Wouldn’t it be just too much if we found out that federal prosecutors were piggybacking prosecution of corporate crimes to reward their cronies?
That certainly seems to be the case in New Jersey. U.S. Attorney Christopher Christie has appointed his old boss, former U.S. Attorney General John Ashcroft to be the ‘corporate monitor’ over Zimmer Holdings and several other medical equipment manufacturers that have been accused of paying kickbacks to get physicians to use their artificial joint reconstruction and replacement products. The company is now involved a deferred prosecution agreement (pdf) with Cristie’s office.
Deferred prosecution agreements usually mean courts are involved in at least an oversight capacity – but the one covering Zimmer Holdings was entirely under Christie’s discretion. Zimmer Holdings and the other companies were faced with either accepting the terms offered by Christie or paying through the nose to cover the fees assessed by monitors appointed by Christie – or face prosecution. Zimmer Holdings accepted Christie’s terms, slipped a blade between a couple of ribs by disclosing in an SEC filing the compensation agreement with Ashcroft.
Ashcroft Group LLC stands to take in somewhere between $29 and $52 million dollars – to be paid by Zimmer Holdings – for serving as corporate watchdog for a mere 18 months. And what will Ashcroft Group do to earn this largess? It will ‘oversee Zimmer Holdings, making sure it does not engage in misconduct and help it adopt corporate reforms.’
As Attorney General, Ashcroft was Christie’s boss for three years, from 2002 to 2005. In addition, Christie served on an advisory panel that regularly consulted with the AG.
Of course, Christie issued the obligatory denial, stating he had nothing to do with Ashcroft’s fee, which he touted as a “real bargain” for American taxpayers – yet he cited the hefty oversight fees that the companies in question agreed to pay as reason to forgo assessing fines.
Yep, that’s quite a bargain when companies that screw the public are let off the hook for paying public fines by enriching former public officials.
(Hat tip Neil Gordon and the POGO blog.)