Ex-DOJ criminal chief Breuer returns to Covington & Burling

WASHINGTON, March 28 Wed Mar 27, 2013 11:59pm EDT

WASHINGTON, March 28 (Reuters) - Lanny Breuer, who stepped down as head of the Justice Department's criminal division, is returning to the law firm Covington & Burling where he spent most of his career.

The firm announced that Breuer will assume the title of vice-chair, beginning July 1.

Ethics rules bar Breuer from appearing before the department or speaking to department officials for two years, but allow him to work on any new inquiries behind the scenes.

In an interview on Wednesday, Breuer said he expects his prior employer to increasingly focus on international investigations including foreign bribery, money laundering, and export issues.

"I think money-laundering will continue to be very big ... for four years we built up a pretty big infrastructure and recruited great lawyers to work on it," he said at Covington's Washington office, across the street from Justice Department headquarters on Pennsylvania Avenue.

In his role as vice-chairman of the firm, he said he plans to split his time on client work, and on developing new work for the firm.

Breuer, who shouldered much of the blame for the lack of criminal cases related to the financial crisis but also led the department to record settlements in other enforcement matters, spent four years as the top criminal prosecutor at the department.

He announced his plans to leave government in January, and officially left the agency earlier this month.

The law firm declined to discuss Breuer's compensation, but last year Covington reported profits per partner of $1.27 million.

FOREIGN COUNTERPARTS

While Breuer met frequently with foreign law enforcement on foreign bribery and other matters, tensions recently flared with the UK Serious Fraud Office over how to proceed with cases tied to a global investigation into the manipulation of benchmark interest rates including Libor.

UK authorities arrested former UBS employee Tom Hayes days before the Justice Department filed criminal charges against him in December, raising questions about whether the two were coordinating their efforts.

Lawyers representing firms and individuals caught up in the Libor probes have privately expressed frustration over what they perceived as international friction among the authorities.

"There are always growing pains ... when you have a very high-profile case, others will be interested in it," Breuer said, describing the relationship between DOJ and foreign counterparts as "great."

Breuer said he visited SFO director David Green in his London office around three months ago. "We could not have had a greater relationship," Breuer said.

TOO BIG TO JAIL?

The Justice Department has also come under fire for a perceived lax approach against the largest financial institutions, in a sentiment dubbed "too big to jail."

HSBC, for example, agreed to pay a record $1.9 billion in December to resolve charges of money laundering lapses, but was not forced to plead guilty to the conduct, and no individual bankers were criminally charged.

U.S. Attorney General Eric Holder acknowledged at a Senate hearing this month that some financial institutions are so large that it becomes difficult to prosecute them because it would "have a negative impact on the national economy, perhaps even the world economy."

Instead HSBC and other institutions enter into deferred prosecution agreements, in which the department agrees to defer and drop charges for good behavior, instead of indicting a company.

Breuer defended such agreements, which he said often result in more draconian punishments than a plea might produce.

The HSBC agreement required the bank's management to undertake a range of specific actions, for example, while a plea does not usually include such specific requirements

Subsidiaries of two other banks, UBS and RBS, in recent months did plead guilty in connection with Libor manipulation, and those deals could provide a template for future action, Breuer said.

"Everybody is seeing what will happen, and I do think more financial institutions, if they've done wrong, will be held to account in similar ways," he said.

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