[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
THE McNULTY MEMORANDUM'S EFFECT ON THE RIGHT TO COUNSEL IN CORPORATE
INVESTIGATIONS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON CRIME, TERRORISM,
AND HOMELAND SECURITY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
MARCH 8, 2007
__________
Serial No. 110-24
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California LAMAR SMITH, Texas
RICK BOUCHER, Virginia F. JAMES SENSENBRENNER, Jr.,
JERROLD NADLER, New York Wisconsin
ROBERT C. SCOTT, Virginia HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina ELTON GALLEGLY, California
ZOE LOFGREN, California BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas STEVE CHABOT, Ohio
MAXINE WATERS, California DANIEL E. LUNGREN, California
MARTIN T. MEEHAN, Massachusetts CHRIS CANNON, Utah
WILLIAM D. DELAHUNT, Massachusetts RIC KELLER, Florida
ROBERT WEXLER, Florida DARRELL ISSA, California
LINDA T. SANCHEZ, California MIKE PENCE, Indiana
STEVE COHEN, Tennessee J. RANDY FORBES, Virginia
HANK JOHNSON, Georgia STEVE KING, Iowa
LUIS V. GUTIERREZ, Illinois TOM FEENEY, Florida
BRAD SHERMAN, California TRENT FRANKS, Arizona
ANTHONY D. WEINER, New York LOUIE GOHMERT, Texas
ADAM B. SCHIFF, California JIM JORDAN, Ohio
ARTUR DAVIS, Alabama
DEBBIE WASSERMAN SCHULTZ, Florida
KEITH ELLISON, Minnesota
[Vacant]
Perry Apelbaum, Staff Director and Chief Counsel
Joseph Gibson, Minority Chief Counsel
------
Subcommittee on Crime, Terrorism, and Homeland Security
ROBERT C. SCOTT, Virginia, Chairman
MAXINE WATERS, California J. RANDY FORBES, Virginia
WILLIAM D. DELAHUNT, Massachusetts LOUIE GOHMERT, Texas
JERROLD NADLER, New York F. JAMES SENSENBRENNER, Jr.,
HANK JOHNSON, Georgia Wisconsin
ANTHONY D. WEINER, New York HOWARD COBLE, North Carolina
SHEILA JACKSON LEE, Texas STEVE CHABOT, Ohio
MARTIN T. MEEHAN, Massachusetts DANIEL E. LUNGREN, California
ARTUR DAVIS, Alabama
Bobby Vassar, Chief Counsel
Michael Volkov, Minority Counsel
C O N T E N T S
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MARCH 8, 2007
OPENING STATEMENT
Page
The Honorable Robert C. Scott, a Representative in Congress from
the State of Virginia, and Chairman, Subcommittee on Crime,
Terrorism, and Homeland Security............................... 1
The Honorable J. Randy Forbes, a Representative in Congress from
the State of Virginia, and Ranking Member, Subcommittee on
Crime, Terrorism, and Homeland Security........................ 3
WITNESSES
Mr. Barry M. Sabin, Deputy Assistant Attorney General, U.S.
Department of Justice, Washington, DC
Oral Testimony................................................. 14
Prepared Statement............................................. 17
Mr. Andrew Weissmann, Partner, Jenner and Block, New York, NY
Oral Testimony................................................. 24
Prepared Statement............................................. 26
Mr. William M. Sullivan, Jr., Partner, Winston and Strawn, LLP,
Washington, DC
Oral Testimony................................................. 33
Prepared Statement............................................. 35
Ms. Karen J. Mathis, President, American Bar Association,
Chicago, IL
Oral Testimony................................................. 45
Prepared Statement............................................. 47
Mr. Richard T. White, Senior Vice President, Secretary, and
General Counsel, The Auto Club Group, Dearborn, MI
Oral Testimony................................................. 75
Prepared Statement............................................. 77
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable Sheila Jackson Lee, a
Representative in Congress from the State of Texas, and Member,
Subcommittee on Crime, Terrorism, and Homeland Security........ 4
APPENDIX
Material Submitted for the Hearing Record........................ 113
THE McNULTY MEMORANDUM'S EFFECT ON THE RIGHT TO COUNSEL IN CORPORATE
INVESTIGATIONS
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THURSDAY, MARCH 8, 2007
House of Representatives,
Subcommittee on Crime, Terrorism,
and Homeland Security
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 9:33 a.m., in
Room 2141, Rayburn House Office Building, the Honorable Bobby
Scott (Chairman of the Subcommittee) presiding.
Mr. Scott. The Subcommittee will come to order.
I am pleased to welcome you today to this hearing before
the Subcommittee on Crime, Terrorism, and Homeland Security, on
``The McNulty Memorandum's Effect on the Right to Counsel in
Corporate Investigations.''
As noted in the U.S. Supreme Court in Upjohn Company v.
United States, the attorney-client privilege is the oldest of
privileges for confidential communications known to common law.
The purpose of the privilege is to encourage full and frank
communications between attorneys and their clients, so that
sound legal advice and advocacy can be given by counsel.
Such advice of counsel depends upon the lawyer being fully
informed by the client. And as the court noted in Trammel v.
U.S. in 1980, the lawyer-client privilege rests on the need for
the advocate and the counselor to know all that relates to the
client's reasons for seeking representation, if the
professional mission is to be carried out.
And this purpose can only be effectively carried out if the
client is free from consequences or apprehensions regarding the
possibility of disclosure of the information.
This is not the case when waivers are coerced or obtained
under duress. And there is certainly a coercive situation where
there is fear or concern by a defendant in a criminal case,
that he or she may not receive full leniency without a waiver
of attorney-client privilege.
As long as there is reason for concern that full leniency
may not be granted without a waiver of attorney-client
privilege, the fact that the department does not specifically
require a waiver is of little consolation.
As the court noted in the Upjohn case, an uncertain
privilege, or one which purports to be certain but results in
widely varying applications by courts, is little better than no
privilege at all.
The attorney-client privilege is a privilege of the client,
not the lawyer, and lawyers have an absolute responsibility to
protect a client's privilege. Corporations are persons relative
to constitutional rights of persons.
Coercing waivers of corporate attorney-client privilege has
not always been the practice among Federal prosecutors.
Formerly, a company could evidence its cooperation with such
prosecutors by providing insight and access to relevant
information and to the company's workplace and employees. The
definition of a company's cooperation did not entail production
of legally privileged communications or attorneys' litigation
work product material.
Memoranda issued by the Department of Justice over the past
several years, however, reveal that policies which suggest that
corporations face an increased risk of prosecution, if they
claim such constitutionally protected privileges.
The first such memorandum was issued by former deputy
attorney general, Eric Holder in 1999. That memorandum was
designed to provide prosecutors with factors to be considered
when determining whether to charge a corporation with criminal
activity, and to specifically allow prosecutors engaging the
extent of a corporation's cooperation to consider the
corporation's willingness to waive attorney-client and work
product privileges.
The Holder memorandum was then superseded in 2003 by
another memorandum issued by former deputy attorney general,
Larry Thompson. The Thompson memo contained the same language
regarding the waiver of attorney-client and work product
privileges and also addressed the adverse weight that might be
given to a corporation's participation in a joint defense
agreement with its officers or employees and its agreement to
pay their legal fees.
Today, the current department policies relating to
corporate attorney-client and work product privilege waivers
are embodied in the McNulty Memorandum issued in December of
2006 by current deputy attorney general, Paul McNulty.
So, this new memorandum does state that waiver request be
the exception rather than the rule. It continues to threaten
the viability of the attorney-client privilege in business
organizations by allowing prosecutors to request a waiver of
privilege upon finding of legitimate need.
I fully recognize that the department faces many hurdles
when undertaking the investigation and prosecution of corporate
malfeasance. We only need to look at victims of the Enron
collapse, where nearly 10,000 individuals lost their jobs,
their pensions, their plans for the future. And we know that it
is vital that prosecutors have the tools necessary to prosecute
these crimes and hold accountable wrongdoers who profit at the
expense of ordinary working Americans.
I also know, however, that facilitating and encouraging
such investigations must not occur at the cost of vital
constitutional rights of corporations or their employees.
I firmly believe that by protecting these well established
and essential constitutional interests, we can only facilitate
legitimate investigations by encouraging corporate offices and
employees to consult with their attorneys regarding corporate
wrongdoing in a confidential setting, but also ensure fairness
of our criminal justice system for all Americans.
It is now my privilege to recognize my colleague from
Virginia, the Ranking Member of the Committee, Randy Forbes,
for his opening statement.
Mr. Forbes. Thank you, Chairman Scott. And I want to thank
you for scheduling this important hearing.
I also want to thank our distinguished panel of witnesses
for taking your time and giving us your expertise and advice
today.
One year ago, on March 7, 2006, this Subcommittee conducted
an oversight hearing on just this issue. At first glance, the
landscape surrounding the issue of corporate waivers of
attorney-client privilege appears to have changed with the
Justice Department's issuance of the so-called McNulty
Memorandum governing criminal prosecutions of corporations.
But a closer examination of the McNulty Memorandum shows
that many of the same questions and concerns that were raised
at last year's hearing remain. This is disturbing to all of us.
I remain concerned that prosecutors may be overreaching by
demanding that corporations waive their attorney-client
privilege as a condition of cooperation and a decision not to
indict a company.
The attorney-client privilege is deeply rooted in our
jurisprudence and the legal profession. It encourages frank and
open communication between clients and their attorneys, so that
clients hopefully can receive effective advice and counsel.
In the corporate context, as we saw in the case of Arthur
Andersen, the life of a corporation can turn on a prosecutor's
exercise of discretion whether or not to charge a corporation.
That decision can have profound consequences to our economy,
the employees and the community, and should not turn on whether
or not a company waives its attorney-client privilege.
I know that cooperation of the criminal justice system is
an important engine of truth. To me, the important question is
whether prosecutors seeking to investigate corporate crimes can
gain access to the information without requiring a waiver of
the attorney-client privilege. There is simply no reason for
prosecutors to require privilege waivers as a routine manner.
I look forward to hearing from today's witnesses and to
working with my colleague, Mr. Scott, on this important issue,
and I yield back the balance of my time.
Mr. Scott. Thank you.
Without objection, all Members may include opening
statements in the record at this point.
We have been joined by the Chairman of the full Committee,
Mr. Conyers, and also Mr. Coble, Mr. Sensenbrenner and Mr.
Chabot, at this point.
And, without objection, Members may include opening
statements.
[The prepared statement of Ms. Jackson Lee follows:]
Prepared Statement of the Honorable Sheila Jackson Lee, a
Representative in Congress from the State of Texas, and Member,
Subcommittee on Crime, Terrorism, and Homeland Security
Mr. Scott. We will now go on to our witnesses.
Our first witness is Mr. Barry Sabin, from the Department
of Justice. He is the deputy assistant attorney general in the
Criminal Division for the United States Department of Justice.
Since January of 2006, he has been responsible for overseeing
the fraud, criminal appellate section, gang squad and capital
case unit.
Prior to his current appointment, he served as a chief of
the Criminal Division's counterterrorism section and has been a
Federal prosecutor since 1990. He received his bachelor's and
master's degrees from the University of Pennsylvania, his law
degree from New York University Law School.
Our next witness will be Mr. Andrew Weissmann, a partner in
the law firm of Jenner and Block's New York office, where he
specializes in white-collar criminal and regulatory matters.
Prior to his current position, he served for 15 years with the
Department of Justice where he worked as assistant U.S.
attorney and was selected to serve as the director of a special
task force created to investigate the Enron corporate scandal.
Previously, he was selected by the director of the FBI to
be a special counsel, and served as chief of the Criminal
Division of the U.S. Attorney's Office in the Eastern District
of New York. In recognition of his efforts in the Department of
Justice, he received numerous awards including the Attorney
General's Award for Exceptional Service, the highest award
given to Federal prosecutors.
He is a graduate of Princeton University, a recipient of a
Fulbright Fellowship at the University of Geneva and a graduate
of the Colombia Law School.
Next, William Sullivan, a litigation partner at the law
firm of Winston and Strawn. In this capacity he concentrates on
corporate internal investigations, white-collar criminal
defense and complex civil and securities litigation. He
previously served over 10 years as assistant U.S. attorney for
the District of Columbia. He also worked in the Manhattan
district attorney's office and in private practice as a
litigator in New York City.
He has spoken on the Government's insistence on the waiver
of attorney-client privilege for corporations under
investigation in front of the American Bar Association, and has
also addressed the World Trade Organization on Sarbanes-Oxley
issues. He received his bachelor's and master's degrees from
Tufts University and his law degree from Cornell University.
Next we have Karen Mathis, president of the American Bar
Association, and partner in the Denver office of McElroy,
Deutsch, Mulvaney and Carpenter.
Prior to holding her current position with the ABA, she
served as the association's second-highest elected office, the
chair of its house of delegates, where she served as a member
since 1982. She has been active in the Denver Bar Association
and the Colorado Bar Association for many years, where she held
offices in the young lawyers section in both associations and
served as vice president of the Colorado Bar Association.
She earned a law degree from the University of Colorado
School of Law and bachelor's from the University of Denver.
Our next witness will be introduced by the Chairman of the
full Committee, Mr. Conyers.
Mr. Conyers. Thank you. Good morning, ladies and gentlemen.
It is great to see the president of the bar here again. She
is becoming more and more regular in her appearances.
I am delighted to just bring to the Committee's attention
the presence of an old friend and a distinguished witness,
Richard White.
He currently is the general counsel for the Auto Club Group
of Companies in Dearborn, Michigan, and was a founding partner
in, I think, the largest, predominantly African-American firm
in Michigan, Lewis, White and Clay. David Baker Lewis is still
the head of that firm.
And we are delighted that you are here today.
He has come up from Morehouse College, Harvard University
Law School, has been very active in the civil rights community
in the State, and has also been commissioner of Foreign Claims
Settlement Commission, and serves as a member of the executive
committee and board of directors of the American Corporate
Counsel Association.
I am very happy to introduce to the Committee Richard
White.
Glad you are here.
And we look forward to some very important testimony on a
subject that could be ignored. What we are finding out,
Chairman Scott, is we are having legislation by memorandum, and
we have gone through quite a few of them.
And I think the combination of civil rights, civil
liberties, chamber of commerce, defense lawyers all coming
together makes this an obvious subject for our attention and
your scrutiny. And I thank you for the opportunity to introduce
Richard White.
Mr. Scott. Well, thank you.
Each of our witnesses' written statements will be made part
of the record in its entirety.
I would ask each of the witnesses to summarize his or her
testimony in 5 minutes or less. To help you stay within that
time, there is a timing light on the table. When you have 1
minute left, the light will switch from green to yellow. And
when finally the red light comes up, we would ask you to
complete your testimony.
Deputy Assistant Attorney General Sabin?
TESTIMONY OF BARRY M. SABIN, DEPUTY ASSISTANT ATTORNEY GENERAL,
U.S. DEPARTMENT OF JUSTICE, WASHINGTON, DC
Mr. Sabin. Chairman Scott, Ranking Member Forbes, Members
of the Subcommittee, thank you for the opportunity to be here
today to discuss the Department of Justice's corporate criminal
charging policies and its respect for the attorney-client
privilege.
These policies have been articulated in a memorandum issued
by Deputy Attorney General Paul McNulty 3 months ago.
In connection with my testimony today regarding the McNulty
Memorandum, I would like to underscore five key points that are
fundamental to the department's corporate criminal charging
policies: one, the tone of the McNulty Memorandum and its
respect for the importance of the attorney-client privilege;
two, developing concrete data to uniformly consider and
implement the McNulty Memorandum; three, establishing a
legitimate need for requesting a waiver of the attorney-client
privilege; four, instituting a meaningful consultation and
approval process to ensure consistent application of department
practices; and five, an incremental approach to seeking
information--first factual information and then legal
opinions--from the corporate entity, if appropriate.
The tone of the McNulty Memorandum is critical to an
understanding of the department's approach to corporate
criminal charging policies. It is a tone of respect for the
importance and longstanding nature of the attorney-client
privilege. The department helps protect investors and ensure
public confidence in business entities and the markets in which
those entities participate.
The Department shares this common goal with the vast
majority of corporate leaders who believe in and work hard to
maintain integrity and honesty in corporate governance.
The attorney-client and work product protections serve an
extremely important function in the U.S. legal system and can
help responsible corporations in their efforts to comply with
applicable law.
At the same time, waiver of the privilege may advance
important interests. As articulated in the McNulty Memorandum,
a company's disclosure of privileged information may permit the
Government to expedite its investigation. Indeed, this may
assist the Government and the corporation.
The principles of charging business organizations, now
embodied in the McNulty Memorandum, establish a nine-factor
test that prosecutors consider in determining, in their
discretion, whether to charge a corporation.
A prosecutor must consider and weigh all of the relevant
factors. The issue regarding cooperation is one of nine
factors, and the waiver issue is a subfactor of cooperation.
It is important that this Subcommittee understand that the
department has never instructed prosecutors to seek routine
requests for waiver of privilege. Nor is waiver of privileged
information a prerequisite to getting credit for cooperation by
a corporation. Indeed, the policy now makes clear that legal
advice, mental impressions and conclusions by counsel are
protected and should only be sought in rare circumstances.
Any request for such materials must be in writing and seek
the least intrusive waiver necessary to conduct a complete and
thorough investigation. This means that the request must be
narrowly tailored to meet the specific investigation need. The
United States attorney considers that request in consultation
with the Assistant Attorney General of the Criminal Division.
The request and approval must be in writing, and those records
must be maintained.
Prosecutors must establish a legitimate need for that
specific information. The four-pronged test is set forth in my
written statement.
This test ensures that evaluating the need for waiver is a
thoughtful process, and that prosecutors are not requesting it
without examining the quantum of evidence already in their
possession and determining whether there was a real need to
request privileged information.
Prosecutors must take preliminary investigative steps to
determine whether a corporation and its employees have engaged
in criminal activity before seeking waiver, thereby ensuring
that prosecutors cannot seek waiver at the outset of the
investigation.
To be clear, a prosecutor must take an incremental
approach, first establishing a legitimate need and then
submitting a narrowly tailored, written request.
The United States attorney, in consultation with the
assistant attorney general of the Criminal Division, approves a
request for factual information; the deputy attorney general
approves requests for legal information.
In light of the substantial and thoughtful revisions
contained in the McNulty Memorandum, the Department urges this
Subcommittee, at a minimum, to allow the guidance a chance to
work before considering any legislation.
In the approximately 3 months since the memorandum was
issued, the deputy attorney general's office has not received a
single request seeking a waiver of legal advice and strategy.
Moreover, the Criminal Division has only received a few
requests to seek purely factual information. In each of these
instances, the Criminal Division has engaged in a meaningful
dialogue regarding the requests with the district.
Our prosecution efforts confirm that corporate fraud is not
a historical relic. The Department of Justice continues to
devote significant time and resources to protecting our
financial markets and the American investor. We remain
committed to investigating and prosecuting corporate matters.
The Department's past and current efforts to combat
corporate fraud have assisted in some part, I believe, to
supporting compliance in the business community. Since the
president established the Corporate Fraud Task Force, many
corporations have implemented effective compliance programs,
and corporations are quicker to respond when they find fraud
committed by the corporation.
It is this common ground--prosecutors committed to the fair
administration of justice and responsible business leaders
fulfilling their duties of honest dealing to corporate
shareholders--that unites us in our determination that
eliminating fraud is good for business.
We appreciate the opportunity to share our views with this
Subcommittee.
Thank you.
[The prepared statement of Mr. Sabin follows:]
Prepared Statement of Barry M. Sabin
TESTIMONY OF ANDREW WEISSMANN, PARTNER,
JENNER AND BLOCK, NEW YORK, NY
Mr. Weissmann. Good morning, Chairman and Members of the
Subcommittee and staff. I will make three points regarding the
McNulty Memorandum.
The memorandum leaves completely intact the Government's
ability to penalize a company that does not take punitive
action against employees for the mere assertion of their
constitutional right to remain silent.
Under the McNulty Memorandum, companies may be deemed by
the Department of Justice as uncooperative, simply because they
do not fire employees who refuse to speak with the Government,
based on the fifth amendment.
By contrast, the Senate bill reintroduced this past January
would appropriately prohibit the Government from considering an
employee's assertion of the fifth amendment in evaluating
whether to charge the individual's employer.
The issue raised by current DOJ policy is not about how so-
called ``big business'' behaves; it is about how the Government
does. Indeed, the current DOJ policy was recently found by
Judge Lewis Kaplan, in the so-called KPMG tax shelter case, to
be constitutionally impermissible. And the factual situation in
KPMG is not unique.
Across the country, numerous corporations have instituted
strict policies that call for firing employees who do not
``cooperate'' with the Government.
Ironically, now that the McNulty Memorandum has largely
eliminated the ability of prosecutors to weigh in on an
employer's decision to advance legal fees, but left intact the
ability to reward a company that fires employees who assert the
fifth amendment, the Government can encourage employers to take
the more draconian corporate measure against its employees, but
not the lesser.
As a simple policy matter, whether a company punishes
employees who assert the fifth amendment is a poor proxy for
determining whether the entire company should be charged with a
crime. Other factors--such as the level and pervasiveness of
wrongdoing, a history of recidivism--are far more accurate
measures of corporate culpability.
But more importantly, the DOJ policy should be altered,
because the Government should not be fostering an environment
where the employees risk losing their job merely for exercising
their constitutional right.
A second problem is that, although the McNulty Memorandum
states that refusal to disclose legal advice and attorney-
client communications cannot count against a company, the same
does not hold true for information the Government deems to be
purely factual.
But information that is deemed by the McNulty Memorandum to
be allegedly purely factual is, in fact, usually clearly
protected by the attorney-client privilege and/or work product
privilege. The McNulty Memorandum's examples illustrate this
problem.
As examples they list as purely factual information,
witness statements, factual interview memoranda and
investigative facts documented by counsel.
But who an attorney interviews, what questions an attorney
asks and what information is chosen as important to memorialize
can reveal significant information about the attorney's defense
strategy. And for this reason, courts have repeatedly held--and
I am quoting now from one of the cases--``how a party, its
counsel and agents choose to prepare their case, the efforts
they undertake and the people they interview, is not factual
information to which an adversary is entitled.''
The McNulty Memorandum simply ignores this case law and its
unassailable logic and abrogates to itself the determination
that material that has heretofore been widely deemed to be
privileged is not entitled to protection under the memorandum.
Finally, one of the main flaws in the McNulty Memorandum is
that the decision to charge a corporation is not required to be
reviewed by Main Justice. In practice, wide variations in the
field currently exist regarding the United States Attorney's
Office's corporate charging practices.
But the lack of oversight is bewildering, given the wide
array of relatively minor decisions that are overseen by Main
Justice and the enormity of the potential consequences of
charging a corporation. And this lack of oversight is
unfortunate, since there is considerable expertise at main
justice in examining these issues.
Again, it is ironic that one of the key innovations in the
McNulty Memorandum was to have national oversight of decisions
regarding requests for waiver of the attorney-client privilege
in corporate investigations.
Yet the final decision regarding whether to charge the
company receives no such scrutiny.
In conclusion, although DOJ has acted to remedy certain
problems in its corporate charging policy, many remain. There
is no reason to believe that those problems will disappear with
the passage of time, since they are embedded in the McNulty
Memorandum itself.
Thank you for the opportunity to address this Committee.
[The prepared statement of Mr. Weissmann follows:]
Prepared Statement of Andrew Weissmann
TESTIMONY OF WILLIAM M. SULLIVAN, JR., PARTNER, WINSTON AND
STRAWN, LLP, WASHINGTON, DC
Mr. Sullivan. Good morning, Chairman Scott, Ranking Member
Forbes and Subcommittee Members and staff.
One year ago yesterday, this Subcommittee held hearings on
this very issue. It stimulated an important dialogue. I was
privileged to testify then.
While the McNulty Memorandum is a commendable effort to
regulate and, perhaps, restrict Government waiver requests, it
remains to be seen whether it constitutes a real departure from
existing practice. I am gravely concerned that the memorandum's
nonbinding guidelines may only serve to entrench and expand an
internal deliberative process, predisposed to request attorney-
client privileged information and attorney work product.
I urge the Members of this Subcommittee to consider how
these policies have given Government prosecutors unnecessary,
unconstitutional and unfair advantages when pursuing corporate
entities, and to perhaps craft an enforceable legislative
response to not only restore balance, but to continue to foster
an environment in which corporations can properly rely on
counsel in order to follow the rule of law.
The traditional protections for business organizations
supported by the attorney-client privilege and work product
doctrine are further eroding as prosecutors and regulators
continue to demand participation in internal investigations and
the submission of detailed reports in exchange for the mere
prospect of leniency.
In my experience, waiver requests are made even before I
have completed my client's internal investigation and, thus,
even before I have determined that a waiver is in my client's
best interests.
Prosecutors' requests for information in a factual road map
form would also encompass a broad subject matter waiver,
leading to possible disclosure of privileged information beyond
the scope of the investigation, to not only law enforcement
officials, but also to future third parties, including other
Government agencies or opportunistic plaintiffs' attorneys.
The corporate clients with whom I work unequivocally desire
to identify and eliminate suspected criminal conduct occurring
within their ranks. They come to me, their lawyer, seeking
advice and guidance in abiding with internal corporate
governance policies and external laws and regulations.
In such discussions, I may be compelled to determine the
existence, nature and extent of potential criminal activity. My
obligation to the client is to make the best choice, based upon
an informed understanding of the law and the facts.
The presumption of innocence should never be forgotten or
ignored. And counsel's first responsibility should be to
inquire as to whether misconduct in fact took place, and if so,
whether there might exist a credible defense.
Naturally, clients are fearful of sharing all pertinent
information when they believe that the details of an attorney-
client conversation may be turned over the Justice Department
as part of a current or future investigation into these
activities.
In the worst cases, the current policies of the Department
only serve to dampen the aggressive repression of criminal
behavior within companies, because they, in fact, serve to
inhibit the candid disclosure and remediation efforts by
responsible corporate citizens and their counsel.
In conclusion, while ultimately the McNulty Memorandum's
limited revisions may have been designed to appease some
critics and potentially forestall imminent judicial and
congressional action, they do not demonstrate an earnest
reevaluation of Department policies regarding corporate
criminal enforcement.
In fact, legislation such as the Attorney-Client Privilege
Protection Act, recently introduced by Senator Specter, may now
be required. But there is certainly something to be said for
our elected representatives taking the laboring or in resolving
policy questions.
Senator Specter's bill seeks to protect the attorney-client
relationship by prohibiting all Federal agents and attorneys in
a civil or criminal case from demanding such waivers. While the
idea encompassed by the bill is sound, it lacks an enforcement
mechanism to ensure meaningful restraint.
I encourage the consideration of a sanctions provision to
deter the willful Government violator.
Ultimately and finally, perhaps the time has come for us to
expend the same amount of energy spent on this privilege
dialogue in establishing the standards and means with which to
measure corporate compliance, governance and ethics programs
and their adherence to the objectives of the Federal sentencing
guidelines as legitimate factors for purposes of determining a
corporation's cooperation instead of its willingness to
jeopardize its future ability to conform to law through its
renunciation of the attorney-client and work product
privileges.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Sullivan follows:]
Prepared Statement of William M. Sullivan, Jr.
Mr. Scott. Thank you.
We have been joined by the gentleman from California, Mr.
Lungren, and the gentleman from Massachusetts, Mr. Delahunt.
Thank you for joining us.
Ms. Mathis?
TESTIMONY OF KAREN J. MATHIS,
AMERICAN BAR ASSOCIATION, CHICAGO, IL
Ms. Mathis. Thank you. Good morning, Chairman Scott,
Ranking Member Forbes, Members of the Committee and, of course,
your staff members.
My name is Karen Mathis. I am the president of the American
Bar Association. I practice law in Denver, Colorado, with
McElroy, Deutsch, Mulvaney and Carpenter.
It is a great pleasure to be back with you today and to
speak on this very important topic to all of us, on behalf of
the American Bar Association and its 413,000 members, who feel
very strongly that we must support the attorney-client
privilege and the work product doctrine.
It is a concern that we have about the language of the
Justice Department's new McNulty Memorandum, and other similar
Federal policies, that have seriously eroded these fundamental
rights about which I want to speak with you today.
We are concerned about the separate provisions in McNulty
Memorandum that erode employees' constitutional and other legal
rights, including the right to effective legal counsel.
We are working in close cooperation with a broad coalition
of legal and business groups. They range from the United States
Chamber of Commerce to the National Association of Criminal
Defense Lawyers to the Association of Corporate Counsel. And
this is in an effort to reverse what we feel are very damaging
and harmful policies.
The Government's policy was established in 2003 in the
Thompson Memorandum, modified, as you said, in 2006 in the
McNulty Memorandum. And it does erode the attorney-client
privilege and the related work product doctrine by pressuring
companies to waive these protections--in most recent cases, in
order to receive cooperation credit during investigations.
The ABA is concerned that the Department's new policy will
continue to cause a number of profoundly negative consequences,
and I would like to list some of those.
First, it will continue to lead to the routine compelled
waiver of the attorney-client privilege and the work product
protections. Instead of eliminating the improper practice of
forcing companies to waive in return for cooperation credit,
the McNulty Memorandum still allows prosecutors to demand
waiver after receiving high-level Department approval.
And, like the Thompson Memorandum, it gives these companies
credit, if they voluntarily waive without being asked.
Whether it is direct or indirect, these waiver demands are
unjustified, as prosecutors only need the relevant facts to
enforce the law, not the opinions and the mental observations
of corporate counsel.
Second, the McNulty Memorandum continues to seriously
weaken the confidential attorney-client relationship in the
corporate context, by discouraging companies from consulting
with their lawyers and impeding the lawyers' ability to
effectively counsel compliance with the law.
Third, it will continue to undermine companies' internal
compliance programs by discouraging them from conducting
internal investigations designed to quickly detect and to
remedy any misconduct.
For these reasons, the new memorandum will continue to
undermine, rather than enhance, compliance with the law.
Last May, prior to the issuance of the McNulty Memorandum,
the ABA sent a letter to Attorney General Gonzales, and we
asked him to reform the Department's policies.
Again, last September, such concerns were conveyed to the
Department by former senior Justice Department officials. Both
letters are attached to our written statement. And many
congressional leaders have also raised the issue.
Certainly in the hearings you referred to, Congressman
Forbes, last March, virtually all the Members of this
Subcommittee expressed strong concern about the preservation of
the attorney-client privilege. And as you know, Senators
Specter and Leahy have similarly echoed these concerns.
It became clear that the McNulty Memorandum would not solve
the problem the Government and we are calling--or I should say,
we are calling--coerced waiver. And as you know, Senator
Specter has introduced legislation in January, Senate Bill 186.
The ABA and this coalition strongly support that measure.
It is equally important that we enforce and protect
employee legal rights, including the right to effective counsel
and the right against self-incrimination. McNulty continues to
erode these by pressuring the employers to take unfair punitive
actions against employees during their investigations.
While the new memorandum now generally bars prosecutors
from requiring companies to not pay their employees' attorney
fees, in many cases it does carve out a broad exception, which
I would be happy to address in your questions. And by forcing
companies to punish their employees long before their guilt has
been established, the Department's policies continue to stand
the presumption of innocence on its head.
They overturn generally accepted corporate governance
principles. And, as has previously been mentioned, they are
constitutionally suspect under the KPMG case.
For all of these reasons, we urge this Subcommittee to
investigate and to promulgate proposed legislation, similar to
S. 186.
Thank you for your time.
[The prepared statement of Ms. Mathis follows:]
Prepared Statement of Karen J. Mathis
TESTIMONY OF RICHARD T. WHITE, SENIOR VICE PRESIDENT,
SECRETARY, AND GENERAL COUNSEL, THE AUTO CLUB GROUP, DEARBORN,
MI
Mr. White. Good morning, Mr. Chairman, and thank you,
Chairman Scott, Ranking Member Forbes, and Members of the
Subcommittee and your staffs assembled. I want to thank you for
the opportunity to appear before you this morning.
I am testifying both as general counsel and on behalf of
the more than 20,000 in-house counsels from around the world
who are my colleagues as members of the Association of
Corporate Counsel.
The Association of Corporate Counsel members represent more
than 9,000 corporate entities in the United States and in 55
countries abroad, including public and private companies, large
and small, profit and non-profit.
I want to provide you the perspective of an in-house legal
community on the current debate about Government policies that
are eroding the attorney-client privilege, work product
protections and individual rights in the corporate context. In
particular, I want to make the following basic points.
First, these protections are crucial to effective corporate
compliance and ethics programs. Second, the McNulty Memorandum
does not substantively change the Department of Justice's abuse
of practices that have eroded these protections. And third, in
the face of the DOJ's repeated refusal to fix these problems,
legislation is indeed warranted.
Mr. Chairman, from where I sit, these protections are
essential to corporate compliance initiatives. As in-house
counsel, we must gain the trust of employees and encourage them
to routinely seek and follow our legal advice.
Certainly, when it comes to compliance, we all want lawyers
actively engaged in counseling employees. If employees believe
that corporate counsel are simply conduits for delivering
confidential information to prosecutors, attorney-client
communications will be chilled, and compliance will ultimately
suffer.
For this reason alone, preservation of these fundamental
protections and rights should be non-negotiable. Unfortunately,
I believe that recent Government policies have given rise to a
culture of waiver that has put the continuing vitality of these
longstanding doctrines in serious jeopardy.
As noted in my written testimony, ACC finds fault with the
McNulty Memorandum in the following respects.
One, the memorandum's focus on formal written waiver
demands essentially misses the point. My corporate colleagues
know from experience that many Federal enforcement officials
rely almost exclusively, in practice, on informal demands to
persuade--indeed, at times to coerce--corporations to waive the
attorney-client and work product protections.
No formal demand is necessary, given this culture of waiver
that the DOJ and other agencies have fostered in the past few
years.
Two, the McNulty Memorandum's modest changes regarding
reimbursement of attorneys' fees do not protect employees. As
Karen has pointed out, the prosecutors are still permitted to
trample on employee rights when it comes to effective
assistance of counsel, when it comes to denying employees
information for their defense, and the refusal to allow joint
defense arrangements with employees.
Three, the McNulty Memorandum's internal DOJ authorization
procedures do not constitute meaningful and acceptable
safeguards. On the rare occasion a prosecutor ever makes a
written waiver demand, merely requiring authorization from
another prosecutor in the same Department does not constitute a
meaningful protection of the attorney-client and work product
privileges.
Despite the desire and efforts of ACC members to have the
Department of Justice itself fix the problem it created, the
Department repeatedly has refused to address or even
acknowledge that the problem exists.
Notably, even today, reports from in-house and outside
counsel suggest that a prosecutor's conduct has not changed
during the months since the issuance of the McNulty Memorandum.
These reports at this juncture are anecdotal, but, indeed, from
our standpoint, persuasive.
They suggest that there have been statements from a
prosecutor that the request for a waiver predates the McNulty
Memorandum and, therefore, is sort of grandfathered under
Thompson. We do not believe that such artful dodges should be
part of the system of justice that we all know and respect.
Above all, we strongly support a legislation that would
prohibit Government officials from formally or informally
requesting a waiver of these protections. There has been
reference to Senate bill S. 186, which, as part of the
coalition, we indeed support.
In the final analysis, whether the McNulty opinion and
memorandum stands will depend on how you balance the real
voluntary nature of the privilege in the first place. It is
either voluntary or it is not, and should not be given up
simply because the memorandum says that it is a precondition to
cooperation.
Thank you very much.
[The prepared statement of Mr. White follows:]
Prepared Statement of Richard T. White
Mr. Scott. Thank you, Mr. White.
We will proceed under the 5-minute rule with questions, and
I will begin. I recognize myself for 5 minutes.
Mr. Sabin, should a corporation be punished for exercising
its constitutional right to attorney-client privilege?
Mr. Sabin. No.
Mr. Scott. If there is a difference in consideration for
those that waive and those that do not, isn't there, therefore,
a punishment for those that do not waive their right?
Mr. Sabin. No, it is a voluntary decision by the corporate
entity whether or not to waive and disclose that information.
Mr. Scott. And will they be given positive, beneficial
consideration for waiving their right to attorney-client
privilege?
Mr. Sabin. Yes. A corporate entity that cooperates with the
Government investigation and waives that privilege, as one
subfactor of the nine factors set forth in the McNulty
Memorandum, that would be positively considered as part of the
overall analysis of corporate criminal charging policies.
Mr. Scott. And those that do not waive are not given that
consideration, that little subfactor consideration?
Mr. Sabin. The distinction between category one and
category two information, the----
Mr. Scott. But, I mean----
Mr. Sabin [continuing]. The declination of a corporate
entity not to provide legal analysis or opinions or mental
impressions, explicitly stated in the McNulty Memorandum, will
not be considered against that corporate entity.
Mr. Scott. But, I mean, those that waive the privilege will
be given beneficial consideration. Those that do not will not
be given beneficial consideration. Therefore, there is a
differential in consideration between those who waive and those
who do not.
Mr. Sabin. The fact that----
Mr. Scott. So, those that do not are, in effect, punished.
Mr. Sabin. I disagree with that conclusion.
We consider positive cooperation as part of the analysis in
the McNulty Memorandum as to whether, in the totality of the
circumstances, how the Government should decide whether to
charge or not charge a corporate entity.
Mr. Scott. Do you ever ask individuals to waive attorney-
client privilege for the purpose of getting beneficial
consideration?
Mr. Sabin. The McNulty Memorandum addresses the corporate
context. It is separate relating to the individuals. I believe
that practice has occurred, yes.
Mr. Scott. Did people get beneficial consideration for
waiving their attorney-client privilege in a criminal case?
Mr. Sabin. I cannot speak to that, you know, grounded in
any particular experience. But the fact that, say, a person in
a drug case and we are investigating the extent and
pervasiveness of that activity, or in a mafia prosecution and
that is waived, I think that that would be a positive
consideration for that individual, again, distinct from a
corporate analysis.
Mr. Scott. If there is beneficial consideration, why would
that not be considered coercion to waive your privilege?
Mr. Sabin. Because the privilege is the corporate entity's
whether to waive or not. It is within their discretion whether
to proceed in that fashion or not. It is not the Government
either routinely asking for it or demanding it. That is not our
guidance; that is not our practice.
Mr. Scott. Thank you.
Ms. Mathis, you indicated that you wanted some time to
address the exception?
Ms. Mathis. Thank you, Congressman.
If your staff and you would take a look at footnote three,
which appears on page 11 of McNulty Memorandum, you will find
that, when the totality of the circumstances show that a
corporation's advancement of its employee's legal feess is
intended to impede a criminal investigation, then the
attorney--the U.S. attorney--may, on the U.S. attorney's own
say-so, direct a corporation not to pay those attorneys' fees.
The effect of this footnote, sir, is that you have a back
door to stopping a corporation from paying an employee's legal
fees that is big enough to fly a C-140 through.
All you have to do as a U.S. attorney is say that, looking
at the totality, there was intent to impede a criminal
investigation, and then the employee's legal fees cannot be
paid.
So, in this particular instance, one has to really question
whether McNulty has advanced the cause of an individual's
constitutional rights to legal counsel or not.
Mr. Scott. Thank you. I yield back.
Mr. Forbes?
Mr. Forbes. Thank you, Mr. Chairman.
Again, I want to thank each of you for taking your time and
being here today. We wish we had the time to chat with you
individually, because you bring so much expertise to the table,
but we are limited to 5 minutes.
You know, one of the issues that we hear raised here this
morning--there is a little bit larger issue that I have been
concerned about. And that is kind of the abuse of prosecutorial
discretion we have seen that--and it is not just on the Federal
level, it is on the State level.
We have a lot of wonderful prosecutors, just like we have a
lot of wonderful law enforcement officers, but we have to
always look at those abuses in those situations where it is not
justice we are looking at, it is just more prosecutions.
And the weight of the resources that can be brought against
a corporation or an individual can just have enormous
intimidation factors, and sometimes we do not always get to
justice.
Mr. Weissmann, that is why I was really interested in one
of your comments about the need for us to have more oversight
in the charging decisions against corporations and individuals.
I wonder if you could just elaborate on that just a moment for
us.
Mr. Weissmann. Yes. First I should say, as an assistant
United States attorney for 15 years and serving on the Enron
task force for about 3.5 years, I got to see first hand an
enormous array of talent at main justice and people who have
experience in making the determination about how to treat
corporations.
The problem of white-collar crime is, in many districts,
relatively new in light of what happened at Enron, so that you
have a number of U.S. attorneys offices now wading into a field
that they frankly did not have a lot of experience in prior to
Enron.
I think it is important to have a system where people at
Main Justice are evaluating how those decisions are made,
because corporations are largely national, if not
international, in scope. And it should not be the case that a
company has to worry about the vagaries of whether a prosecutor
in one part of the country is going to be applying a very
different standard than in another part of the country.
In many ways this applauds the Thompson memo and the Holder
memo before it and the McNulty memo, because it is saying that
there are valuable aspects to those policies, but I think, if
you ask practitioners, they will tell you that they are not
applied uniformly, by a long shot, around the country.
Mr. Forbes. Mr. Sullivan, I was interested in your
testimony where it seemed to indicate that prosecutors were
actually requesting a waiver before there was even a
determination as to whether or not there was a crime that was
committed.
Has that been your experience?
Mr. Sullivan. In all fairness, Mr. Forbes, prior to the
promulgation of the McNulty memo, I had been in the first meet-
and-greet meetings with representatives of the Government upon
my first engagement, when I was asked if I would be sharing the
results of my internal investigation.
And the questions went so far as to ask whether or not I
was representing the corporation, or whether I was a third-
party investigator, suggesting that from the very first, even
if I were paid by the corporation, that I would be an
individual who would not have a privilege relationship with
that corporation. And the suggestion was it might be better if
I was an independent contractor, as opposed to an advocate.
I took great pains in those discussions to explain to the
Government that I could be forthright and candid with them,
that I would proffer to them hard, factual information, that I
would not try to spin the story, but I could do that as being
an advocate for the corporation itself.
Mr. Forbes. And you could always deal with getting around
the problem, if you wanted to, by offering the proffer in a
situation like that, without having to provide a waiver.
Mr. Sullivan. I began most of these discussions by
proffering as an attorney.
Post-McNulty, I have still been badgered by the Government
demands that my corporation, my client, my company compel the
provision of witness statements from employees under threat of
termination.
Now, this is in direct opposition to the Garrity case,
which compels that the Government cannot pursue such leverage
or intimidation tactics with their own employees. Someone who
refuses to speak or invoke is not going to be threatened with
sanctions.
I have had such requests literally within the past month.
Mr. Forbes. My time is about up, but Ms. Mathis and Mr.
White, in case we do not get another round, could you follow
up, maybe, with something in writing if you have experienced
the kind of prosecutorial abuse in certain situations, and what
your recommendations might be on how we can get a balance on
that, and suggestions for that.
It is something we are very much concerned about, and I do
not know if I will have time to get your answers in, but you
can try.
Ms. Mathis. Congressman, let me just, if I may, reflect on
something that Mr. Sabin said earlier. And that is that, since
McNulty, there have been no formal requests.
And what we think is happening, but there is no hard
evidence, because it is not being kept by DOJ, is that what is
happening now is it has gone underground, and there now are
implicit requirements that they be waived.
And as the Chairman said earlier, if you are both at a
standstill, but one person is given an advantage, whether it is
in a golf game or around an oval track, then somebody has got
an advantage. And the person who is left back here is left in
the dust. And that is one of the main problems with McNulty.
We would be happy to supplement our testimony.
Mr. Forbes. Thank you.
Mr. White. We will be happy to do so.
We are getting anecdotal calls and reports from some of our
members, who are saying that the practice is vastly different
from the language of the McNulty Memorandum. It is more
informal than formal.
Mr. Forbes. Well, thank you. My time is out.
Thank you, Mr. Sabin. I hope I will get some more questions
later for you.
Mr. Scott. Thank you.
Mr. Conyers?
Mr. Conyers. Thank you, Mr. Chairman.
You know, this is a pretty one-sided hearing, in a way, for
Mr. Sabin. You see, when bipartisanship comes together, things
get pretty rough, don't they? Because, this is pretty----
Mr. Sabin. I appreciate the opportunity to be here and have
that dialogue.
Mr. Conyers. Yes. Well, I want to try to lighten the
environment for you, because I kind of sense which way this
train is moving here.
And before we start, I think we are in an almost corporate
crime wave. There is nobody that wants to get on top of some of
the criminal activity that has been going on the last, past
number of years than I do.
But the advantages and the below-the-radar activity that
the Department can engage in is pretty clear. You can write
this in red letter law all you want.
But it is what--you know, when the U.S. attorney sits down
with an attorney defending someone, they do not read back the
Federal Code to each other. ``You get the drift,'' as they say
on the streets.
And so, what is happening right now is that we are
overtaking a small, but important part of creating the level
playing field. And that is what interests me so very, very
much.
When you get the American Bar Association and dozens of
organizations--progressive, conservative, corporate, civil
rights--it seems to me--and I listen to the tenor of the
discussion among our colleagues--we do not always get this kind
of bipartisanship in the Judiciary Committee.
So, I would just like to ask Mr. White and the president of
the Bar, is there some way we can take this medicine, you know,
calmly and understand? Why doesn't the attorney general see the
light here? Or will this hearing help him?
Mr. Sabin. Can I address that, sir?
Mr. Conyers. Sure.
Mr. Sabin. The attorney general actually spoke at the ABA
white-collar crime gathering, conference, in San Diego last
week and discussed the McNulty Memorandum with them.
I am a member of the ABA. I am going down to chat with
their litigation section next month. We appreciate the
opportunity to talk through these issues.
Mr. Conyers. That is great.
Mr. Sabin. We are not----
Mr. Conyers. Whereas, the president is right here three
seats down from you. [Laughter.]
Mr. Sabin. Okay. Well, I would say that, to the extent that
there are suggestions that practice is different from reality,
we have not heard about that. So, if there are specific
suggestions----
Mr. Conyers. Let me recognize her with the couple minutes I
have left.
Are there any ways that this different--everybody is
supporting--I mean, you support the McNulty. But the fact of
the matter is, it is not sufficient. Is that the correct
interpretation?
Ms. Mathis. Congressman, the American Bar Association
believes, number one, in the basic jurisprudence concept of
attorney-client privilege and all that in the common law it has
done to backstop our judicial system and to provide very
limited privileges.
But the privilege is not that broad. It does not cover
facts. It does not cover a number of things.
And we think that within that privilege, and the way it has
been structured and reviewed by our judicial officers--mainly
judges--that it is sufficient for the purposes of Department of
Justice.
It is so central to our system of Government that people be
entitled to that, that to the extent McNulty and its
predecessors violate those precepts, that they must be amended,
and that, clearly, the way to do that at this point is through
congressional legislation.
Mr. Conyers. Absolutely.
Richard White, would you like the last word?
Mr. White. I certainly would agree with the ABA on that
point, and would suggest to you that the attorney-client
privilege is a privilege that should not be for sale, either
for positive incentives or punitive responses. It is that basic
to our system of justice and fairness.
And it sort of hits me as somewhat peculiar that we would,
under Sarbanes-Oxley and other appropriate legislative
initiatives, require codes of conduct and ethical behavior in
corporations and allow behavior that could be, under some
circumstances, unethical and inappropriate to go on.
Legislation is not only warranted, it is absolutely
necessary.
Mr. Conyers. Thank you.
Mr. Scott. Thank you. Thank you. The gentleman's time has
expired.
The gentleman from California, Mr. Lungren?
Mr. Lungren. Thank you very much, Mr. Chairman.
I mean, this issue came up about 2 years ago when Mr.
Delahunt and I were concerned about it in the context of the
Sentencing Commission's recommendations, where, even though I
believe it was a footnote, nonetheless, it was very obvious
that there were going to be consequences as far as judges were
concerned, following the Sentencing Commission guidelines as to
whether or not a corporation basically gave it up--I mean, gave
up the attorney-client privilege.
And we joined together, along with others, to make our
views known to the Sentencing Commission, and the Sentencing
Commission basically decided that they would not do that
anymore.
So, the second phase of it is the Justice Department. And I
see we have one, two, three, four separate memoranda that have
been in succession on this--Mr. Holder's, Mr. Thompson's, Mr.
McNulty's, Mr. McCallum's.
And I guess I would ask one question to the four non-DOJ
representatives here, and just, hopefully, a very short answer,
because I only have 5 minutes, as well.
Is there any improvement that you see as a result of the
memorandum? That is, is the McNulty iteration of these
memoranda an improvement for the Department?
Mr. Weissmann?
Mr. Weissmann. The short answer is that, in theory, it is
an improvement; and in practice I have seen no change at all.
Mr. Lungren. Mr. Sullivan?
Mr. Sullivan. Frankly, it is a little early to tell.
On the waiver side, there has not been any specific
request. On the indemnification side there have been requests
made to me to retain employees under threat of termination in
order to compel their statements. That is a violation,
unacceptable.
Mr. Lungren. Ms. Mathis?
Ms. Mathis. It is not an improvement, Congressman. And one
particular reason that it is not is, it has taken what might
have been a formal request of a waiver--in other words, in the
light of day--and it has put it back into an implicit request
for waiver, where it is not as clear to see, nor will data be
kept on it.
But as the other witnesses have indicated, it is still
ongoing, it is still pervasive.
Mr. Lungren. Mr. Weissmann?
Mr. Weissmann. I would agree with Ms. Mathis, that it is
not an improvement. It is an attempt, but that is about all
that it is. And our feedback is from our folks out in the
field, that the practice continues underground.
Mr. Lungren. Mr. Sabin, I mean, based on that I have got
one person who believes it is an improvement in words, but not
in theory, another who said it's being violated, one who said
it is not an improvement and another one who said it is not an
improvement.
The very fact that Mr. McNulty felt it necessary to issue a
new memorandum, and then, with the memorandum that accompanied
the memorandum from Mr. McNulty, in which he said, we have
heard from responsible corporate officials recently about the
challenges they face in discharging their duties to the
corporation, while responding in a meaningful way to a
Government investigation.
Many of those associated with the corporate legal community
have expressed concern that our practices may be discouraging
full and candid communications between corporate employees and
legal counsel.
To the extent this is happening, it was never the intention
of the Department for our corporate charging principles to
cause such a result. And then indicates that they are,
therefore, promulgating this new memorandum.
What was the purpose of the memoranda? That is, the new
memoranda? What do you say about those who say that, either it
is insufficient, or that, while sufficient on its terms, it is
being violated in its practice, or thirdly, that all it has
done is driven these decisions underground?
And I guess the last way to ask that last part is, what are
you doing to enforce this? If, in fact, you believe in this
memorandum, what would you do to respond to the complaint that,
in fact, the memorandum is being observed in its breach?
Mr. Sabin. We believe that the McNulty memorandum strikes
the right balance with respect to our ability to thoughtfully
and aggressively investigate corporate wrongdoing. We believe
that it is an improvement.
And back to Congressman Conyers' point, in terms of the
long view of history, I believe that the Department's attempts
to transparently and thoughtfully articulate the manner in
which it goes about its corporate criminal charging decisions
will be viewed as sound and well-placed and well-grounded.
The prosecutors around the country--not only in Main
Justice, but in the 93 U.S. attorneys offices--take their
duties and responsibilities to enforce those laws and protect
the American investing public extremely seriously.
We are not seeking to obtain waivers as a routine matter.
We are not seeking to abrogate constitutional violations.
We are seeking to ensure that we have full and complete
understanding of a factual nature, in order to make appropriate
charging decisions as to the corporate and business entity.
With respect to our means of enforcing it, we have had
training and guidance, and continue to have such distributed to
prosecutors, investigators and regulators around the country.
Indeed, today, out in Salt Lake City, the securities fraud
working group that is discussing with those entities how to
ensure that there is complete and full and accurate compliance
with it.
Prosecutors understand those duties and responsibilities.
And when guidance is provided by the Department's leadership,
it is expected to be followed.
To the extent that folks here have suggested that it has
gone underground, or that there is something going on below the
radar screen, we welcome the referral of those specific matters
to obtain concrete, specific data to address that kind of
either implicit or ``wink-wink, nod-nod'' activity.
To the extent that what we have had in terms of specific
data, is that prosecutors do care about what has been said--the
career prosecutors around the country in economic crime
sections and fraud sections, in the Criminal Division's Fraud
Section, at Main Justice--the ability to enter into a real
understanding of how to implement it and enforce it.
We ask for that time to make sure that it is done
thoughtfully and appropriately.
We have had five matters where we have had specific
requests for factual information, category one type, narrowly
tailored requests for the waiver of information. And we have
had that meaningful dialogue between the Criminal Division and
the respective U.S. attorneys office.
Mr. Lungren. Thank you, Mr. Chairman.
I would just say that, I think you understand there is a
bipartisan concern that, as we go after corporate corruption,
we do not in any way create a prosecutorial culture of coerced
waiver, because we happen to believe, on a bipartisan basis,
that the attorney-client privilege is so important to the
working of justice, the protection of American citizens, but
also to promote actual legal compliance within a corporate
structure.
And I think you are going to find, on a bipartisan basis,
we are going to continue to look at this and to see how it
falls out. So, I thank you.
Mr. Sabin. I appreciate those comments, Congressman. And we
agree. I agree absolutely with what you just stated.
Mr. Scott. The gentleman from Massachusetts?
Mr. Delahunt. I thank the Chairman.
And I, again, concur with the observations by the gentleman
from California. I am sure you are aware that Mr. Lungren and I
actually penned an opinion piece.
But he has asked the questions--he has preempted me,
because those really were the questions that I was going to
pose.
Let me acknowledge to Mr. White and Ms. Mathis that, from
my perspective, you know, the attorney-client privilege is such
a core value of American jurisprudence, that even if it should
lead to great frustration, it has to be respected. This is so
vital to our system of justice.
But let me pursue with Mr. Sabin. I mean, as a prosecutor--
and I know that Mr. Lungren was a former attorney general--we
are very familiar with human nature.
And human nature being what it is, aggressive prosecutors,
who are passionate about a particular case or an investigation,
eventually, in my opinion, will slip into that gray area where
all of the training and all of the guidance simply do not, will
not accomplish the kind of enforcement that I am sure you would
like to see in terms of compliance. So, that is my problem.
Now, if you want to talk about a sanction and maybe civil
liability, personal liability, the ability to sue the
Government, you know, that is a different kind of enforcement.
Guidance and training is wonderful. But when there is a
clear sanction--and I am not talking an administrative
sanction, necessarily, but a sanction that could be brought in
a court of law by a corporation--for those cases that seem to
drift away from the explicit guidelines enumerated, now, that
is a different situation.
I would suggest that, if you went back to Justice and did a
survey of assistant U.S. attorneys and others that are involved
in this decision-making process, there would be real reluctance
to accept that sanction--again, a real sanction. Because, I
think it was Mr. White that--well, maybe it was actually
yourself--that talked about, you know, reality and practice,
there is a divergence there.
And that is what I am particularly sensitive to, and I am
sure members of this panel are, and as Mr. Lungren indicated,
we will continue to monitor. But my own initial inclination is
that--without revealing it in detail--is that Senators Specter
and Leahy have an answer that I think respects the history of
American jurisprudence.
Mr. Sabin, you are more than welcome to comment. The last
time I think you were here, we were discussing cockfighting, if
I remember. [Laughter.]
Mr. Sabin. Mr. Delahunt, you have a good recollection.
Mr. Delahunt. Right. You were rather well-informed on
that---- [Laughter.]
Mr. Sabin. Well, I actually came up on a different topic.
But since the other panel members were engaging in that, I
think the Committee----
Mr. Delahunt. You are a renaissance man in terms of----
[Laughter.]
Mr. Sabin. I appreciate the kind words that you say there.
The Department appreciates that concern. I am aware of your
op-ed with Congressman Lungren. I am aware of your prior
prosecutorial background, as well as Congressman Lundgren.
We respect and understand the concern that has been
articulated.
I would suggest that, let us look at the concrete, tangible
data. Let us look at how it is implemented. Let's look----
Mr. Delahunt. I understand. But, you know what? I mean,
again the reality is, this data will only come in anecdotal
form. And you welcome--and I am sure of your bona fides--
referrals.
But in the real world with defense counsel to make those
references, there is a variety of motives that would dictate
against that.
I guess what I am suggesting is that it is really
impossible in terms of defining a methodology that would give
us that accurate data. And my own sense is that we just have to
go on our sense of what the reality is and trying to understand
human nature.
Mr. Sabin. And I believe that prosecutors will follow
Department directives, consistent with their ethical duties and
responsibilities, to uphold the highest traditions and
principle of the Justice Department.
Mr. Delahunt. And I am sure the vast majority will. I am
not suggesting otherwise.
But we all know that there is always a percentage that will
be so aggressive, that will extend--will go beyond the
parameters and the boundaries that have been defined.
And in our system of justice, the one thing that we cannot
compromise is the integrity of the system, because when we
begin to do that, we erode the confidence of the American
people in our justice system.
Mr. Sabin. Don't disagree, sir.
Mr. Scott. Thank you. Thank you.
The gentleman from Texas, Mr. Gohmert?
Mr. Gohmert. Thank you, Mr. Chairman. I appreciate the
opportunity for having this hearing. And I appreciated the
Chairman of the full Committee's comments about the
bipartisanship here in this Committee. We are pleased the
Democrats would join us on this issue. And, anyway--a little
inside joke. [Laughter.]
Mr. Scott. Moving right along----
Mr. Gohmert. But moving right along.
Mr. Delahunt. That was a very futile attempt at humor from
somebody from Texas. [Laughter.]
Mr. Gohmert. But one of the things that has concerned me
the last week is noting that perhaps just an inquiry about
anything that may have to do with cases pending may be deemed
as an ethics violation, or perhaps an obstruction of justice.
So, I hope that the holding of this hearing does not rise
to that level that we are all potentially obstructing.
But, anyway, I have been concerned about the sentencing
guidelines. Some of us remember when those were put in place,
and the Supreme Court held that, absolutely, of course they are
constitutional.
And some of you, I am sure, remember an awful lot of
Federal judges were very upset about that, but they got used to
them. And then I did not hear a lot of complaints.
And then the Supreme Court, since it is so consistent and
they are so magnanimous in their incredible view of the law,
came back and said, well, I do not know what we were thinking
before, but it does not look constitutional to us now.
But the problem is, you know, is the right of waivers were
exacerbated in 2004. To have that even come up as a
consideration, a waiver of the attorney-client privilege come
up in a sentencing scenario--well, you talk about a chilling
effect on the claiming of attorney-client privilege.
And so, I have been a little out of the justice loop over
the last few years, running for Congress and being here, and I
am not familiar with whether or not there has been any effect,
been any consideration at all, in the sentencing aspects,
especially in view of Booker throwing out the guidelines.
As you are probably aware, we have considered the last
couple of years, some people have been proponents of inserting
legislative guidelines. I have been one of those that were
encouraging, when we were in the majority, let us hold up. I am
hearing Federal judges say they are not sure they need them.
Let us see how the data goes from the sentencing, and determine
whether or not we really need to interpose like that.
I still am not sure about that.
I would like, maybe starting right to left.
Mr. White, any comments, anything of which you are aware,
cases in which you are aware, that the non-waiver of attorney-
client privilege may have been considered in any way in the
sentencing aspect, because I am sure you would agree, that
would have a dramatic chilling effect if it were. Right?
Mr. White. Well, it would.
But, Congressman, from a practical standpoint, the chilling
effect occurs long before sentencing. From a practical
standpoint, the chilling effect occurs when I have employees
who are reluctant to come forward in a code of conduct, ethical
program, because they are concerned that what they say to me
will be silver-plated over to----
Mr. Gohmert. Well, and I understand that. A lot of people
have covered those issues. And I only have a few minutes, and I
was wanting to get to the sentencing guidelines aspect.
Mr. White. I think there are probably----
Mr. Gohmert. But has it been----
Mr. White. Sorry. I think there are probably others who, on
the group here. I have not gotten directly involved in the
sentencing aspect. And I think that Ms. Mathis and, perhaps,
some of the outside counsel would have more to say about that.
Mr. Gohmert. Thank you for your candor, Mr. White.
Mr. White. I will just pass to them. Thank you.
Mr. Gohmert. Thank you.
Ms. Mathis?
Ms. Mathis. Congressman, I think it is instructive to note
that, after the U.S. Sentencing Commission decided to
voluntarily withdraw their guidelines about privilege waiver,
that the Commodity Futures Trading Commission did the same
thing.
So, I will tell you that my sense is that, by not coercing
or asking for the voluntary waiver of the privilege, that it
has not had a deleterious effect on the Sentencing Commission.
The other point that I would make is that this is a little
bit like shadow boxing, if I may, because the Department has
said that, since McNulty, there have only been five requests
for category one waivers, and there have been no requests for
category two waivers.
Now, if no one is asking for these waivers, then the
question really does arise: What is wrong with legislation,
which straight-out says that no agent or attorney of the United
States may pressure a company or another organization to
disclose confidential information protected by the attorney-
client privilege or work product doctrine, or to take some of
these very draconian measures against its own employees?
It is a rhetorical question.
Mr. Gohmert. Well, my time is up and I still have not
gotten an answer on whether or not--because, even though it is
not a part of the guidelines, the guidelines are affected, as
we have heard before. It doesn't mean that it is not being
utilized. And so, maybe, if we have another round, I can get
somebody to answer my question.
Thanks.
Mr. Scott. Did you want to continue responding?
Mr. Sullivan. I am happy to continue. I second what Ms.
Mathis----
Mr. Gohmert. Thank you, Mr. Chairman.
Mr. Sullivan. I second what Ms. Mathis has said about the
guidelines and the CFTC. I had a role in submitting information
for purposes of the CFTC's report.
I will try to directly answer your question by saying, in
my experience, the sentencing guidelines, by virtue of the
revision, there has not been a significant, or any impact,
frankly, on any clients that I have had.
If I may say one more thing. I am very aware of the buzzer.
I have heard that before. I think we may be able to simplify
this dialogue from the perspective of outside counsel.
I am not here to suggest--and I don't think any of my
brethren are, either--that waiver is not sometimes good and
useful. The 1989 Salomon Brothers case, where the law firm of
Wachtell Lipton decided to waive, in the face of pervasive and
horrific facts, began the process.
There are times to waive. If you have got a billion-dollar
restatement and you represent the corporation, you might want
to assist the Government for purposes of finding the
individual, culpable wrongdoers.
My point is, it is the corporation's privilege. It should
be the corporation's decision. There should be no attempt to
coerce on the part of the Government, and there should be no
penalty for not waiving. It should be neutral, except if you
choose to voluntarily waive; then you should be provided a
benefit.
Mr. Weissmann. I have nothing to add, because I agree with
Mr. White. The issue for corporate criminal liability is one
that arises at the charging phase, because for a company it is
all about not being charged.
And given the enormous hammer that the Government has, if
there is a factor, whether it is to penalize or to reward based
on a waiver, whether it be category one or category two, they
are going to waive, because it is not viewed as voluntary. They
are going to do everything they can to get every possible
benefit, because the indictment can kill the company.
Mr. Sabin. One aspect that has not been discussed is
deferred prosecution agreements, that the idea that there is
this kind of cooperation, voluntary disclosure, or even limited
disclosure with respect to the privilege, allows the Government
to make informed decisions and to address not necessarily in
charging with an actual criminal charge, but to have a deferred
prosecution agreement as a result of that voluntary
cooperation.
So that addresses sort of the sentencing phase, which never
actually gets to a sentencing phase, because you have a
compliance agreement, you have a monitor. Depending upon the
specific circumstances of a deferred prosecution agreement,
that is one of the sort of spans between the charging nature
and the sentencing phase.
And the Department is continually working through those
relationships with experienced and sophisticated corporate
defense counsel.
Mr. Scott. Thank you.
Mr. Forbes and I had about one additional question, and
then part of my question.
Let me just make a statement that, Mr. Sabin, I think you
indicated that there is, in fact, a difference in treatment
between those who waive and those who don't, creating a
differential.
And that did not come as a surprise to everybody, because
everybody knew that to begin with.
And I have always been intrigued by the idea that you
cannot charge extra for using a credit card. However, you can
give a cash discount if you pay cash, creating a differential
between those who pay cash and those who use credit cards.
But somehow you eliminate that problem by, if you call it a
discount, it is okay. If you call it a punishment or a
surcharge, then that is not okay.
The fact of the matter is, so long as there is a
differential, you can call it what you want. The people who do
not get--who do not waive are, in fact, put at a disadvantage,
and some would call that punishment for not having waived.
And if everybody knows that that differential is there, you
do not have to say it, that's pressure.
Now, my question is, to kind of put these kind of things in
perspective, what difference does it make to a corporation to
get the cooperation? How much less of a penalty may they get?
What are we talking about in terms of qualifying for the
benefit?
Mr. Sabin. Again, I reiterate, we are not--the Department
of Justice is not pressuring corporations into waiving the
privilege. We respect the privilege----
Mr. Scott. Everybody knows there is a differential between
those who do and those who do not.
Mr. Sabin. We reward cooperation for category one
information that has been provided, voluntary disclosure
information that has provided.
In many instances, that is crucial information to ferret
out the wrongdoing that is undertaken by individuals in the
corporate entity.
Again, I go back to the larger picture. It is a nine-factor
analysis, and cooperation is just one factor. And the waiver of
the privilege and the shielding of culpable agents and
employees are subparts of that totality of the circumstances
analysis.
So, all those factors go into informed prosecutorial
decision-making.
Mr. Scott. I guess my question was, what difference does it
make to a corporation to get that cooperative designation, as
opposed to not getting that designation? How much benefit is it
to the corporation?
Mr. Sabin. And again, that is going to be fact-dependent
upon----
Mr. Scott. Well, I mean----
Mr. Sabin [continuing]. Specific facts----
Mr. Scott. Are you talking about the fine will be cut in
half, they will not get time in jail? I mean, what difference
does it make for----
Mr. Sabin. I am not going to make a broad assertion as to
the nature and extent of that.
Mr. Scott. Okay, well, then let me----
Mr. Sabin. It is going to depend upon the specific facts
and circumstances involved. And then you go to the
pervasiveness of the misconduct, the complicity of management
in the misconduct, the history of the corporation relating to
that. All those factors go into the prosecutorial decision-
making.
Mr. Scott. Let me hear from some of the corporate counsel,
because those are the ones that are considering whether or not
it is worth waiving.
Mr. Sullivan?
Mr. Sullivan. Thank you, Chairman Scott.
The key issue for corporate counsel, for purposes of
engaging with the Government in the light of potential
misconduct, is to avoid a corporate indictment.
My testimony did not discuss, but written materials do, why
I think--and this is probably a topic for another hearing--my
corporation should only in exceedingly rare circumstances ever
be indicted.
But nevertheless, the corporate company's indictment has
dramatic, draconian ramifications. Its business suffers. Its
stock price falls. Employees leave--well before conviction,
well before there has been a determination of guilt beyond a
reasonable doubt.
So, that is the dynamic that corporate counsel fight to
preclude, almost at all costs.
And as I said before, if bad facts are pervasive, you need
to engage to avoid an indictment. That is the Wachtell-Salomon
case.
If there is gray area, as I said in my opening statement,
my obligation is to understand that the preponderance of--I am
sorry--that the guilt beyond reasonable doubt and the
presumption of innocence still applies in these contexts. And I
need to understand the facts and to establish a credible
defense.
It is the gray area cases where, if I choose not to waive,
I should not be penalized.
Mr. Scott. Mr. White?
Mr. White. Mr. Chairman, if a company is asked to waive,
even before the investigation is complete, the value or the
differential that you were talking about of waiving or not,
cannot even be assessed by the company.
So a knowing and/or intelligent waiver really does not take
place at that level. You just waive or you do not get the
benefit slash punishment.
Mr. Scott. Thank you.
Mr. Forbes?
Mr. Forbes. Thank you, Mr. Chairman.
Once again, I just want to thank all of you.
And, Mr. Sabin, thanks for holding up under fire here. We
want to make sure you know that we appreciate the great job
that you and your office do in so many areas. We are just
trying to get that balance and make sure we are protecting
these rights.
Mr. Sullivan gave a great summary of the whole waiver
issue, I think, just a few moments ago.
Mr. Sullivan. Thank you, Mr. Forbes.
Mr. Forbes. And we really thank you for that.
And I think what Mr. White and you are both saying is that,
really, in a corporate situation the indictment really is the
sentence. And so, by the time you get there, the game is pretty
much up.
Mr. Sabin, we have talked about the concrete evidence that
you would like to have, and I think everybody knows, they are
not going to be able to get you that. And maybe that is
something that your office could look at. Maybe you are doing
it.
But even getting data like the number, or keeping track of
the number of waivers that are taking place, and doing them by
district, so that maybe that gives us some patterns we can look
at. And maybe you are doing that. I don't----
Mr. Sabin. That is explicit in the memorandum----
Mr. Forbes. That was the----
Mr. Sabin [continuing]. To maintain written records and to
have those records available----
Mr. Forbes. Maybe----
Mr. Sabin [continuing]. Both in the U.S. Attorney's
Office----
Mr. Forbes. If we could get a look at those at some point
in time, maybe that kind of could help us, sir, see----
Mr. Sabin. Well, I am not going to----
Mr. Forbes [continuing]. The numbers. I understand.
Mr. Sabin. But I am----
Mr. Forbes. I am just throwing it out, what helps.
Ms. Mathis, a final question for you. We are trying to get
that pendulum swing right. We do not want to go as far as our
friend, Mr. Delahunt, was raising in terms of civil penalties.
I know the ABA supports Senator Specter's legislation.
What is the mechanism for enforcement in that legislation,
and what does the ABA recommend as an enforcement mechanism
that strikes that proper balance?
Ms. Mathis. Congressman, let me talk about it in general
principles, because my understanding is that Senate bill S. 186
does not specifically have an enforcement mechanism.
Mr. Forbes. But are you okay with that? I mean, do you feel
that just having it in the legislation will be enough without
any enforcement mechanism?
Ms. Mathis. The ABA's position is that, it is important for
the Congress, both houses, to put their own stamp on
legislation, and that what you feel comfortable with is what
you should do.
But with regard to these types of prosecutorial misconduct,
the common law has handled them often, by allowing the judicial
officer--the judge in the case--to determine. And so, that is a
general precept that the ABA is supportive of.
However, if your legislation provides specific sanctions,
we would be happy to work with your staff to look at what would
fit within the normal contextual balance, as you point out,
between the prosecutorial duties, and also the attorney-client
privilege.
Mr. Forbes. But you are pretty comfortable with leaving it
up to the way the common law has handled it with discretion to
the judge.
Ms. Mathis. Yes, so the judge could deal with it, yes.
Mr. Forbes. Thank you all so much. Mr. Chairman, thank you.
Mr. Scott. Thank you.
Mr. Gohmert, do you have other questions?
Mr. Gohmert. Yes.
Mr. Scott. Okay, thank you.
Mr. Gohmert. Thanks.
I thought the gentleman's analogy about gas prices with use
of credit card, use of cash, was a great illustration.
And I guess what I was trying to get to earlier, I
understood all the other testimony. But if it were to come up
at all in sentencing that this person either waived or didn't
waive, then there's potential for effect there.
But just quickly, on the issue of sanctions, and Ms.
Mathis, I think you made a great point that, it seems in so
many areas of the law, if you just give the judge the power of
enforcement, then it takes care of itself.
In Texas, several--and I had felonies and I had major civil
litigation as a judge. But I liked the discovery rule that
finally it came to, because there had been so much abuse.
But a discovery rule that gave the judge latitude to either
prevent witnesses from testifying as a form of sanction,
prevent certain evidence from coming in as a form of sanction,
or in the worst case scenarios, forcing--just outright
dismissal.
What do you think about some form of sanction in a rule
like that? If I could get comments.
Ms. Mathis?
Ms. Mathis. Congressman, it seems that those are exactly
the kind of sanctions in terms of increasing bad effects,
consequences, of the request for a waiver or the use of
material that came from a waiver.
I also concur with the statements that Mr. Sullivan has
made earlier. It may well be in a corporation's best interest,
but it should be in their interest to waive.
But if a judge were to find that there was pressure for
them to waive, then it would need to be done early. And I think
that is something we have to remember, that it may not be at
the point of going into a trial. It may be at the point of
indictment.
And so, we would have to think about how would a judicial
officer be involved prior to that indictment coming to the
fore.
Mr. Gohmert. Well, if it were prior to indictment, or at
the time of potential indictment, I am not sure I can envision
different degrees. You know, either you get to indict or you do
not. And I understood the great point about sometimes an
indictment is a death penalty to a corporation.
Do you agree that different degrees of sanctions would be
good for the judge to have?
Ms. Mathis. In general, I am all for the judicial officer
being able to have the full spectrum of opportunities for
sanctions.
Mr. Gohmert. Yes. Not just a death penalty, throw the case
out or leave it. Yes.
But at the time of potential indictment, do you see any
other degrees that I am missing, other than either you don't
get to return the indictment or you do? Are there any other
measures that could be taken?
Ms. Mathis. I am going to pass that one, if I may, to Mr.
White.
Mr. Gohmert. Mr. White?
Mr. White. Thank you, Karen.
I am not sure I appreciate the pass, but I will give a pass
at it. [Laughter.]
Again, I will hearken back to one thing that Karen did say,
and that is that we believe--I believe--that there is enough
not only intellect, but commitment--and apparently bipartisan
commitment--to establish an appropriate enforcement principle,
whether the principle is one of referring to the discretion of
the court to do certain things on a pre-indictment basis,
should it be found that there's been some form of coercion, and
that a right as trusted and as vulnerable as the right to
attorney-client confidentiality has been breached.
It would seem to me that that could become even a separate
matter for inquiry in an appropriate prosecutorial way.
And I would suggest to you that there may even be ethical
requirements for prosecutors who are aware that another
prosecutor may have violated a constitutional right of someone
to have the duty to step forward and do something about it.
That is on a pre-indictment basis.
On a post-indictment basis, you know, the bell has already
rung. And it would seem to me that a court could take notice of
inappropriate behavior and act accordingly, either suppress
certain evidence or impose certain sanctions, or some of the
other things that you mentioned.
Mr. Gohmert. Mr. Sabin, do you see different degrees of
potential sanction, even at the early indictment stage?
Mr. Sabin. I would not concede that there is factual
evidence that prosecutorial misconduct is occurring in this
area, such that there should be a need for sanctions to be in
play.
We have the Office of Professional Responsibility for
egregious misconduct violations, if and when they should occur.
But to go back to the premise, I would strongly disagree
that there is, as suggested here, some kind of concerted or
widespread prosecutorial misconduct, requiring this Congress
or----
Mr. Gohmert. And I appreciate that, Mr. Sabin.
And I understand that. And I actually appreciate the DOJ
taking this effort in order to try to minimize the potential
for that kind of problem.
But it still did not answer my question of whether or not,
given that is the position, I do not have anything factual to
start at this point.
I am just saying, if there were a rule, would you like to
have input? Are there different degrees of sanctions at the
indictment stage?
Mr. Sabin. Sure, in the theoretical----
Mr. Gohmert. Do you realize you may not be in the DOJ come,
you know, January or February of 2009.
Mr. Sabin. I am a career prosecutor, sir. So, I look
forward to a long----
Mr. Gohmert. Well, you must have missed the hearing that
was going on this week. [Laughter.]
But that potential is out there.
Mr. Sabin. The ability to link it to a judicial officer,
when that, I do not see in the pre-indictment stage, other than
in a grand jury context with a judge overseeing the grand jury
having authority for some kind of misconduct, would have a
triggering mechanism for a judicial officer to be involved.
Absent that, how does a court get involved in something
that is merely an ongoing investigation? I do not see how you
can link those two, at that investigatory phase, link it up
with a judicial officer.
Mr. Sullivan. Mr. Gohmert, if I may?
Mr. Gohmert. Well, I have to yield back to the Chairman at
this point. I am out of time. But if the Chairman allows.
Mr. Sullivan. Thank you, Mr. Chairman.
In answer to your question and Mr. Sabin's response, I
think at the pre-indictment phase, if there were a sanctions
provision and it can be showed that an aggressive prosecutor
violated that sanctions provision, you could move to dismiss
the indictment.
You could allege in that motion that improper
considerations were undertaken and adverse inferences were
drawn by the refusal of the corporation to waive, that the
request to waive itself was improper.
You could submit that, even post-indictment, if such a
motion would fail, that information obtained, or potentially to
be obtained, through that request would be excluded for
purposes of the prosecution's case in chief.
You could also suggest that the violating prosecutor be
subjected to OPR--internal OPR investigatory review--as well as
Bar sanctions, in accordance with the Bar jurisdictions where
that person is admitted.
So, I think there are a variety of efforts to be undertaken
for purposes of chilling a willfully aggressive prosecutor who
seeks to violate Senator Specter's proposal.
Mr. Gohmert. Thank you, Mr. Sullivan. Appreciate that
answer.
Mr. Scott. I would like to thank the witnesses for their
testimony.
Members will have an additional--if they have additional
written questions, we will submit them to you, and ask you to,
if we submit any additional questions, respond as quickly as
possible.
Without objection, the hearing record will remain open for
1 week for the submission of additional materials.
And without objection, the Committee stands adjourned.
[Whereupon, at 11:10 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record