PREPARED REMARKS OF
ATTORNEY GENERAL ALBERTO R. GONZALES
NATIONAL LEGAL CENTER
GENERAL COUNSEL CONFERENCE
TUESDAY, MAY 10, 2005
WASHINGTON , D.C.
Thank you, Fred (Fielding) for that kind introduction.
Good evening, Ladies and Gentlemen. I’m pleased to be with you tonight. And as the last speaker at the end of a long – and I am sure informative – day, I will try to make you pleased that I’m with you tonight – by being brief with my remarks.
I told the President that I couldn’t think of any good jokes to open my speech with tonight. He suggested I do what he did…ask my wife to tell them for me.
I don’t know if any of you saw the First Lady at the White House Correspondents Dinner, but she really brought the house down.
Unfortunately, Becky told me I was on my own; so I guess I will just proceed with my remarks.
I do appreciate that you’ve included me in this important discussion about corporate governance issues.
I say “discussion,” even though that portion of the conference clearly happened earlier today, because I am thinking of the long-term discussion on key legal issues that the National Legal Center has nurtured for thirty years.
The Center truly works for the public interest by facilitating educated debate and informed policy-making. It provides opportunities, such as this one, for government, legal, and business leaders to learn from one another.
I particularly welcome your participation in this conference. It shows that you are committed to the same principles of justice and fair competition that the Department of Justice is committed to upholding.
The American economy is one of the greatest strengths of our country, and our system of free enterprise is the envy of the world. The credit for that goes to the imagination, creativity, and dedication of American workers, executives, and investors. But the rule of law also plays a critical role in the success of our economy. Free markets require clear rules and a determined commitment to justice and fairness.
I know that as counsels and legal advisors to corporations, you play a vital role in upholding the rule of law. Much of the work of business lawyers consists of guiding clients to do the right thing in an environment of greater and greater legal and regulatory complexity. Everyday you bring a wealth of experience, a critical expertise, and the highest ethical standards to bear on a variety of legal challenges. Your efforts are critical to the proper functioning of the American economy.
At the Department of Justice, we have a role to play as well. We are responsible for enforcing laws that help protect the integrity of the marketplace and help preserve the quality of life we’ve come to expect from the greatest economy in the world.
Tonight, I want to highlight four areas in which the Department, through enforcing and improving the law, helps to protect the proud traditions of our economy and strengthen the rule of law that businesses need to survive.
First, we are aggressively enforcing the laws that guard intellectual property.
Intellectual property is the true capital on which our economy is built. We have a responsibility to vigorously enforce IP laws in order to nurture the creative energy of this country and harness that ingenuity for the future of our economy.
Recently, I had the chance to visit with some high school students in Los Angeles to discuss what the Department is doing to safeguard intellectual property. I told them that we must steadfastly protect the ability to create and innovate and also to be rewarded for our creations and innovations. I assured them – and I assure you – that we are doing just that.
I think it was important to remind kids who have grown up in an age of unlimited – and often unguarded – creative content, that stealing a song from the internet is no different than stealing the laptop you used for the download.
The program in L.A. was the work of the Department of Justice’s Task Force on Intellectual Property, which has recommended that youth education be a part of the fight against piracy and other forms of IP theft. The IP Task Force is one significant way in which the Department protects intellectual property.
In addition to programs designed for prevention, we are devoting resources throughout the Department to aggressively pursue intellectual property crimes – including prosecuting crimes such as product counterfeiting and the theft of trade secrets.
As we work to preserve an environment conducive to innovation, we also have to protect the competition that drives our economy. That’s why the Justice Department, through the Antitrust Division, also works hard to enforce laws that protect our free markets from anti-competitive behavior.
Cartels are the most egregious violators of competition law. They harm the economy by inflating prices, restricting supply, reducing efficiency, and stifling innovation. In short, they are robbing Americans of hard-earned dollars. It’s no surprise that the Supreme Court has called collusion by competitors the “supreme evil of antitrust.”
And that’s why the Department in recent years has focused on anti-cartel enforcement, including by seeking jail time for individuals who are involved in organizing cartels. During this Administration, an increasing number of these individuals have been sentenced to more and more time in jail for crimes related to cartels. That means we’re putting away bad actors and deterring others from hurting consumers in the first place.
We are also collecting record fines in the antitrust area – including the Department’s recent announcement that Hynix Semiconductor would plead guilty to price fixing and pay a fine of $185 million.
Hynix, a Korean high-tech firm, and several co-conspirators engaged in a scheme that fixed prices for the data memory products found in computers and other electronic devices. Companies such as Dell, Apple, and IBM had to pass along increased prices to consumers – or sell inferior products for the same price as prior models with more memory.
The Department’s aggressive and determined prosecution of this and other cartels is good news for millions of consumers who have been overpaying for laptops, PDAs, and other computer products – and good news for an economy that depends on honest competition.
A third area I want to talk about tonight is the work of the Corporate Fraud Task Force. The President established a Corporate Fraud Task Force to coordinate the balanced – and consistent – enforcement of our laws regarding securities fraud, accounting fraud, and other related financial crimes. As with intellectual property laws and antitrust laws, the Department’s aggressive enforcement actions against corporate fraud produce clear benefits for honest executives, for employees of responsible, law-abiding corporations, and for the American economy.
The work of the Corporate Fraud Task Force will remain a priority for the Department. We want to protect your efforts as well as deter future crimes… before honest businesses lose customers, before investors lose their money, and before hard-working employees lose their jobs.
In carrying out our duties as prosecutors, we at the Department understand the considerable powers we have been given as prosecutors, and the corresponding responsibility that we have in bringing those powers to bear. W e understand that if the Department is not sufficiently vigilant and aggressive in enforcing the laws, then the rule of law disappears, and those few bad actors who are inclined to break the law will have an unjust advantage over all of those who abide by our laws. At the same time, we also understand that irresponsible or overreaching exercise of investigatory and prosecutorial powers – in addition to being unjust – can create its own problems, through overdeterrence. Overdeterrence can discourage innovation, discourage law-abiding conduct, and discourage competition – and thereby cause serious harm to our economy. Additionally, we are mindful of the burdens and challenges that you and your clients can face when there are multiple investigations – one following the other – by different state and federal governmental agencies into the same underlying conduct. At the Justice Department, we are fully aware of these considerations and issues.
We do not seek to discourage decision makers from taking the type of business risks that have long been rewarded or punished in the arena of our markets. That is not the role of the Department; it is instead to prosecute those who engage in unlawful behavior.
Under the guidance of the Corporate Fraud Task Force, hundreds of investigators and prosecutors at the Department work every day to detect and punish corporate fraud crimes. But we’re doing so in a manner that respects the good efforts of honest businesses, maximizes the restitution we can offer victims, and realizes that employees, investors, and corporations can be victimized by these corporate frauds as well.
The settlement we recently reached with Adelphia Communications is a good example of the Department’s efforts to responsibly prosecute corporate crime.
In this case, we agreed not to prosecute the corporation itself, in return for a $715 million contribution by the corporation to a Victim Compensation Fund. Those who lost money as a result of the accounting fraud schemes and corporate looting perpetrated by the leadership of Adelphia – who might otherwise receive nothing – can now recover some of their losses.
Sometimes, however, enforcing the laws on the books is not enough. We must also be willing to adapt our laws to new trends and challenges facing our economy. The President realizes that frivolous lawsuits are a modern challenge to our economy, one that requires a modern solution. He has said: “Our tort system has become a needless disadvantage for American manufacturers and entrepreneurs.” And he’s urged Congress to take a hard look and enact common-sense tort reform.
As all of you know, the costs of litigation have risen substantially over the past several decades – higher than in any other industrialized nation in the world. Lawsuits are burdening businesses, threatening jobs across America, and creating logjams in our courtrooms – and they aren’t serving those who actually need restitution.
The President has actively campaigned for the enactment of medical liability reform, class action lawsuit reform, and asbestos litigation reform to expedite resolutions and curb the costs of lawsuits for America’s economy…and I am committed to helping make sure the President’s efforts succeed.
The active enforcement of our Federal laws – whether in the area of intellectual property, of antitrust, or of corporate fraud – and the improvement of our tort system will remain priorities for this Administration, and for the Department of Justice during my tenure. These measures will, as one of their many benefits, contribute to the maintenance of a strong economy based on the rule of law. But the Department’s efforts are only one piece of this effort. The most important element of ensuring a strong economy based on the rule of law is continuing to promote a culture of corporate responsibility, which is what you as corporate counsels are tasked with doing on a daily basis.
Once the Department of Justice prosecutes a crime – regardless of the jail time imposed or fines collected – the damage is already done. When it comes to protecting intellectual property, breaking up corporate cartels, and prosecuting corporate fraud, we would rather stop crimes before they happen – through prevention and deterrence – than wait until consumers and citizens have lost money, lost jobs, or lost confidence in the business community or our competitive economy.
The Department can play a part by continuing to enforce the rule of law and to develop innovative resolutions that value compliance, cooperation, and victim compensation. But prosecution is no substitute for a culture in the private sector that values ethical operations and transparent compliance with the laws and values of the community.
I appreciate the good work that corporate general counsels do in this regard, and I encourage you to continue to be leaders in this effort – to nurture a sense of stewardship for your customers, investors, and employees.
You are with your clients everyday. You’re in the arena where corporate cultures are constructed through the decisions and actions of business leaders all across America. I know you will continue ensure that those are cultures that respect the rule of law and are guided by the highest ethical standards. The vibrancy and health of our economy depend on it.
I look forward to working with you in pursuit of these goals. In doing so, we will safeguard the principles of justice and free enterprise that have been entrusted to our care…and pass them along to future generations even stronger than we found them.
Thank you, may God bless you and your families, may He guide our pursuit of a culture of responsibility, and may He continue to bless the United States of America.