Posted Aug 07, 2012 07:32 pm CDT
Corporations this year will likely pay as much as $8 billion to settle charges of defrauding the U.S. government, the New York Times reports, and that is twice as much as what was assessed last year by the Justice Department. However, some question the lack of charges against executives running those companies.
“A lot of people on the street, they’re wondering how a company can commit serious violations of securities laws and yet no individuals seem to be involved and no individual responsibility was assessed,” Jack Reed, a Rhode Island Democratic U.S. senator who chairs a securities regulation subcommittee, said recently at a hearing.
In the past three years, the Times reports, the Justice Department collected $8.6 billion from corporations, and that’s “more than in any similar period in history.” Recent defendants include GlaxoSmithKline, which settled civil accusations of drug marketing and price fraud; and ATK Launch Systems, which agreed to pay $37 million for selling defective flares to the military.
Some say the civil prosecutions are lucrative for the government. The Times mentions a Gibson Dunn & Crutcher report to clients that stated that for the first six months of 2012, civil cases filed under the False Claims Act brought in more than $4.1 billion. Criminal settlements and payments amounted to $2.7 billion, according to the piece.
Also, few executives are prosecuted because the cases are harder to prove up, government enforcement officials said. Senior executives are often insulated from day-to-day decisions, the Times notes, and they’ve learned to avoid evidence like emails that would prove they knew their companies were breaking the law.
“To the extent you do not see many individuals being held accountable, that’s not because of a lack of will on the part of the Department of Justice,” acting associate attorney general Tony West told the Times. “There is a lot of behavior that makes us angry but which is not necessarily illegal. If the evidence is there, we won’t hesitate to bring those cases.”