DPA DISCOUNTS

There is a longstanding debate over the propriety of corporate deferred and non-prosecution agreements, those semi-private settlements entered into between prosecutors and companies under criminal investigation. That debate is occurring in the shadow of the growing use of these DPAs and NPAs, a trend that recent DOJ policy changes suggest will only increase. Regardless of where one stands on the debate, all agree that the fair, consistent, and transparent awarding and application of these agreements is paramount. Based on an empirical analysis of more than ten years of DPAs and NPAs used in Foreign Corrupt Practices Act cases, we find that the monetary penalties imposed on companies are consistently discounted below the low end of the fine range calculated pursuant to the Organizational Sentencing Guidelines, sometimes even below the monetary benefits companies received from their wrongdoing. Further, the culpability score calculations made pursuant to the Guidelines, which are designed to calibrate a company's ultimate penalty with its level of wrongdoing, are not statistically significant in determining penalties. Instead, it appears a hardened norm has developed at the DOJ of giving an almost uniform 25% discount off the low end of the fine range regardless of a company's culpability. This norm is remarkably consistent despite wide variability in corporate behavior and the likely bargaining positions of prosecutors and corporate defendants. These findings call into question the current oversight of DPAs and NPAs and, ultimately, their use in combatting corporate crime, thereby shedding new empirical light on what has become the primary means of holding our most high-profile corporate wrongdoers accountable.