Compliance in an era of deferred prosecution

Deferred prosecutions have been controversial topic lately, especially as the Department of Justice and prosecutors have increasingly relied on such agreements.

In 2012,  20 deferred and non-prosecution agreements have been inked. Since 2007, there have been more than 150. These agreements have sparked suggestions of justice gone awry, of back-room dealing between companies that are too cozy with prosecutors. That's a stereotype of course.

Truth be told, deferred prosecutions are a compelling and often effective course of action, with can result in enhanced compliance. Bloomberg notes the words of Lanny Breuer, chief of the Justice Department's criminal division: "The result has been, unequivocally, far greater accountability for corporate wrongdoing -- and a sea change in corporate compliance efforts."

Before the rise of such deals, he noted, prosecutors faced a choice: Prosecute or walk away. Now they can use deferred prosecutions to wrangle upgrades in compliance efforts and improvements across the board. The deals are most useful in cases in which rogue employees have broken the law, despite the best efforts of the company to police criminal activity.

Indeed, an established culture of compliance will go a long ways toward winning a deferred prosecution that spares the company a formal indictment. Rogue companies, however, can expect to bear the full brunt of an indictment. For compliance officers, the trend has been fortuitous. If they have built a solid compliance operation, they and their companies will get credit for that, and a chance to avoid prosecution.

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