Lawyers: Plan Won't Change Business
By ANNE GEARAN
Associated Press Writer
WASHINGTON (AP) — President Bush's proposed fixes for corporate looting and insider deals may do some good, probably won't do much harm but ultimately will be mostly for show, business lawyers and former prosecutors say.
Bush wants longer sentences for some kinds of business fraud and closer federal scrutiny to deter sweetheart deals, corporate back-scratching and funny accounting. A new federal task force would investigate and prosecute corrupt executives.
``He certainly is addressing a problem that needs to be addressed — the serial failure of any of these corporations to act in a manner consistent with their obligations to shareholders and employees — but I wonder whether any of these proposals indeed have teeth in them,'' said Gerard Treanor, a Washington lawyer who defends white-collar executives.
Federal penalties for business fraud are already stiff, and prosecutors have not been shy about going after rogue traders and boardroom big shots. Ivan Boesky and Michael Milken are reminders of the corporate abuses of another era, and they too prompted loud calls for a crackdown.
``A lot of this is same-old, same-old,'' said Brian Hoffmann, a New York lawyer who advises corporate clients on mergers and other deals. ``People are going to see this for what it is, which is a political response.''
Howard Pearl, a former federal prosecutor who now defends white-collar executives in Chicago, said Bush's proposal for longer sentences for financial crimes is ``mere window dressing.''
Wall Street was unimpressed by Bush's appearance there Tuesday to announce the get-tough proposals. The speech, which the White House talked up for days beforehand, was intended to buck up the markets after weeks of new and deepening boardroom scandals. Stocks drifted mostly down as Bush spoke.
Errant executives aren't likely to change their ways just because the maximum sentence for mail or wire fraud is increased from five to 10 years in prison, or because more federal investigators are peeking over the executive shoulder, lawyers said.
Accountants or executives who commit fraud on the scale alleged at Enron or Arthur Andersen never think they are going to get caught, and may not even think they have done anything wrong, lawyers said.
``I seriously doubt whether the people ... at Andersen sat there and said, 'OK, we're going to do the following and in so doing we're committing a crime,''' Pearl said.
The idea that those hypothetical executives would then thumb through the federal sentencing guidelines to see whether the crime might draw five or 10 years behind bars ``is literally laughable,'' Pearl said.
It is the guidelines that matter when judges fix a sentence, not the possible maximum sentence, lawyers said. Few criminals of any sort receive the maximum possible sentence, so the notion of more 10-year prison terms for financial crimes ``is a fig leaf, and not much more,'' said Treanor. ``To say 10 years sounds better than five years. It looks good in the paper.''
Bush cannot make all his proposed changes alone. Congress will have a say, as will the federal Sentencing Commission, an independent agency that establishes sentencing policies for federal courts.
There are competing bills in Congress that would do some of the things Bush proposed Tuesday and more.
While Congress and the White House have lived to regret some past tinkering with the criminal justice system, the main risk now is raising false hopes, lawyers said.
``The downside is if the public thinks that this will change the problems in the system,'' said Pearl. ``That would be illusory.''
Lawyers offered differing assessments of Bush's chances to win all the changes he seeks, but agreed that a success or two early on would help his cause.
``A task force is nice, but it's going to take somebody going to prison,'' Hoffmann said. ``You need a poster boy.'' |
