• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Continuing the "Culture of Waiver" at DOJ

    Many have noted that the so-called “Filip Memorandum,” DOJ’s effort to forestall legislation limiting its ability to force companies to waive the attorney-client privilege, does not apply to prosecutions originated by federal agencies other than the Justice Department (e.g., here, here, and here), but few have recognized that the new Guidelines don’t apply to all of DOJ’s activities, either.

    The broad issue is whether DOJ can take into account a company’s willingness to waive the privilege and work-product protections when deciding whether to indict the company. For many businesses, an indictment would be a death sentence (witness the implosion of Arthur Anderson), so they’re willing to do anything DOJ even hints might help to avoid that fate—even if that means turning over privileged materials and throwing employees under the bus in the process. (See, e.g., the Judge Kaplan’s thoughtful Stein II decision, affirmed by the Second Circuit the same day DOJ released its new Guidelines.)

    As Heritage’s Brian Walsh has explained, the new guidelines (to be incorporated into the U.S. Attorneys’ Manual) are generally laudable but don’t go far enough or provide enough certainty. The biggest shortcoming is that the “culture of waiver” has spread well beyond DOJ to other departments and agencies, like the SEC and the EPA. The new guidelines seem to explicitly condone the use of coercive techniques outside of DOJ (§ 9-28.750).

    That same section of the Guidelines, on “voluntary” disclosures, also alludes to the fact that the new protections do not apply to all of DOJ’s own cases. The Department, it explains, “encourages corporations…to conduct internal investigations and to disclose the relevant facts to the appropriate authorities.” In certain cases, “prosecutors may consider a corporation’s timely and voluntary disclosure” for several purposes, leading to a decision on whether or not to prosecute. Such cooperation, the Guidelines note, does not guarantee non-prosecution, offering as an example that “the Antitrust Division has a policy of offering amnesty only to the first corporation to agree to cooperate.”

    Not only is this first-in-the-door policy well known for its coerciveness—the Division plays competitors off one another and only the one that “wins” avoids prosecution—but it also gave rise to a rather infamous 2002 non-prosecution agreement with the global shipper Stolt-Nielsen. The policy is straightforward: In cases of alleged collusion, the Antitrust Division agrees not to prosecute the first company that approaches the Division and provides “full, continuing, and complete cooperation” in developing the case.

    In Stolt-Nielsen’s case, “cooperation” included “producing…all documents and records, including personal documents and records…requested by attorneys and agents of the United States.” Of more recent first-in-the-door agreements, some have included similarly broad language, while others have explicitly recognized the continued applicability of privileges.

    For what it’s worth (not much, it turns out), Division attorneys told Stolt-Nielsen that it would not be required to waive the attorney-client privilege. In the end, however, DOJ decided the company’s cooperation and compliance were insufficient and so prosecuted it. Late last year, a federal court dismissed the indictment, on the grounds that Stolt-Nielsen had fulfilled its obligations under the agreement—a major vindication after a harrowing experience for the company and its employees.

    The new Guidelines do nothing to stop DOJ from coercing “voluntary” waiver of the attorney-client privilege, where “voluntary” means that a corporation can “volunteer” not to be indicted—indeed, they appear to approve of the practice in certain circumstances. That’s the same quid pro quo that the new Guidelines purports to prohibit.

    This is just a part of the reason why the new guidelines, though an improvement, are no substitute for more comprehensive and durable congressional action. The Attorney-Client Privilege Protection Act (S. 3217), for example, bars prosecutors from making charging decisions or determining cooperation based on “the valid assertion of the protection of the attorney-client privilege or attorney work product doctrine.” Period.

    And it does so whether the enforcement action commences at DOJ or at the SEC, HUD, the IRS, etc.—all of which have adopted policies like DOJ’s lead in coercing, or in some cases outright demanding, waiver.

    Posted in Legal [slideshow_deploy]

    One Response to Continuing the "Culture of Waiver" at DOJ

    1. William Olis, 1503 D says:

      I am Bill Olis, father of Jamie Olis, who was sentenced to 24.3 years to federal prison for white collar crimre of fraud,etc when he was employed by Dynegy of Houston on 25 March 2004.Trial was in early November 2003 in downtown Houston federal court house. and Jamie Olis entered prison on 20 May 04 at FCI at Bastrop TX about 40 miles east of Austin TX and about 100 miles where I and his wife live. He was moved shortly in January 2005 to FCI Prison in Oakdale, Louisiana, which is in central part of state. About 800 mile trip of Killeen and and about the same for his wife and now 5 year old daugher, who was six months old at the time on 20 May 2004 when Jamie first enter prion and was not until late September 2006 that Judge Sim Lake reduced his sentence to 72 months per 5th Circuit Court of Appeals who returned it for length of sentence. Jamie and my wife and me along with his wife and daugher had to go to bed at night trying to sleep with this draconian 24.3 sentence inside our heads. That was a period from May 2004 until the September 2006, over 28 months, Judge Lake was also judge in the Enron trial of Skilling and the late Mr. Lay. Fastow of Enron was given the same sentence of 72 moths. Even though Jamie made no financial gain for his so called crime and Jamie did not plea guilty as Fastow did, and the

      company stopped paying Jamie's legal fees shortly after a visit from the CEO of Dynegy to the DA's office in Houston. Jamie's boss and secretry who plead guilty were sentence to short time in prison to hardly any time to secretary. /////Jame has am appeal that more or less in waiting for Judge Lake to officaily deny and request for his recusal in case. I searched on this site in name of Jamie Olis and found nothing the Search said nothing on Jamie Olis.

      He is and legal fees are simliar cases like Judge Kaplans and KMPG company.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×