Remarks* of Deputy Attorney General
Larry D. Thompson
to the Citizens' Crime Commission
New York, New York
July 25, 2002
Good evening and thank you for the invitation to address this esteemed group about some of the law enforcement issues that are front and center in my job as Deputy Attorney General. Let me say first of all, that it is always a pleasure to come up to New York - a city that is so much in our thoughts these days. Your city bears eloquent and painful witness to both the horrific terrorist attacks of last year and the stock markets' dizzying gyrations of this year. And my two and only sons have lived here for a couple of years. They were here on 9-11. One works downtown, one attends NYU and my wife and I shared the anxiety of many New Yorkers following the attack. And it is the Justice Department's role in the war on terrorism and our attack on Corporate Fraud that I would like to speak about this evening.
CONCERNS / BALANCED MEASURES
Americans before us have gone to war many times - and spent untold blood and treasure to secure the liberties that we hold dear.
But we live in historic times. We are the first generation of Americans to confront the mass murder of civilians by a foreign enemy on our own soil.
September 11, 2001 was not the beginning of America's war against terrorism, but the attacks that day in New York and Washington did galvanize the country and bring into sharp focus our goals.
We are fighting a tenacious and devious enemy who seeks to use our own freedoms against us. That fact has had far-reaching consequences for the law enforcement role in this war. We have had to use every weapon in our legal arsenal to disrupt and prevent future terrorist attacks - including the aggressive but still appropriate use of detention, surveillance and legal processes such as material witness warrants.
As a public official - and as an attorney who, for many years, represented criminal defendants - I share the concern that the struggle against terrorism not change the essential character of our nation. But I want to assure you that, in my opinion, none of these steps that we at the Justice Department are taking threatens our Constitution. All of the measures that we are bringing to bear are arrived at openly, in the sunlight of public attention, and are subject to judicial review.
And, It is our very open, democratic and just society - whose hallmark is our concern for civil rights - that has made us the terrorists' target.
Our freedoms are the envy of the world and the perennial winner in the global marketplace of values and ideas.
It is precisely because the terrorists' ideology cannot compete in the open marketplace that they have turned to violence and horror. They attempt to achieve through mass murder what they will never be able to accomplish in a free exchange of ideas: to subvert our freedoms, freedoms for which millions of Americans have strained and sacrificed.
We are certainly not the first nation to be assailed by terrorists bent on its destruction. Others who have responded to this challenge can help guide us to strike the right balance among competing liberty and security concerns.1 Although Israel has been the victim of repeated terrorist assaults, the Israeli Supreme Court has prohibited the use of "moderate physical pressure" by its domestic investigators. In doing so, the Israeli court recognized a principal that applies equally to our own struggle: "This is the destiny of democracy, as not all means are acceptable to it, and not all practices employed by its enemies are open before it. Although a democracy must often fight with one hand tied behind its back, it nonetheless has the upper hand. Preserving the Rule of Law and recognition of an individual's liberty constitutes an important component in its understanding of security. At the end of the day, they strengthen its spirit and [add to] its strength and allow it to overcome its difficulties."
This same reverence for civil rights inspired the Attorney General immediately after the terrorist attacks to challenge all of us in the Justice Department to "think outside the box" in fighting terrorism, but caution us: "Don't think outside the Constitution."
We are rich nation that has enjoyed many luxuries, not the least of which has been the peace that has prevailed within our borders for four generations even as the combat flared and smoldered abroad. In this current war, that has brought the fighting and dying home to this city, we have had to think carefully through how to handle the treatment of captured enemy combatants - and to think especially hard about U.S. citizens who have taken up arms against our cause or against their own country.
It is a universal principle of warfare that enemy combatants may be detained outside the criminal justice system for the duration of hostilities. In every war since the founding of the Republic, the United States has detained without legal recourse captured enemy combatants - sometimes including U.S. citizens fighting for the enemy.
We need to detain enemy combatants because (1) it would be suicidal not to - they could otherwise resume their belligerent acts - and (2) in order to gather information about the enemy and his plans. Such detention is entirely distinct from criminal punishment. It is a basic military imperative and an integral part of the President's constitutional duty to defend the United States.
Of course, as you are acutely aware in the center of the financial world, attack from foreign terrorists is not the only threat to the health of the Republic. Our financial markets have been shaken by a wave of criminal conduct at the highest levels in American corporations. While this conduct is shocking, it is not without precedent and the Administration is taking swift and certain action to punish the wrongdoers and restore confidence to investors.
Two weeks ago, the President appointed me Chairman of the Corporate Fraud Task Force, an interagency group that represents the vast law enforcement resources of the Justice Department, the S.E.C., the Treasury Department and others. We have begun the process of coordinating and overseeing these efforts to root out fraud in corporate boardrooms and executive suites, and to put the wrongdoers in prison.
There is a significant category of wrongdoers who cannot be imprisoned, but are nonetheless crucial targets of our efforts. Although it should be done sparingly, we should never hesitate to prosecute corporations themselves when the circumstances warrant it.
In making the decision to seek an indictment against a corporation we consider the company's history of wrongdoing, its response to regulatory actions, its reaction to the criminal conduct committed by its employees, the level within the corporation at which the crimes were committed or condoned, and the pervasiveness of the criminal behavior within the organization.
I now want to speak about a few of the reasons why I believe that it is imperative to continue to prosecute business organizations where appropriate:
First, corporations are economic and cultural facts in our society. Employees act on the corporation's behalf and take on the corporation's identity. Large corporations, develop their own methods and culture that guide employees' thoughts and actions. That culture is a web of attitudes and practices that tends to replicate and perpetuate itself beyond the tenure of any individual manager. That culture may instill respect for the law or breed contempt and malfeasance. The organization itself must be held accountable for the culture and the conduct it promotes. Without this tool, the public would have no adequate deterrent to corporate criminal conduct because the culture that condoned, or at least acquiesced in, that behavior would be beyond the criminal law's power to correct. Only by clearly preserving the possibility of prosecuting the corporation itself can we ensure systemic reform.
Second, the corporations that are prosecuted have generally transgressed before and proven themselves immune to civil persuasion. The Justice Department has long recognized the principle that an employee's criminal wrongdoing does not mean that the employing organization should automatically be charged with a crime, especially where it would not serve a substantial federal interest to prosecute and adequate non-criminal alternatives exist. In reality, the corporations that are criminally prosecuted - that is, for which the enforcement authorities choose to subject their case to the criminal standard of proof beyond a reasonable doubt - are ones in which the company has flagrantly crossed the line in one or more ways that demonstrate that the guilty mind of individual actors was borne out of the guilty culture of the organization itself.
Third, civil regulatory regimes may do a good job sorting out the normal range of problems in an industry, but it takes criminal sanctions to deal with extreme cases of serious or repeated wrongdoing. Traditional civil remedies have proven ineffective against recidivist companies that are the primary targets of criminal prosecution. Civil sanctions simply do not have the power of criminal penalties to concentrate the corporate mind and change corporate culture. Large business organizations, particularly public companies that are already regulated in myriad ways, sometimes have the disappointing tendency to view civil sanctions as merely the "cost of doing business" - a cost that can be passed on to customers and shareholders without lingering effect in the management suite and the board room. Civil sanctions are particularly impotent in combating crimes against society at large, such as regulatory reporting violations or obstruction of justice, that may undermine the legal system, but do not create easily quantifiable harm. The severe potential collateral consequences to a corporation resulting from a criminal conviction is sometime the best and most effective way to punish a corporation.
Without corporate criminal liability, there would be no effective deterrent to a corporate culture that -- expressly or tacitly -- condones criminal conduct. Instead, corporations could merely appoint a "Vice-President in Charge of Going to Jail" who would serve as a whipping boy for the collective acts of the organization. It should go without saying that the criminal law seeks to punish individuals who commit crimes. But the criminal law wisely seeks to punish and reform the corporation that fosters or condones its employees' criminal behavior.
When asked why he robbed banks, Willie Sutton famously responded, "Because that's where the money is." So, too, is the money in the corporation. In order to change corporate cultures that foster criminal conduct, it is sometimes necessary to punish the corporation itself through substantial fines and the collateral consequences of criminal convictions that not only have a direct impact on the bottom line, but also spur reforms in the way the business makes money.
I think we are on the right track at the Department of Justice. But we will not be complacent.
As Will Rogers, the famous American philosopher, once said, "Even if you are on the right track, if you just sit there and do nothing, you will eventually get run over."
*NOTE: Mr. Thompson frequently speaks from notes and may depart from the speech as prepared. However, he stands behind the speech as presented in written format.
1 Israeli Supreme Court decision of September 6, 1999 concerning the interrogation practices of the General Security Service (also known as "Shin Bet").