The Justice Department has to do something about its timing – and more importantly, they need to reexamine exactly what they did (and are doing) with the criminal prosecution of GM.
If you want a perfect example of talking out of both sides of your mouth, the last two weeks put the focus right on the leadership of the Justice Department. The picture is not a pretty one — it is really inexplicable.
First, with much fanfare and political moxie, DOJ issued the Yates memorandum, promising to prosecute culpable individuals involved in corporate crime.
Everyone took DOJ at its word, read the memorandum and understood what it said and what prosecutors were going to do.
Second, the next week, and I mean the next week, DOJ announces the criminal settlement with GM for $900 million for the ignition switch scandal. Let’s take a look at the terms of this deal:
- A deferred prosecution agreement, not a guilty plea
- A $900 million fine and settlement, less than Toyota’s 1.2 billion settlement for accelerator and floor mat safety defects.
- No individuals indicted
- An admission of causing 15 deaths, not the 124 deaths connected to the defect
Forgive me, but it does not take a rocket scientist to figure out that DOJ’s timing could not be worse, and its resolution is embarrassing.
As a former federal prosecutor and DOJ official, I am disappointed, to say the least, that the Justice Department did not do its job, and did not fulfill its obligation to justice. For those victims’ families, my heart goes out to them, and I share their disappointment in the failure of the Justice Department to carry out its mission.
The GM scandal is one of the most egregious examples of white-collar crime resulting in direct harm to the public – the killing of many innocent consumers. It is a story that deserves greater punishment and individual accountability. Unfortunately, now it will go down in history as reflecting a bleak moment for the Justice Department as well as GM.
The facts surrounding the case, even if you accept the Valukas Report, an internal investigation conducted by one of GM’s primary law firms, is hard to stomach. For over a decade GM employees, lawyers and senior officials were aware of the ignition switch defect. During this decade, with fits and starts, GM did not fix the problem. Instead, the ignition device defect continued despite the fact that innocent people were being killed, and engineers and lawyers ignored or blatantly derailed internal attempts to address the problem.
GM’s lawyers were complicit in this cover-up for fear of civil litigation implications. GM’s ethics and compliance function was moribund to the point of non-existence and corporate leadership was nowhere to be found.
The US Attorney for the Southern District of NY, for whom I have a lot of professional respect, got it wrong when he told the press, “We’re not done, and it remains possible we will charge an individual,” he said at a news conference. “If there is a way to bring a case like that, we will bring it.”
That does not sound like a prosecutor who has instructed his troops to investigate a case with the goal of prosecuting culpable individuals. It sounds like a prosecutor who is trying to buy time and justify a failure to act.
Prosecutors have a variety of tools available to them to bring individuals to justice and I can assure you that the US Attorney and senior Justice Department officials did not adequately review or push for the prosecution of individuals.
Whatever the explanation may be for the failure to prosecute culpable individuals, the Justice Department did not advance the ball on its so-called commitment to individual accountability – if anything, they let the public, and most importantly, the victims’ families down.