Why have we seen so few convictions for those responsible for our economic collapse? What actually happens when a corporation is charged with wrongdoing? Should its employees be held criminally accountable? In Too Big to Jail: How Prosecutors Compromise with Corporations, law professor Brandon L. Garrett takes us into a complex world of backroom deals for an unprecedented look at what happens when criminal charges are brought against a major company in the United States. In the interview below, Garrett introduces us to his study, which we’ll publish later this year.
When a company faces criminal charges, a completely different side of the criminal justice system is revealed. Normally, federal prosecutors play the role of Goliath, wielding incredible power and discretion. The world of corporate crime is completely different. Prosecutors play the role of David when they are up against the largest and most powerful corporations in the world. In recent years, prosecutors have taken on the likes of AIG, Bristol-Myers Squibb, BP, GlaxoSmithKline, Google, Halliburton, HealthSouth, HSBC, JPMorgan, KPMG, Merrill Lynch, Monsanto, and Pfizer, and such companies can mobilize astonishing resources in their defense.
Corporate prosecutions have been transformed over the past decade, but when you look beyond the Fortune 500 companies and the seeming blockbuster fines, a story of deep compromise emerges. I found that prosecutors typically negotiate deals with lenient fines, vaguely defined reforms that appear largely “cosmetic,” no review by a judge, and allowing many of the most serious corporate criminals to avoid a criminal conviction entirely. As a result, I raise “too big to jail” concerns extending far beyond the Wall Street banks.
Q: Your work here will likely be welcomed by the many people outraged over the general failure to bring criminal prosecutions in the wake of the financial collapse—Senator Elizabeth Warren comes to mind. And yet you actually began the project in 2006, before the crisis. Do you see the financial collapse as any sort of turning point in the prosecution of corporations, or is it just the backdrop that’s helped bring attention to these pre-existing patterns of compromise?
The expression “too big to jail” has been used by Senator Warren and others to refer to failures to prosecute Wall Street bankers after the last financial crisis. To see why corporations themselves may escape prosecution, however, it is important to understand how a company is prosecuted, and the practical challenges such cases face. Federal prosecutors cemented their current approach to corporate prosecutions following the Arthur Andersen trial, which took place in 2002, and which I describe in the book—the jury convicted Andersen, resulting in the collapse of the company, but the conviction was then reversed on appeal. Fearful of the backlash should more high-profile cases end in disaster, prosecutors decided to allow more companies to avoid a conviction by entering deferred and non-prosecution agreements. Those deals took off in 2003, and they first caught my attention in 2006, when just a few dozen had been entered. The new approach was firmly in place when the financial crisis hit in 2007, and perhaps as a result, some companies may have felt they could settle prosecutions as a cost of doing business.
However, my work should be equally welcomed by those who think some corporations targeted do not deserve prosecution, and that prosecutors should be clearer about what corporate crimes deserve punishment. My main goal in exploring corporate prosecutions is to encourage more public attention to the troubling problem of how to hold corporations accountable for crimes.