What If Holder and Obama Listened to DOJ’s Cartel Prosecutors?

By William K. Black
Quito: March 11, 2015

This is how Belinda A Barnett, Senior Counsel to the Deputy Assistant Attorney General for Criminal Enforcement, Antitrust Division, U.S. Department of Justice began her speech entitled “Criminalization of Cartel Conduct” on April 3, 2009.  This was, of course, early in President Obama’s first term.

1. Introduction

“It is well known that the Antitrust Division has long ranked anti-cartel enforcement as its top priority. It is also well known that the Division has long advocated that the most effective deterrent for hard core cartel activity, such as price fixing, bid rigging, and allocation agreements, is stiff prison sentences. It is obvious why prison sentences are important in anti-cartel enforcement. Companies only commit cartel offenses through individual employees, and prison is a penalty that cannot be reimbursed by the corporate employer. As a corporate executive once told a former Assistant Attorney General of ours: “[A]s long as you are only talking about money, the company can at the end of the day take care of me . . . but once you begin talking about taking away my liberty, there is nothing that the company can do for me.”1 Executives often offer to pay higher fines to get a break on their jail time, but they never offer to spend more time in prison in order to get a discount on their fine.

We know that prison sentences are a deterrent to executives who would otherwise extend their cartel activity to the United States. In many cases, the Division has discovered cartelists who were colluding on products sold in other parts of the world and who sold product in the United States, but who did not extend their cartel activity to U.S. sales. In some of these cases, although the U.S. market was the cartelists’ largest market and potentially the most profitable, the collusion stopped at the border because of the risk of going to prison in the United States.”

¹Donald I. Baker, The Use of Criminal Law Remedies to Deter and Punish Cartels and Bid-Rigging, 69 GEO. WASH. L. REV. 693, 705 (Oct./Dec. 2001).

In two paragraphs, Barnett (unintentionally) exposed the disgrace that is President Obama, Attorney General Eric Holder, and Lanny Breuer’s (President Obama’s first head of the Criminal Division) refusal to prosecute the senior bank officers that led the three fraud epidemics that caused the U.S. financial crisis and the Great Depression.  But her words are an even greater indictment of Presidents Clinton and Bush who could have prosecuted the elite bank felons’ frauds and prevented the crisis.

Please remember these two takeaways that we have been explaining for years.

“Companies only commit cartel offenses through individual employees, and prison is a penalty that cannot be reimbursed by the corporate employer.  As a corporate executive once told a former Assistant Attorney General of ours: ‘[A]s long as you are only talking about money, the company can at the end of the day take care of me . . . but once you begin talking about taking away my liberty, there is nothing that the company can do for me.’”

“We know that prison sentences are a deterrent to executives who would otherwise extend their cartel activity to the United States. In many cases, the Division has discovered cartelists who were colluding on products sold in other parts of the world and who sold product in the United States, but who did not extend their cartel activity to U.S. sales. In some of these cases, although the U.S. market was the cartelists’ largest market and potentially the most profitable, the collusion stopped at the border because of the risk of going to prison in the United States.”

We know how to deter elite white-collar crimes – the only way to do so.  Holder’s bank fines are useless – and DOJ’s real prosecutors told him why they were useless from the beginning.  No one, of course, thinks Holder went rogue in refusing to prosecute fraudulent bank officers.  President Obama would have requested his resignation five years ago if he were upset at Holder’s grant of de facto immunity to our most destructive elite white-collar criminals.