Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Most companies assume that they’ve successfully dodged a bullet when they sign a nonprosecution agreement with the government. That’s certainly what shipping giant Stolt-Nielsen S.A. thought when its subsidiary struck a deal three years ago to avoid federal criminal charges for antitrust violations. But shortly after the deal was concluded, the government said it would indict Stolt-Nielsen anyway because the company had broken the pact. Stolt-Nielsen maintains that the government is the one that isn’t living up to the deal, and in July asked the U.S. Supreme Court to block the indictment. The high court refused last week to block the indictment while an appeal is pending. U.S. Department of Justice spokeswoman Gina Talamona said the Stolt-Nielsen case is the first time that lawyers in the agency’s Antitrust Division have tried to revoke a nonprosecution deal (also called an amnesty agreement). Talamona said that DOJ doesn’t keep such statistics outside the Antitrust Division, but other observers say they don’t know of any other instance in which the government has tried to rescind a deal with a corporate defendant. The government’s allegations focus on Stolt-Nielsen Transportation Group Ltd., the Dutch subsidiary of the London-based parent company. DOJ believes that the subsidiary colluded with other shippers in 2002 to fix prices and share customers. After Stolt-Nielsen began cooperating with the government, DOJ won guilty pleas from the other shippers, which have been hit with $62 million in fines and had several of their executives go to jail. Stolt-Nielsen and its executives escaped fines and prosecution when the company signed its nonprosecution agreement with DOJ in January 2003. MOVE TO BLOCK INDICTMENT Six months later, the government filed a criminal complaint against Stolt-Nielsen executive Richard Wingfield, adding that it would indict the company. DOJ lawyers separately told Stolt-Nielsen that they were revoking the nonprosecution agreement because the company had lied about when it had stopped its wrongdoing. Stolt-Nielsen responded by asking a federal district court judge in Philadelphia to block the indictment. In January 2005, Judge Timothy Savage sided with the company, ruling that the government couldn’t rescind the agreement prior to a judicial determination that Stolt-Nielsen had breached it. Plus, Savage added, there was no breach because the company had ceased its wrongdoing by the time it signed the agreement � and no other date is mentioned in the agreement. But this past March, the Third Circuit U.S. Court of Appeals reversed Savage’s ruling. An appellate panel found that a valid nonprosecution agreement can bar the government only from prosecuting a company, not from indicting it. The circuit court said Savage did not have the authority, under the Constitution’s separation of powers provision, to stop DOJ from indicting. “Simply being indicted and forced to stand trial is not generally an injury for constitutional purposes,” the Third Circuit judges said. That’s simply wrong, Stolt-Nielsen argued in its petition to the Supreme Court. The company said that an indictment “would have a catastrophic and incurable impact” by letting creditors claim an adverse change, throwing the company into default, accelerating repayment obligations and possibly prejudicing Stolt-Nielsen’s ability to refinance maturing debt or to sell assets. The high court last week denied a renewed application that would have kept in place an injunction by a federal district court preventing the Department of Justice’s Antitrust Division from bringing charges against the company. GCS HAVE CONCERNS Susan Hackett, senior vice president and general counsel of the Association of Corporate Counsel, said that her group planned to file an amicus curiae brief with the Supreme Court on Stolt-Nielsen’s behalf. According to Hackett, the government’s attempt to renege on its deal with the company has caused in-house counsel to question whether nonprosecution agreements can still deliver their main benefit � freedom from indictment. “If that benefit is now in doubt or undermined,” Hackett said, “it will impact the advice that corporate counsel provide. And it will chill the likelihood that clients will be as interested in self-reporting or early resolution of complex cases.” Sue Reisinger is a reporter with Corporate Counsel, a Recorder affiliate.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.