Corporate Investigations - Challenges in Corporate Governance

One of the effects of this historic financial crisis and its spotlight on corporate conduct is likely to be an increased pressure to allocate blame. That pressure is bound to be directed toward identifying culpable employees within a firm, given the desire to spare corporations from indictment and prosecution. Thus corporate directors will have to consider the potential implications to the firm of the process required to identify such culpable employees- corporate investigations. Additionally, should the firm succeed in being spared an indictment it will likely be subject to ongoing oversight through a Deferred or Non-prosecution agreement (“DPA” and “NPA,” respectively). This paper will trace the tortured trail of the Department of Justice (“DOJ”) in creating various iterations of Principles of Federal Prosecutions of Corporations. Notwithstanding nearly a decade of memoranda addressing these issues the DOJ has left the corporation vulnerable to undermining important legal protections and ethical principles. Furthermore, should a corporation succeed in avoiding indictment and entering into a deferred or non-prosecution agreement its directors need to be aware of the unchartered waters in which they may be operating. This paper will also address the specific governance issues surrounding such agreements.