From: RDShatt@aol.com
To: pat@ethics.org
CC: sharshbarger@proskauer.com, paul.mcnulty@bakermckenzie.com, moxley@bakerlaw.com, savelino@CSLG.com, wswenson@CSLG.com, fiorelli@xavier.edu, tmarshall.jr@bingham.com, jemurphy@voicenet.com, lthomps@uga.edu
Sent: 11/9/2013 6:12:57 P.M. Central Standard Time
Subj: Policy Summit Summary re Improving Corporate Conduct
Dear Dr. Harned,
I have reviewed the Policy Summit Summary regarding the ERC's February summit "Improving Corporate Conduct Through Pro-Compliance Enforcement Practices" (which summary is on the ERC website here).
The Summary summarizes as follows:
In February 2013, just over a year after releasing a report by an independent advisory group on the Federal Sentencing Guidelines for Organizations’ (FSGO) first 20 years, the Ethics Resource Center (ERC) called together government enforcement officials and members of the corporate compliance community for a policy Summit to consider ways to encourage corporate compliance through federal enforcement practices. With the advisory group’s recommendations as a point of departure ,the Summit examined the FSGO’s role in government enforcement decisions, the relevance of corporate compliance and ethics (C/E) programs in those decisions, and how enforcement officers and corporate compliance officers could support each other in their efforts to deter misconduct.
The discussions suggested a shared belief in corporate self-policing and strong ethics cultures as the foundation for successfully deterring misconduct. They revealed wide agreement that FSGO provides a valuable framework for effective C/E programs and can guide prosecutors in deciding whether or not to file charges when corporations or their employees may have broken the law. C/E professionals praised enforcement officials for their familiarity with corporate compliance issues and programs.
However, the Summit also revealed lingering fissures: The Department of Justice’s antitrust division provided a prominent example of the differences between agencies (even within agencies) when it comes to granting credit for effective C/E programs; enforcement officers appear dubious about a uniform, government-wide approach for evaluating the effectiveness of C/E programs; and compliance officers believe enforcement agencies can and must do a better job of explaining when and how they grant credit for C/E in charging decisions. Compliance officers also believe that enforcement officials would benefit from dedicated training to assist in the evaluation of C/E programs. Enforcement officials are less certain of the need.
I can appreciate the desire of the ERC to push on law enforcement ERC's belief in the positive impact of strong compliance standards (under the Federal Sentencing Guidelines for Organizations) in enhancing corporate ethical conduct, and the desire of the ERC :"to encourage consistent application of FSGO as criteria in enforcement, and recognition of the FSGO-based ethics and compliance programs in declinations."
How persuaded law enforcement is about the FSGO you know better than I. (See the last sentence quoted above: "Enforcement officials are less certain of the need.")
If law enforcement is less persuaded about the FSGO than the ERC would like, you might think about a couple of things.
Discipline under FSGO Sec. 8B2.1(b)(6)
I have tried to question the ERC about whether "discipline" under FSGO Sec. 8B2.1(b)(6) is a nullity, and I have received no response. (My inquiries may be found in and through this blog entry.)
In trying to persuade law enforcement on the importance of the FSGO for improving corporate ethical conduct, has the ERC tried to engage with enforcement officials about the provision for the corporate use of "discipline" under FSGO Sec. 8B2.1(b)(6) and tried to show law enforcement how the same has had a beneficial effect on corporate behavior? Have enforcement officials evidenced any interest in "discipline" under Sec.8B2.1(b)(6) as potentially helping them with law enforcement?
If the ERC has not engaged with law enforcement about FSGO Sec. 8B2.1(b)(6), and/or enforcement officials have shown no interest in corporate "discipline" under the FSGO, is that suggestive that such discipline is vacuous window dressing, and does that present risk that law enforcement opinion of the FSGO is diminished by reason of such vacuity? Perhaps the ERC should factor in this possibility in evaluating how law enforcement is receiving the importuning of the ERC about the FSGO.
Law enforcement may think other things are more important
Please think about whether the ERC has been overly preoccupied with trying to push its FSGO agenda and, as a result, is failing to appreciate the significance of other things that law enforcement is wrestling with and that law enforcement may consider more important than the presence or absence of FSGO-based ethics and compliance programs. As to these "other things", please think about whether, in its preoccupation with the FSGO, whether the ERC is failing to consider adequately how such "other things"may have an important bearing on ethics and compliance. .
The first "other thing" is public anger and law enforcement concern about corporate officers and employees not being held personally accountable for corporate wrongdoing. This has been much in the news; and, in the minds of some (including myself), it is relevant to lessening corporate wrongdoing. I have tried hard to raise this issue with the ERC, but the ERC has evidenced no interest that I can tell.
Law enforcement has also been wrestling with whether corporations should be required to admit wrongdoing in settlements. I cannot speak for the motivation of law enforcement here, but it is at least plausible that admission of wrongdoing has bearing on trying to improve corporate behavior. I recently asked you about this, but you have not responded.
It is worth mentioning that one of the concerns about requiring admission of corporate wrongdoing in settlements is the ramifications in the private, civil liability domain. This concern calls for awareness of what goes on in the private, civil liability domain. If the ramifications there are an argument against admission of corporate wrongdoing in settlements, that then leads to possibly investigating whether any correction of the adverse ramifications is possible, in order to eliminate that impediment to using admission of corporate wrongdoing as a means to improve corporate behavior. (As you know, I have attempted to make a more far reaching consideration of whether what goes on in the private, civil liability domain undermines the goal of business ethicists.)
It is noted that the ERC has its own complaint about settlements impeding recognition and credit for the presence of FSGO-based ethics and compliance programs. At a minimum, the ERC ought to recognize that its concern is not the only legitimate concern about settlements.
Further, please think about the circularity that (i) the ERC has chosen to direct its attention to entity level liability and to attempt to leverage the threat of entity level liability to improve corporate behavior through the FSGO, and then (ii) the ERC has a seemingly important prong in the FSGO of "discipline" under FSGO Sec. 8B2.1(b)(6) that gets back to individual responsibility and accountability. Thinking about that circularity may foster more attunement to the above first "other thing" that law enforcement is wrestling with, to wit, the law doing more to hold officers and employees personally liable for corporate wrongdoing, as discussed above, and the connection of that with improving corporate behavior.
Conclusion
Dr. Harned, perhaps at the February summit, with all the discussion going on with enforcement officials in trying to push ERC's FSGO agenda, the ERC turned a little light on itself and its "discipline" provision in the FSGO, and perhaps ERC representatives evidenced interest in discussing with enforcement officials the above "other things" that may be more important in the minds of enforcement officials.
Alternatively, maybe ERC representatives just wanted to be deaf and blind about anything outside the ERC's agenda concerning the FSGO.
I don't know which it is, and I am writing this email, in part, to try to find out.
Thank you for your attention to this email and for whatever response the ERC sees fit to give to it.
Sincerely,
Rob Shattuck
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