Publications

In this day of market meltdowns, failed recalls, and foreign bribery scandals, it’s commonplace to hear calls for criminal prosecution of individuals who, in the public’s mind, should be held responsible for such calamities.

These calls predictably prompt apologetic responses, in turn calling for new regulation, beefed-up federal resources, and harsher penalties. Possibly lost in all this buzz has been Attorney General Eric Holder’s recently-announced prescription for curing such perceived ills, corresponding with the Justice Department’s recent prosecution of FedEx in a case that marks a dramatic extension of the “failure to prevent” theory of criminal liability. Corporate compliance officers need take notice.

Attorney General Holder, speaking recently at New York University, recited the oft-heard lament regarding his department’s inability to hold accountable “high-ranking executive[s] who [are] far removed from a firms day-to-day operations.” The root cause of this problem, he explained, is that “[r]esponsibility remains so diffuse, and top executives so insulated, that any misconduct could … be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.” Recognizing that, in our system of justice, a “crime” unaccompanied by intentional wrongdoing is typically no crime at all, he proposed the following fix: modification of our criminal laws, as was recently done in the UK, to require someone in a corporate organization to be designated as accountable if misconduct occurs. To create the appearance that such radical change to our system of justice – effectively mandating the designation of a corporate whipping boy – is within the historical norm, he cited to the well-aged Federal Food, Drug and Cosmetic Act (FFDCA), which first gave rise to the “responsible corporate officer” doctrine, and which, according to Holder, is exemplary because, “in the event that illegal activity is uncovered,” it allows for “criminal charge[s] against the people in charge who were in a position to do something about it.”[1]

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