The Antitrust Division recently indicted a Japanese executive in the auto parts industry for agreeing to rig bids and fix prices for heater control panels. Hitoshi Hirano, an executive with Tokai Rika CO. was also charged in a second count with obstruction of justice for attempting to have subordinates destroy documents and delete electronic data when he learned that the company’s US office was being searched. In a press release, Brent Synder, Deputy Assistant Attorney in charge of the Division’s criminal enforcement program said: “Attempts to obstruct justice and destroy evidence will give rise to additional charges.” http://www.justice.gov/atr/public/press_releases/2014/306153.pdf.
It is a good time to review the consequences of destroying documents, an action that almost always makes a bad situation worse. First, the Antitrust Division places a high priority on prosecuting any form of obstruction of its investigations, from document destruction, to attempting to persuade witnesses to testify falsely, to making false statements. Even a hint of obstruction will focus the investigation on that issue. The Division will devote the resources necessary to run down any leads of obstruction.
As a former Division prosecutor, I can also attest that obstruction fires up the investigative team. It is a pressure point to turn witnesses and evidence of obstruction is usually a sure indication that the underlying offense was committed.
From Bad to Worse
Besides focusing the Division’s attention, other negative consequences flow from obstruction. Some are obvious.
1) A person who has committed obstruction has ruled himself out from any possible amnesty deal, or later immunity. The Division will bring obstruction charges whenever it has sufficient evidence. A person who may have gotten a pass for the Sherman Act violation will be charged if there is sufficient evidence of obstruction.
[In the 1980’s the Philadelphia office was bringing auction collusion cases. The FBI was executing a search warrant at the home office of the bookkeeper for the auction ring. The ledger recorded who bought what and what the payouts were at the knock out auction. As the FBI took the ledger, the individual asked if he could just make a copy of a few pages he needed for his ongoing business. He took the ledger over to the copier—and started erasing furiously. The bookkeeper became a defendant and received a six-month sentence for obstruction at a time when jail was not very common.].
2) Even if not charged with obstruction, if the Division has good reason to believe a person has committed obstruction, the Division may insist on a Sherman Act plea from an individual who may have otherwise gotten a pass. The individual will have pled to a Sherman Act count, but it may in fact have been obstruction that caused the Division to demand a plea. Alternatively, a plea agreement of 24 months for a Sherman Act violation may in reality have been 18 months, but the Division insisted on a 6-month kicker because of evidence of obstruction. In other words, the penalties from obstruction are not always evident in the pleadings.
3) Finally, in some instances, an executive, especially a foreign executive, may be destroying his “ace in the hole.” Documents located overseas are typically beyond the reach of the Division. Even when there are coordinated dawn raids, the EU and other competition agencies cannot simply give the documents to the US. The “hot documents” are often the most valuable commodity a target has to trade, either for immunity or a lesser sentence. The Division’s need for a “hot” document may even grow if a potential trial approaches. The document that incriminates you may be the document that saves you–if it also incriminates others.
Another important negative consequence is the increased likelihood that the Division will seek extradition of foreign fugitives charged with obstruction. The Philadelphia field office indicted Ian Norris, a British executive, in a four-count indictment. The lead count was price fixing of various carbon products, but he was also charged with three counts of obstruction. The US sought Norris’s extradition from the UK. It was a seven-year extradition battle, but in the end, the UK allowed Norris’s extradition to stand trial for the obstruction counts, but not the price fixing count. The price fixing count did not meet the test of “dual criminality” because price fixing was not a crime in the UK at the time of Norris’s offense. Norris was convicted of one count of obstruction and sentenced to 18 months in prison.
It is an unanswerable question as to whether the DOJ would have even sought Norris’s extradition, but for the obstruction counts. But, as mentioned earlier, the Division gets quite agitated about obstruction of its investigations. The Division has never extradited a Japanese citizen. Might Mr. Hirano be the first due the obstruction charge? Time will tell, but Mr. Hirano may not have played his cards well in this case.
Compliance Training Is Key
Once an investigation starts—especially if it is with the execution of a search warrant, it is too late to warn executives about the obvious and non-obvious consequences of obstruction. A search warrant, or even the execution of a subpoena, can set off the “fog of war” and the impulse to cover up is strong. [In the 4th grade I got a “D” in religion. I panicked. Before bringing the report card home, I tried to turn it into an “A.” That got me an extra couple of weeks of grounding. I will have to wait to see if the nun’s promise of “eternal damnnation” will be imposed.). A panicked executive will forget how many copies of an email may exist; how many people took notes at the meetings, and who may have secreted away documents for possible later protection. Normally cool under fire, an executive under criminal investigation may react poorly—and try to cover up. This may be especially true of executives who are overseas who may take false comfort in the distance between the grand jury and their location. But, the distance between immunity and jail may be just an ill-advised delete, erasure or false statement. The time to disabuse executives of the notion that obstruction is a good idea is during a strong compliance training program, which hopefully will keep them from creating documents in the first place that need to be destroyed.