).
51 See Baer (footnote 33, above), at 953 (‘Despite the fact that the DOJ has intoned an interest in generating a more ethical ‘corporate culture,’ its prosecutors have little expertise in bringing about this development’).
52 See Garrett (footnote 48 50, above), at 72 (‘compliance programs [required in DPAs] are often described in fairly general terms. They refer to ‘appropriate due diligence’ and ‘effective compliance’ without defining it.’).
53 Vikramaditya Khanna and Timothy L Dickinson, ‘The Corporate Monitor: The New Corporate Czar?’, 105 Mich. L. Rev., 1713, 1723 to 1727 (2007).
54 See also Griffin (footnote 1 2, above), at 120 (‘DPAs . . . fail to make clear the scope of the monitor’s responsibilities.’); Garrett (footnote 48 50, above), at 72 (noting that pretrial diversion agreements often just gesture toward the goal of ‘effective compliance’).
55 See Baer (footnote 31 33, above), at 977 (‘prosecutors do not review compliance plans prior to their implementation, test compliance processes over time, pool information learned from disparate firms, consult on a regular basis with compliance officers on key issues or concerns, or address procedural shortcomings as they discover them’).
56 Laufer (footnote 35, above), at 71.
57 Kathleen M Boozang and Simone Handler-Hutchinson, ‘“Monitoring” Corporate Corruption: DOJ’s Use of Deferred Prosecution Agreements in Health Care’, 35 Am. J. L. & Med., 89 (2009).
58 US Government Accountability Office, GAO-10-110, ‘DOJ Has Taken Steps to Better Track Its Use of Deferred and Non-Prosecution Agreements, but Should Evaluate Effectiveness’, 20 to 24 (2009) <www.gao.gov/assets/300/299781.pdf>.
59 Griffin (footnote 2, above), at 120 (‘When prosecutors direct sole-source contracts to former colleagues in the private sector, questions about conflicts of interest arise.’).
60 Memorandum from Eric Holder, Deputy Attorney General, to All Component Heads and United States Attorneys, ‘Bringing Criminal Charges Against Corporations’ (16 June 1999) <https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2010/04/11/charging-corps.PDF>.
62 John Hasnas, ‘A Context for Evaluating Department of Justice Policy on the Prosecution of Business Organizations: Is the Department of Justice Playing in the Right Ballpark?’, 51 Am. Crim. L. Rev., 7 (2014).
63 See William S Laufer, ‘A Very Special Regulatory Milestone’, 20 U. Penn. J. Bus. L., 391, 409.