White & Case LLP - News - Business Civil Liberties at Risk, Concludes Report Prepared with Assistance by White & Case

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Business Civil Liberties at Risk, Concludes Report Prepared with Assistance by White & Case

Washington, DC, March 17, 2010 ... US businesses' ability to function in a challenging economic environment can be made more difficult by the overuse of criminal sanctions to regulate commercial conduct, concludes a new report published by the Washington Legal Foundation and prepared with pro bono assistance by global law firm White & Case.

Federal Erosion of Business Civil Liberties methodically documents the rapid and often arbitrary expansion of federal criminal law and the trend to criminalize the regulation of business activities. In doing so, it provides policy makers and the legal community with detailed summaries, analysis, and critiques of key legal, judicial, and regulatory developments in this area.

"Markets dominated by fraud and corruption are not free and prosecution has a place in policing them, but over-zealous use of criminal sanctions as a means of regulating legitimate business conduct is stifling to entrepreneurship and innovation," said George Terwilliger, III, head of White & Case's Global White Collar Practice and a former US Deputy Attorney General, who contributed to the report. "A prosecutor's most important responsibility is the exercise of good judgment and this Report raises legitimate questions about judgments being made in business crime cases."

"Businesses may be the immediate victims of overcriminalization – as was the case with Arthur Andersen, for example – but the long-term victims are everyday people who lose jobs or pay more for goods and services because of the costs exacted by overzealous corporate prosecution," said Eric Grannon, a White & Case White Collar partner and former Department of Justice prosecutor who also contributed to the report.

The report finds that US enforcement authorities have too often resorted to criminal prosecution of minor regulatory offenses. To cite a few examples:

In 2004, the Eleventh Circuit sentenced three seafood importers to prison for a record eight years as first-time offenders for the minor offense of importing frozen seafood in plastic bags rather than cardboard boxes. (United States v. McNab)
In 2007, McWane, Inc., a cast iron pipe manufacturing plant, and three of its managers were criminally charged with discharging wastewater into a navigable river from more than one permitted discharge point in violation of the company's permit. The Eleventh Circuit reversed the convictions in 2008, noting that the EPA failed to show any actual harm or injury, or risk of harm, to the river. (United States v. McWane, Inc.)
In January 2009, the Second Circuit upheld a jury conviction and affirmed that a corporate defendant can be held criminally responsible for the conduct of a single low-level employee even if he or she acted in direct violation of corporate policy and a robust corporate compliance program. In this case, the offense was failure to "maintain" an oil record book as required by regulation. (United States v. Ionia Management, S.A.)
In July 2009, Frederic Bourke was convicted of conspiring to violate federal anti-bribery law, even though he was never accused of bribing or directing others to bribe foreign government officials. Bourke's conviction was based on evidence of "general knowledge" of corruption in the region and the court's "conscious avoidance" jury instruction to satisfy element of criminal knowledge. (United States v. Bourke)

Meanwhile, federal agencies are continuing their attack on business violations. According to the report, the Environmental Protection Agency's (EPA) enforcement program has greatly grown in size and budget, with a proposed 2010 budget of $600 million – its highest enforcement budget ever and 32 percent higher than the level enacted the previous fiscal year – of which a record high $57.7 million is allocated for criminal enforcement. EPA conducts approximately 20,000 inspections a year, any of which can result in a criminal action, substantial fines and lengthy prison sentences.

About White & Case
White & Case LLP is a leading global law firm with lawyers in 36 offices in 25 countries. Among the first US-based law firms to establish a truly global presence, we provide counsel and representation in virtually every area of law that affects cross-border business. Our clients value both the breadth of our global network and depth of our US, English and local law capabilities in each of our regions and rely on us for their complex cross-border transactions, arbitration and litigation provided by our global practices.

Contact:
Christopher Rieck
Media Relations Manager
White & Case LLP
1 212 819 7960

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Expertise White Collar Lawyers George J. Terwilliger III Locations Washington, DC	Business Civil Liberties at Risk, Concludes Report Prepared with Assistance by White & Case Washington, DC, March 17, 2010 ... US businesses' ability to function in a challenging economic environment can be made more difficult by the overuse of criminal sanctions to regulate commercial conduct, concludes a new report published by the Washington Legal Foundation and prepared with pro bono assistance by global law firm White & Case. Federal Erosion of Business Civil Liberties methodically documents the rapid and often arbitrary expansion of federal criminal law and the trend to criminalize the regulation of business activities. In doing so, it provides policy makers and the legal community with detailed summaries, analysis, and critiques of key legal, judicial, and regulatory developments in this area. "Markets dominated by fraud and corruption are not free and prosecution has a place in policing them, but over-zealous use of criminal sanctions as a means of regulating legitimate business conduct is stifling to entrepreneurship and innovation," said George Terwilliger, III, head of White & Case's Global White Collar Practice and a former US Deputy Attorney General, who contributed to the report. "A prosecutor's most important responsibility is the exercise of good judgment and this Report raises legitimate questions about judgments being made in business crime cases." "Businesses may be the immediate victims of overcriminalization – as was the case with Arthur Andersen, for example – but the long-term victims are everyday people who lose jobs or pay more for goods and services because of the costs exacted by overzealous corporate prosecution," said Eric Grannon, a White & Case White Collar partner and former Department of Justice prosecutor who also contributed to the report. The report finds that US enforcement authorities have too often resorted to criminal prosecution of minor regulatory offenses. To cite a few examples: In 2004, the Eleventh Circuit sentenced three seafood importers to prison for a record eight years as first-time offenders for the minor offense of importing frozen seafood in plastic bags rather than cardboard boxes. (United States v. McNab) In 2007, McWane, Inc., a cast iron pipe manufacturing plant, and three of its managers were criminally charged with discharging wastewater into a navigable river from more than one permitted discharge point in violation of the company's permit. The Eleventh Circuit reversed the convictions in 2008, noting that the EPA failed to show any actual harm or injury, or risk of harm, to the river. (United States v. McWane, Inc.) In January 2009, the Second Circuit upheld a jury conviction and affirmed that a corporate defendant can be held criminally responsible for the conduct of a single low-level employee even if he or she acted in direct violation of corporate policy and a robust corporate compliance program. In this case, the offense was failure to "maintain" an oil record book as required by regulation. (United States v. Ionia Management, S.A.) In July 2009, Frederic Bourke was convicted of conspiring to violate federal anti-bribery law, even though he was never accused of bribing or directing others to bribe foreign government officials. Bourke's conviction was based on evidence of "general knowledge" of corruption in the region and the court's "conscious avoidance" jury instruction to satisfy element of criminal knowledge. (United States v. Bourke) Meanwhile, federal agencies are continuing their attack on business violations. According to the report, the Environmental Protection Agency's (EPA) enforcement program has greatly grown in size and budget, with a proposed 2010 budget of $600 million – its highest enforcement budget ever and 32 percent higher than the level enacted the previous fiscal year – of which a record high $57.7 million is allocated for criminal enforcement. EPA conducts approximately 20,000 inspections a year, any of which can result in a criminal action, substantial fines and lengthy prison sentences. About White & Case White & Case LLP is a leading global law firm with lawyers in 36 offices in 25 countries. Among the first US-based law firms to establish a truly global presence, we provide counsel and representation in virtually every area of law that affects cross-border business. Our clients value both the breadth of our global network and depth of our US, English and local law capabilities in each of our regions and rely on us for their complex cross-border transactions, arbitration and litigation provided by our global practices. Contact: Christopher Rieck Media Relations Manager White & Case LLP 1 212 819 7960