Should America put Inspector Javert in the board room?

by Kurt Schulzke

The DOJ is renewing its aggressive push for companies to affirmatively search for and deliver evidence of employees’ criminal behavior. Is deputizing the corporate HQ good for the law, business, or neither?

Michael P. Kelly’s Corporate Counsel breakdown asks how harboring permanent Inspectors Javert in corporate headquarters will impact the trust that gives life to free markets. At the same time, constitutional questions abound, as Deputy AG David Ogden acknowledged in 2009.  Fourth and Fifth Amendments, anyone?

Other compelling questions loom. Where will corporate America recruit these Javerts who on their hire dates should already be experienced criminal investigators? The biggest pool of such talent is now at the DOJ and other federal law enforcement agencies. What incentives does the Inspector Javert program create for budding corporate Javerts eyeing lucrative post-DOJ jobs in the private sector?

Basic game theory suggests that the DOJ’s Javerts-in-embryo should stoke macro demand for their future services by increasing the perceived frequency and severity of corporate prosecutions. On the other, in individual cases they should “go easy” on defendants to curry favor with officers and directors of their most promising potential future employers, those with the most to lose from criminal prosecutions. Exacerbated regulatory capture seems a clear and present danger.

Perhaps Congress should take a closer look at this shift toward more aggressive use of corporate “cooperation credit” for what boils down to company bosses continually investigating and criminally prosecuting their employees.

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