This Corporate Counsel article reports on the cottage industry in placement services that New York AG (“Aspiring Governor”) Eliot Spitzer has developed in regard to his multiple investigations of big insurance companies. Seems as though a number of those companies (listening AIG and Berkshire?) are hiring former prosecutors as executives in connection with the companies’ efforts to soften the blow of such investigations.
Although not mentioned much in the MSM, the most notorious example to date was Marsh & McLennan’s decision to promote a Spitzer friend and former supervisor in Spitzer’s AG office — Michael Cherkasky — to CEO after Spitzer indicted there would not be a settlement so long as Jeffrey Greenberg (son of current Spitzer target, Maurice “Hank” Greenberg) remained in control. Then, in January, Marsh hired E. Scott Gilbert — a former Assistant U.S. Attorney in Manhattan — to serve as chief compliance officer. Finally, this past December, former prosecutors also took on compliance roles at two other insurers that are under investigation — The Hartford hired Ronald Apter as its new deputy associate counsel for compliance and AIG named associate general counsel Mari Maloney as its chief compliance officer.
Business executives cannot view this trend of hiring former prosecutors as compliance officers with warm and fuzzy feelings. As companies adopt a strategy of appeasing regulators regardless of the nature of their probes, the companies are increasingly cooperating with the investigators, requiring executives to waive their self-incrimination privilege as a condition of maintaining their employment, and cutting a settlement check as quickly as possible to satiate the regulators. Accordingly, prosecutors with ties to Mr. Spitzer should keep their resumes current — you just never know when the next business subject of the Lord of Regulation is going to need some
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Longtime Houston attorney Tom Kirkendall's observations on developments in law, business, medicine, culture, sports, and other matters of general interest to the Houston business, professional, and academic communities.
Gee? Business prosecutions certainly do “pay”. Of course there are all the rumors of prosecutors trying to pave their way for their next big political move but this is definitely a more lucrative way to go- create your own niche job market! Prosecutors for Hire! Will Work “greasing the wheels” for Food (plus benefits, bonus and an appropriate number of stock options).
The idea that AIG is another Enron is ridiculous- but I don?t doubt that the right prosecutor can create an Enron out of it. Just takes a lot time, a lot of money and the ability to utilize the public?s trust and anger over financial losses to their advantage – all things a government prosecutor has a whole lot of by virtue of their position and the individuals they are going after don?t. Greenberg may have the money to fight, but the lower levels don’t- they are the ones that go down first in the typical prosecutor’s case building strategy.
Remember McCarthyism?- a time when fear and unfounded accusations twisted the public?s perception of acts that were perfectly legal- when targeted businesses made purely reactionary decisions that harmed individuals just to appease the accusers? The government seems to think more criminalization of not uncommon business practices is what the public wants- It sure is a lot of trouble to make rules and review their convoluted interpretations along the way so why bother? Nowadays, they can just wait and imprison people if they don?t like the results.
Oh by the way, seems the “experts” supporting these positions in the first place are typically free and clear… generally in the “unindicted co-conspirator” category.. hmmm.. I wonder why that is?