Press Releases

Statement of Ranking Member Trent Franks

Hearing on Transparency and Integrity in Corporate Monitoring: Subcommittee on Commercial and Administrative Law

Deferred prosecution agreements are an invaluable tool in the Justice Department’s arsenal for combating corporate crime.  These agreements allow the Department to achieve all of the benefits of a criminal prosecution without subjecting the companies, their employees and shareholders to the collateral consequences of prosecution and conviction.

In contrast to the far more rigid criminal sentencing process, deferred prosecution agreements permit the Justice Department and corporate defendants to work together in a more flexible environment to remedy past violations and prevent future illegal conduct.  They serve to rehabilitate the company, root out illegal and unethical conduct, discipline culpable employees, and promote good corporate citizenship going forward.  And, they allow prosecutors to achieve more than they could through court-imposed fines and restrictions alone.

The benefits of deferred prosecution agreements have been recognized by the Bush I, Clinton, Bush II, and Obama Justice Departments.

In some cases, part of an effective deferred prosecution agreement is the use of a corporate monitor to oversee the implementation of and compliance with the agreement’s provisions.

Corporate monitors help ensure that companies institute meaningful changes and develop the best compliance programs possible.  Additionally, corporate monitors can verify that companies are fulfilling the obligations of the deferred prosecution agreement to a much greater extent than the Department could accomplish on its own.

Despite the benefits of corporate monitors, their use has engendered criticism in recent years in the press and from some on the other side of the aisle.  Much of this criticism was levied in an attempt to derail the gubernatorial campaign of former New Jersey U.S. Attorney Chris Christie.  As hearings before this subcommittee demonstrated, however, the criticism of Governor-elect Christie’s use of corporate monitors was unjustified.

Yet, we are here today to consider whether legislation is needed to avoid conflicts of interest in the appointment of compliance monitors.  Quite frankly, I do not believe the case has been made that congressional legislation is needed in this area.

This is not to say that I believe that the appointment of corporate monitors should be ungoverned.  However, I do not think there is credible reason to believe that the Justice Department has not or cannot develop sufficient internal regulatory guidance on the appointment of corporate monitors.

Over the past ten years, since the initial Holder Memo on deferred prosecution agreements, the Department has continually fine-tuned its rules for these agreements.

At this point, I think the nation’s corporate law enforcement goals would be best served by continuing to leave it to the Department to ensure transparency and integrity in corporate monitoring.  We do not need to unnecessarily tie the Department’s hands with legislation at this point in time.

In closing, let me say that I find it disappointing that this committee is once again revisiting the subject of the appointment of corporate monitors when we have yet to take a look at the Obama administration’s appointment of countless policy czars.

Certainly, these czars, who are not subject to Senate confirmation, wield far greater power than any corporate monitor.  I hope that in the future the Chairman will direct this committee’s oversight efforts to these constitutionally questionable, yet highly powerful czars to the same degree that we have investigated corporate monitors.

I look forward to the witnesses’ testimony and yield back the balance of my time.

Congressman Franks is serving his fifth term in the U.S. House of Representatives and is a member of the Judiciary Committee, where he serves as Chairman of the Subcommittee on the Constitution and a member of the Subcommittee on Courts, Commercial and Administrative Law. He is also a member of the Armed Services Committee, where he serves on the Strategic Forces Subcommittee and the Subcommittee on Emerging Threats and Capabilities.

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