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A federal judge has prohibited prosecutors from bringing any indictment against a Norwegian corporation that entered into an amnesty program with the U.S. Department of Justice and provided information about a price-fixing and bid-rigging conspiracy that led to guilty pleas from two of its co-conspirators and more than $62 million in fines. In his 31-page opinion in Stolt-Nielsen Transportation Group v. United States, U.S. District Judge Timothy J. Savage concluded that the company had fulfilled its obligations under an immunity agreement and is therefore entitled to an injunction that bars the filing of an indictment. Prosecutors argued that SNTG misled the government by claiming that its participation in the antitrust conspiracy had ceased in March 2002. But Savage found that the amnesty agreement explicitly immunized SNTG and its executives from prosecution for activity prior to Jan. 15, 2003. Since the government drafted the agreement, Savage said, it “cannot depend upon a tacit understanding of what it contends was meant during negotiations but was not memorialized in the integrated agreement.” Savage concluded that the only way to protect SNTG’s due process rights was to decide — prior to the filing of any indictment — whether the government was entitled to void the immunity agreement. The evidence, Savage found, showed that SNTG never breached the agreement, and that the Department of Justice was therefore not entitled to void it. “When it entered into the agreement, DOJ never intended to prosecute SNTG. Its goals were to pursue SNTG’s co-conspirators and to break up the conspiracy. It got what it had bargained for in the agreement,” Savage wrote. “SNTG’s partners in the conspiracy were prosecuted and convicted, and the conspiracy has been terminated. Now that it has received the benefit of the bargain, DOJ cannot prosecute the party that incriminated itself when it delivered the evidence DOJ used to accomplish its goals,” Savage wrote. The ruling is a victory for SNTG’s lawyers, George J. Terwilliger III, Christopher M. Curran, J. Mark Gidley and Lucius B. Lau of White & Case in Washington, D.C., and Ian M. Comisky and Matthew D. Lee of Blank Rome in Philadelphia. According to court papers, SNTG admitted to participating in an international conspiracy to allocate customers, rig bids and fix prices on parcel tanker affreightment contracts for the shipment of specialty liquids to and from the United States and elsewhere. On the basis of information provided by SNTG, the government filed criminal charges and secured guilty pleas from its two co-conspirators — Norwegian-based Odfjell Seachem and Jo Tankers B.V., which is based in the Netherlands, according to Savage’s opinion. Odfjell Seachem agreed to pay a $42.5 million fine and Jo Tankers agreed to pay a $19.5 million fine, court papers stated. Guilty pleas were also entered by two Odjell executives and three Jo Tankers executives. All five were sentenced to prison terms in the range of three to four months, and paid fines totaling more than $600,000. Savage found that SNTG’s immunity agreement stemmed from its participation in DOJ’s “corporate leniency program” under which the government entices companies to report their involvement in ongoing antitrust conspiracies and to cooperate in the investigation and prosecution of co-conspirators. Under the program, the reporting companies and their officers, directors and employees are granted immunity from criminal prosecution, but only the first company to come forward gets the protection. Later applicants and co-conspirators are subject to prosecution and the cost of defending against criminal charges. After SNTG entered into an agreement with DOJ in January 2003, it turned over incriminating documents and produced two employees who explained how customer lists were exchanged among the conspirators, according to the opinion. But in April 2003, DOJ suspended SNTG’s participation in the amnesty program because it claimed that SNTG did not cease its part in the conspiracy in March 2002, but continued its illegal activity into the second half of 2002. In June 2003, SNTG executive Richard Wingfield was arrested and charged with participating in the conspiracy to allocate customers, fixing prices and rigging bids between March 2001 and October 2002, the opinion stated. Under threat of indictment, SNTG filed suit in February 2004, seeking enforcement of its rights under the agreement. Soon after, Wingfield, too, filed suit seeking to enforce his own rights under the amnesty agreement. In March 2004, DOJ formally revoked SNTG’s conditional leniency and notified the company that it intended to seek an indictment. SNTG responded by asking Savage to issue a preliminary injunction barring the government from seeking an indictment, and prosecutors agreed to put the prosecution on hold until Savage had issued a ruling. Now Savage has sided with SNTG, finding that since it abided by its agreement, the government cannot be permitted to seek an indictment. In his opinion, Savage found that his first task was to decide whether SNTG was entitled to a ruling on the issue prior to indictment. Prosecutors argued that SNTG could raise the issue in a motion to dismiss after indictment. But SNTG’s lawyers argued that it was entitled to a ruling before it was forced to challenge an indictment and suffer the consequences of one. Savage agreed, saying SNTG “is entitled to a decision before the government pursues a prosecution because if an indictment were later determined to have been wrongfully secured, it would be too late to prevent the irreparable consequences.” The only way to protect SNTG’s due process rights, Savage said, is to rule on the validity of the immunity agreement now. “Resolving the issue of whether SNTG was in material breach of the agreement and whether DOJ is bound by the agreement now at the pre-indictment stage ensures that SNTG is afforded the requisite due process without imposing an undue burden on the government,” Savage wrote. “Weighing the government’s interest in maintaining prosecutorial discretion against a party’s due process rights, we conclude that the government’s interest will not be significantly compromised by a judicial proceeding and decision prior to indictment rather than later after the other party’s interest will have been adversely affected,” Savage wrote.

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