A U.S. appeals court on Tuesday upheld the ability of federal prosecutors to broker deals allowing corporate defendants to avoid criminal convictions in a case involving a Dutch company accused of illegally shipping aircraft parts to Iran and other countries.
The unanimous ruling by a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit focused on a so-called deferred prosecution agreement with aerospace services company Fokker Services B.V.
The appeals court threw out a lower court judge’s decision rejecting Fokker Services’ agreement pay $10.5 million to resolve a criminal investigation into whether it had illegally shipped aircraft parts to Iran, Sudan and Myanmar in violation of U.S. sanctions.
The appeals court ruled that Washington-based District Court Judge Richard Leon lacked the authority to issue an order in February 2015 rejecting the agreement. Leon had described the company’s payment as “grossly disproportionate” given the seriousness of its actions.
The appeals court ruling was authored by Judge Sri Srinivasan, who President Barack Obama considered nominating to the U.S. Supreme Court before selecting Merrick Garland, a fellow appeals court judge.
Srinivasan did not address whether the financial penalty was too low or not. “Rather, the fundamental point is that these determinations are for the executive – not the courts – to make,” Srinivasan wrote.
Critics, including some members of Congress, have questioned whether the Justice Department overuses deferred prosecution agreements and whether judges should have greater oversight of such deals.
Under deferred prosecution agreements, companies can avoid a full-fledged criminal prosecution in exchange for agreeing to take certain actions.
Prosecutors agreed in 2014 to defer and ultimately drop charges that Fokker Services sent more than 1,000 parts, technology and services to sanctioned countries between 2005 and 2010 without first obtaining a license, as long as the company abided by the terms of the pact.
The Justice Department cited the company’s efforts to disclose the conduct, improve its compliance program and discipline employees as reasons for the lenient treatment.
The case is U.S. v. Fokker Services, U.S. Court of Appeals for the District of Columbia Circuit, No. 15-3016.
(Reporting by Lawrence Hurley; Editing by Will Dunham)
http://www.reuters.com/article/us-usa-court-deferred-idUSKCN0X21VS
“Srinivasan did not address whether the financial penalty was too low or not.”
He didn’t need to. That was a foregone conclusion (too low).
“Under deferred prosecution agreements, companies can avoid a full-fledged criminal prosecution in exchange for agreeing to take certain actions.”
Or at least ONE action for certain.
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