U.S. revises guidelines on white collar crime probes
NEW YORK (Reuters) - The U.S. Justice Department announced new guidelines on Thursday for investigating corporate crime cases, following criticism that prosecutors have gone too far in pressing companies to cooperate with criminal probes and restricted individual defendants' rights.
U.S. Deputy Attorney General Mark Filip said the rules would be binding with immediate effect on the department's prosecutors. Filip said he hoped the U.S. Securities and Exchange Commission and other government agencies would also follow the revised policy.
Filip said at a news conference at the New York Stock Exchange that the new rules prevent prosecutors from asking firms to disclose certain attorney-client privileged information.
A corporate lawyers' group and two U.S. Senators who have called for the changes welcomed the announcement but said more needed to be done.
"There are several other government agencies that still have misguided rules in place that unfairly undermine the attorney-client privilege," Association of Corporate Counsel president Frederick J. Krebs said in a statement.
Prosecutors also may not consider whether a company is paying the legal fees of employees, officers or directors being investigated for potential wrongdoing and whether or not a corporation has made joint defense agreements with other firms or individuals.
The expected announcement came the same day a U.S. appeals court in New York upheld the dismissal of criminal charges against 13 former executives at accounting firm KPMG, saying prosecutors violated the defendants' constitutional rights over payment of legal fees.
Filip said he could not comment on the KPMG ruling because he had not yet read the decision, but he outlined several changes to rules prosecutors may use in evaluating a company's cooperation while under investigation.
The government has faced criticism, from business groups to lawyers and legislators, for pressuring companies to cooperate in criminal probes or else risk indictment.
Among the tactics critics said were too aggressive were demands that companies waive attorney-client privilege or stop paying attorney fees for employees under investigation. Some critics have called for permanent legislation by Congress rather than revisions of the guidelines.
They include Senator Arlen Specter, a Republican from Pennsylvania and ranking member of the Senate Judiciary Committee. Specter, in a statement, called the revisions "a step in the right direction but they leave many problems unresolved so that legislation will still be necessary."
Senator Patrick Leahy, a Democrat of Vermont who is chairman of the U.S. Senate Judiciary Committee, said he would consult with Specter and other committee members.
"We will continue to be vigilant on this issue, and ensure that the Department does not return to the abusive policies and practices of the past," Leahy said.
Filip said that he believed the revisions would not change the number or types of cases prosecuted by his department.
"We are committed very much to aggressively investigating and prosecuting crimes whether it's by individuals or companies," he told reporters at the NYSE. "We believe these new rules allow us to do that. We also think it is important to have rules that respect people's rights."
The previous guidance -- known as the "McNulty Memo" named for Filip's predecessor, Paul McNulty -- allowed prosecutors to consider whether a firm disciplined or fired employees for the purposes of evaluating cooperation.
Filip said that was now disallowed and prosecutors may only consider whether a corporation has disciplined employees "that the corporation identifies as culpable, and only for the purpose of evaluating remedial measures or compliance program."
(Editing by Gary Hill)
