#10-05-02: Remarks of Deputy Attorney General LARRY D. THOMPSON Michigan federal bar association Ypsilanti, Michigan October 5, 2002

Remarks of Deputy Attorney General LARRY D. THOMPSON Michigan federal bar association Ypsilanti, Michigan October 5, 2002
Good afternoon.

Thank you, Jeff, for those kind words. As you know, I always enjoy returning to Michigan and seeing all of the friends I have made here, both from the university of Michigan Law School and from my years of practice as a private attorney which – as luck would have it – frequently returned me to the cradle of my legal education.

Let me express my thanks, as well, for being invited to speak as part of such an impressive program. It is reassuring to see members of the bar clearly focusing on the pressing issues of federal law enforcement. Foremost among those issues are the two topics that I am going to address: the Department’s role in the ongoing war against terrorism and our comprehensive effort to attack corporate fraud.

WAR ON TERRORISM

Turning first to the most urgent concern – the war that we are now fighting – we would do well to recall the sacrifices that the preservation of country may require. We are a rich nation that has enjoyed many luxuries, not the least of which has been the peace that has prevailed within our borders for 4 generations. In this current war, that has brought the fighting and dying home to our cities, we have had to think carefully through the treatment of captured enemy combatants – and to think especially hard about U.S. citizens who have taken up arms against their own country.

Although we are a rich and strong country, we cannot deceive ourselves that we are omnipotent and that our republic is immortal.

It is critical that we understand and respect the terrorist threat. Since the terrorist attacks of September 2001, Americans both at home and abroad have continued to be threatened or killed by concerted terrorist actions: from the shoe-bomber to the murder of Daniel Pearl, to the assassination of an American soldier in the Philippines this week. We do well to remember that 10,000 men went through Al Qaeda’s training camps. This legion of hate and evil has dispersed itself throughout the globe. Stamping it out will require vigorous, sustained effort -- likely for several years -- is what foreign government officials say from countries that have experienced terror. We cannot afford a pause from caution or a holiday from vigilance.

Now, 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.

Down the hall from my office in the Justice Department, there hangs a plaque to commemorate the trial of Nazi saboteurs captured in the United States during World War II. Few would doubt that our detention and even execution of these enemy combatants – one of who claimed American citizenship – served a necessary purpose in prosecuting the war.

We need to detain enemy combatants because it would be suicidal not to – they could otherwise resume their belligerent acts – and in order to gather information about the enemy and his plans. Getting information is the cornerstone of our efforts to prevent terrorist attacks. Such detention is entirely distinct from criminal punishment. This is not the same as criminal punishment. This is where there is sometimes confusion on this point. It is a military imperative and an integral part of the President’s constitutional duty to defend the United States.

CORPORATE FRAUD

As we are all aware from the business scandals of the past months, attack from foreign terrorists is not the only threat to our nation’s well-being. 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.

Almost three months 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 are coordinating and overseeing these efforts to root out fraud in corporate boardrooms and executive suites, and to put the wrongdoers in prison.

Those crimes have compromised the integrity of a wide range of companies -- from multi-billion dollar communications giants to tiny internet start-ups. Because the vitality of our increasingly complex economy rests on free and fair exchange of information, these crimes are particularly pernicious and appropriately the subject of intense law enforcement focus and action. They affect not only institutions, but shareholders and employees and pensioners. They harm average folks as well as major investors, main street as well as Wall Street.

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, including cooperation with the government investigation, the level within the corporation at which the crimes were committed or condoned, and the pervasiveness of the criminal behavior within the organization.

In visiting one city after another, people ask why is this happening? I don’t have all the answers – but based on my experience as a prosecutor and as a defense lawyer, I know that it is important that we look at the culture of some corporations.

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 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 associated 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 am proud of the way dedicated, professional agents and prosecutors have answered the challenge. Prosecutions of following matters: Arthur Anderson, Enron, WorldCom, Adelphia, ImClone, Homestore.Com, Aura Systems, Motor Car Parts, CFS International (NDOK) has opened more than 100 new corporate fraud investigations since 07/09/02 with more than 400 agent/ investigators. 46 defendants have been convicted or agreed to plead and more than 150 individuals charged with corporate fraud offenses.

We will press ahead in these efforts and look forward to your continued cooperation and support. I believe we are on the right track but we will not be complacent. As Will Rogers once said, "Even if you’re on the right track, you’ll get run over if you just sit there." And we will not just sit there. We will move aggressively to defeat terrorism wherever it exists and defend citizens’ rights whenever they are threatened. I can assure you of that.

*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.