Richard A. Epstein of the University of Chicago and the Hoover Institution authors this WSJ ($) op-ed that takes up a common topic on this blog over the past couple of years (see also here) — the improper use of deferred prosecution agreements by prosecutors to blackmail companies into agreeing to absurd fines and “corrective” measures to avoid a deabilitating indictment. Professor Epstein notes one particularly egregious such arrangement:

In one such notable agreement, the U.S. attorney for New Jersey, Christopher J. Christie, put the screws to Bristol-Myers Squibb, which got into hot water because of a potential securities violation for inflating its quarterly earnings by a business practice known as channel stuffing. BMS told its distributors that they had to take into inventory large amounts of BMS products immediately, with the understanding that down the road they could return the excess for a refund. The alleged securities violation arises from the overstated earnings quarterly reports, without indication of any expected future write-offs.
The naÔøΩve reader might think that a DPA should prohibit the firm from engaging in future conduct of the sort that got it into hot water in the first place. But Mr. Christie had larger ambitions. The most striking evidence of the abuse of power is paragraph 20 of the agreement, which requires BMS to “endow a chair at Seton Hall University School of Law,” Mr. Christie’s alma mater, for teaching business ethics, a course that he himself could stand to take.

And Professor Epstein understands precisely what needs to be done to correct this prosecutorial misconduct:

[T]he Department of Justice should engage in unilateral disarmament by disavowing the odious Thompson memo, and rethinking why it ever needs to threaten the nuclear option of a corporate indictment. For its part, our new Congress should repeal by statute the doctrines of vicarious liability for criminal conduct in a corporate context — because these give the government unwarranted and arbitrary power over corporations.
At bottom, corporations are just individuals tied together by an elaborate network of contracts; and we don’t need yet another sorry reminder of how mindless government policies harm the innocent shareholders whom they are supposed to protect. The government has a vital role in criminal enforcement. So let it go after real, i.e., human, criminals the old-fashioned way, by careful investigation and skilled prosecution.

Epstein makes his point without even mentioning the Enron Task Force’s irresponsible destruction of wealth in connection with prosecuting Arthur Andersen out of business. As Geoffrey Manne asked awhile back — Where’s the outage?