Sally Yates, before she became known as the acting attorney general fired by the President for refusing to litigate his Muslim refugee ban, was usually known for signing off on the “Yates Memo,” in which she tried to moniker the individual accountability memo that of course will forever be known under her name. The Yates Memo was hardly a dramatic change, as it recommitted the Justice Department to prosecuting individual lawbreakers who worked in corporations. While the Yates Memo was perceived to be in response to the lack of any Justice Department prosecutions from the 2008 financial crisis, in the world of The Man From FCPA, it was treated as only one more iteration by the Justice Department in a continuum of policy pronouncements.
The indictment of six individuals from the ongoing Volkswagen scandal certainly informs the government’s execution of the precepts of the Yates Memo. Drawing from research into street criminals, two commentators noted two reasons, encapsulated in one question, for increased individual prosecutions. It basically comes done to two questions, “will I be caught, and if so, how badly will I be punished?”
It has been shown that more certainty toward apprehension goes a long way toward deterrence. Basically “the more people think they will be arrested for a crime, the less likely they are to commit it.” The second dimension of punishment is generally seen to have lesser deterrent effect. Yet, both of these aspects play into both the Yates Memo and the more general ongoing enforcement efforts against bribery and corruption.
Some commentators have railed against the use of Deferred Prosecution Agreements as being too lenient on corporations. They could, however, be right on the lack of deterrence effect from such prosecution tools. Volkswagen has paid almost $20bn in fines and penalties. Yet, it was the indictment of the six individuals that may, in the long run, send the clearest signal of the Justice Department’s new approach to this issue.