Nice Work If You Can Get It
By: Mark W Adams

Majikthise alerts us to this little scam where a company suspected of corruption can get out of trouble by paying "monitors" to watch their future dealings in an new animal called "Deferred Prosecution."

At first, I thought it was a Freudian slip and they really meant deferred compensation. But no, a shady corporation suspected of kickbacks and payola can keep out of court by paying an outside firm to watch them, in this case John Ashcroft's firm received the bargain fee of up to $52 Million to watch Zimmer Holdings in a deal set up by Ashcroft's former employee at Justice.

The Project on Government Oversite -- POGO Blog -- has more:

Ashcroft’s consulting firm, the Ashcroft Group LLC, will earn between $29 million and $52 million (paid by Zimmer Holdings) to serve as a corporate watchdog for 18 months. It will oversee Zimmer Holdings, making sure it does not engage in misconduct and helping it adopt corporate reforms. As head of the Department of Justice, Ashcroft was Christie’s boss from 2002 to 2005. Christie also served on an advisory panel that consulted regularly with the Attorney General.

Two members of the New Jersey Congressional delegation, Reps. Bill Pascrell, Jr. (D) and Frank Pallone, Jr. (D), have expressed concern over the deal and are seeking hearings on deferred prosecution agreements and the process by which corporate monitors are appointed. What particularly worries Reps. Pascrell and Pallone is the lack of transparency and oversight.

Deferred prosecution agreements (and a variant called non-prosecution agreements) are a new weapon gaining in popularity among federal prosecutors. They are starting to show up in POGO’s Federal Contractor Misconduct Database. Deferred prosecution agreements usually involve court involvement or oversight. However, the deal arranged in the Zimmer Holdings matter was crafted entirely at Christie’s discretion. The companies under investigation faced a difficult choice: either agree to Christie’s terms and pay the substantial fees charged by the monitors that he appointed, or face prosecution. Also, fee arrangements for corporate monitors are usually secret; Zimmer Holdings took the rare step of disclosing its compensation arrangement with Ashcroft in an SEC filing.

Christie said he had nothing to do with arranging Ashcroft’s fee, which he justified as a “real bargain” for taxpayers. However, Christie used the hefty monitoring fees the companies agreed to pay as an excuse not to impose any criminal fines. Is it really a “bargain” if, instead of paying back the government, companies who cheat the public are instead forced to enrich the lucky few who have connections to a U.S. Attorney?

It sure pays to know low people in high places.