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Best Practices for Internal Investigations

Matt Kelly | April 20, 2009

All right, we’re going to say it: Occasionally prosecutors go overboard.

This is a big admission for Compliance Week, because like good reporters everywhere, we tend to be cynical people. When we hear the word “indicted” we assume “guilty” and wonder when the person in question will resign.

Lately, however, we’ve seen two instances of heavy-handed prosecution. Most notable was the case of Ted Stevens, the former Alaska senator, whose conviction on corruption charges was tossed out by a federal judge on April 7 because of prosecutorial misconduct. The judge was so incensed over the prosecutors’ behavior he referred them for criminal investigation. We’re not sure how much of a salve that is to Stevens, who was convicted in late October and promptly lost his job on Election Day.

Likewise, we have the hollow victory of Kent Roberts, former general counsel for IT security company McAfee. Roberts was indicted in February 2007 for alleged improprieties over backdated stock options. He was acquitted by a jury of some charges in October 2008, and the Securities and Exchange Commission dropped all other remaining charges against Roberts in March.

Again, that’s probably not much solace to Roberts. He was fired from McAfee in 2006, and was named countless times by the media—including Compliance Week—as an “alleged offender” in the backdating frenzy that swept Corporate America in 2006 and 2007.

Roberts’ and Stevens’ innocence is worth noting, since they’re not the only ones out there tarred by prosecutors and the media.

So what’s to be done?

First, Compliance Week is putting corporate investigations in the spotlight at our annual conference in June. We’ve corralled Roberts’ defense attorneys, Neal Stephens and William Freeman from the law firm Cooley Godward, to speak about investigations and the balancing act compliance officers face: how to demonstrate good-faith cooperation to prosecutors, what can go wrong, and how to keep legal troubles and costs to a minimum for your company. We encourage all our subscribers to attend; our full conference agenda makes it well worth the cost.

Second, keep hope alive. Congress has been yammering at the Justice Department for years to ease up its strong-arm habits of forcing companies to waive attorney-client privilege and the like. At least on paper, the Justice Department has been doing that with successive revisions of its policies for investigating and indicting corporations.

The cynics—and yes, we’re still among them—will be quick to say revised policies don’t matter as much as the people enforcing them. Well, on April 8, Attorney General Eric Holder assigned Marshall Jarrett, long-time director of the Justice Department’s Office of Professional Responsibility, to run the Executive Office of U.S. Attorneys and oversee what the 94 U.S. attorneys are doing.

Jarrett and Holder worked together closely in the 1990s, when Holder was deputy attorney general and Marshall served in his office. At the time, Jarrett helped to shape federal criminal law enforcement policy and supervised the prosecution of corrupt officials. Holder, meanwhile, was drafting “ the Holder Memo,” the department’s first-ever guidelines on corporate investigation and indictment.

So the key players know each other, have worked together, and presumably have a clear sense of what they want to do. Let’s hope that ending prosecutorial abuses is part of that.