On September 9, the Department of Justice (DOJ) issued a Memorandum entitled “Individual Accountability for Corporate Wrongdoing,” no doubt in response to the widespread criticisms of the failure to hold any senior executives to account for the banking crisis.
According to the DOJ, such accountability:
It should be noted however that holding individuals accountable is much more difficult than may first appear. For that to be effective for banks, that would require some fundamental changes in banking laws and regulations, such that banks could not hide who was responsible for what decisions. That has yet to come – and the timing of those types of banking laws and regulations is uncertain.
Another question to ponder: Do fines change the culture of the bank?
In my opinion, probably not. But the trend for prosecutors even before the crisis has been to prosecute companies rather than high-level individuals. This is presented as “transforming the corporate culture” because the various deferred prosecution agreements and non-prosecution agreements are ones in which the company agreed to take various measures to prevent such occurrences in the future. But perhaps in these cases the fines were about “recovering funds that are due to the American taxpayer”, as Freddie Mac’s CEO, Donald H Layton said in 2013. That leaves open the question of holding senior executives accountable and accountability in the future. That is really, in my opinion, the issue to be addressed.
I will be in New York City next week, September 21-25, and in Washington, DC, September 28 – October 2. If you would like to meet to discuss my work, please contact my publicist in the U.S., AlMartin@ImpactCommunications.org / 800-974-7753.
I am excited to herald the arrival of my next book, Lehman Brothers: A Crisis of Value (Manchester University Press, November, 2015), and to discuss these important matters with concerned citizens and business leaders in the U.S.
All best,
Dr. Oonagh McDonald, CBE
- Deters future illegal activity
- Incentivizes changes in corporate behaviour
- Ensures that the proper parties are held responsible for their actions
- Promotes the public’s confidence in the U.S. justice system
It should be noted however that holding individuals accountable is much more difficult than may first appear. For that to be effective for banks, that would require some fundamental changes in banking laws and regulations, such that banks could not hide who was responsible for what decisions. That has yet to come – and the timing of those types of banking laws and regulations is uncertain.
Another question to ponder: Do fines change the culture of the bank?
In my opinion, probably not. But the trend for prosecutors even before the crisis has been to prosecute companies rather than high-level individuals. This is presented as “transforming the corporate culture” because the various deferred prosecution agreements and non-prosecution agreements are ones in which the company agreed to take various measures to prevent such occurrences in the future. But perhaps in these cases the fines were about “recovering funds that are due to the American taxpayer”, as Freddie Mac’s CEO, Donald H Layton said in 2013. That leaves open the question of holding senior executives accountable and accountability in the future. That is really, in my opinion, the issue to be addressed.
I will be in New York City next week, September 21-25, and in Washington, DC, September 28 – October 2. If you would like to meet to discuss my work, please contact my publicist in the U.S., AlMartin@ImpactCommunications.org / 800-974-7753.
I am excited to herald the arrival of my next book, Lehman Brothers: A Crisis of Value (Manchester University Press, November, 2015), and to discuss these important matters with concerned citizens and business leaders in the U.S.
All best,
Dr. Oonagh McDonald, CBE
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