The Justice Department Swears It’s Finally Getting Serious About Putting Corporate Criminals in Jail

Attorney General Loretta Lynch.

Photo by Alex Wong/Getty Images

After years of getting reamed over its failure to prosecute bankers for their roles in the financial crisis—not to mention the various other criminal frauds that have been uncovered on Wall Street during the Obama era—the Department of Justice is finally promising to really, truly make an honest-to-god effort to put corporate lawbreakers behind bars. This week, DOJ officials circulated a new memo instructing its lawyers to focus on bringing charges against individuals while pursuing cases. Its most important policy point: From now on, companies will not receive any credit for cooperating with an investigation unless they hand over “all relevant facts about the individuals involved in corporate misconduct.” In other words, they can’t shield their employees from scrutiny if they want a decent settlement. Theoretically.

This is the latest step in a philosophical evolution at the Justice Department, which has recently started wringing guilty pleas from large banks involved in criminal cases after years of relying on deferred prosecution agreements, in which the government held off on bringing charges against companies in return for large fines and promises of good behavior. Assuming prosecutors stick to them, the new rules seem like they really could help finally land a few real, flesh-and-blood corporate felons in jail. As the New York Times notes, big companies that get into legal trouble work with prosecutors by hiring an expensive law firm to run an internal investigation, then hand over their findings to the Feds. (Yes, in America, justice for wealthy corporations is sort of a collaborative process.) It’s going to be very hard for many banks or multinationals to produce an extensive accounting of their misdeeds without pinning the blame on somebody.

The question is: Who’s going to take the fall? Will banks be allowed to find the lowest-level schmuck they can pack off to Club Fed with a clear conscience? Or are prosecutors going to demand the scalp of an executive or two? “We’re not going to be accepting a company’s cooperation when they just offer up the vice president in charge of going to jail,” Sally Yates, the memo’s author, told the Times, which, while a great one-liner, doesn’t really tell us that much. As for the memo itself, well, it basically exhorts prosecutors not to be lazy. “The requirement that companies cooperate completely as to individuals … does not mean that Department attorneys should wait for the company to deliver the information about individual wrongdoers and then merely accept what companies provide,” it states. “To the contrary, Department attorneys should be proactively investigating individuals at every step of the process—before, during, and after any corporate cooperations.”

It’s a little depressing that Justice needs to formalize the idea that prosecutors shouldn’t be taking a company’s carefully constructed storyline at face value. But this counts as progress, I suppose.