For a Better Way to Prosecute Corporations, Look Overseas Brandon L. Garrett is a professor at University of Virginia School of Law. David Zaring is an assistant professor of legal studies at the Wharton School of the University of Pennsylvania. The favored new tool of the corporate prosecutor, the deferred prosecution agreement, is being actively exported to other countries. In these agreements, prosecutors allow large corporations to avoid a criminal prosecution entirely by agreeing to pay a fine and adopt reforms. Five years after the financial crisis, many doubt whether prosecutors have taken business crime seriously enough, and some of the blame is laid on lenient deferred prosecution agreements. We can learn some lessons about how to better hold corporations accountable for crimes, though, from the way these types of prosecution agreements are now being used across the globe. After passing detailed legislation approving their use, the British government has circulated plans for a potentially more rigorous deferred prosecution agreement program. One American prosecutor declared that trying to evade taxes via Swiss bank accounts is now "beyond foolish," given the series of such agreements concluded with Swiss banks that, essentially, require them to give up their clients. But at least one American court has promised to subject international deals to greater judicial scrutiny. The deferred prosecution agreement has thus become an example of the way that American law can reach beyond the country's borders. Prosecutions of foreign corporations have become far more important. Indeed, on average, federal prosecutions of foreign companies involve far larger fines than prosecutions of similar domestic ones. Britain's adoption of such agreements shows how American criminal law can spread overseas: British companies found themselves on the receiving end of American prosecutions, until Britain decided it was better to collaborate with and copy the actions of prosecutors in the United States. The use of deferred prosecution agreements to solve the problem of tax evasion through Swiss banks has illustrated their potential. The government required Swiss banks to turn over information about American clients, through such deals, and has also created a possibility of voluntary disclosure program. This sort of amnesty for banks is something new - and combined with the threat of prosecution, it really does seem to be bringing down the wall of banking privacy - even when Swiss privacy law seemed to be in direct conflict with United States criminal law. The prosecutions made offshore banking less attractive, and hopefully we will soon enter into a world where there is nowhere for Americans interested in tax evasion to go. But although American prosecutors are proselytizing the deferred prosecution agreement approach around the globe, the remedies imposed in these corporate prosecutions are new and untested. These agreements are a form of regulation - except it is a single company or entity rather than an entire industry that is ordered to adopt structural reforms. Regulatory programs are supposed to receive consultation and careful judicial review, but deferred prosecution agreements usually do not. The larger picture is similar. The deferred prosecution agreement has not been endorsed by Congress, or vetted by an agency. Moreover, the agreements - settling a case before it can be filed - are designed to avoid even the deferential judicial review that occurs if a company enters a plea deal before a judge. Britain's impending adoption of the agreements, on the other hand, exemplifies the cautious embrace offered by good administrative law. Britain's proposed program comes with a code governing its use, and a requirement that a court conclude that the agreement is both "in the interests of justice" and "fair, reasonable, and proportionate." Moreover, the proposal itself has been opened for comment from the public. We wish deferred prosecution agreements had been similarly vetted in the United States. Instead, American prosecutors have used agreements in cases of great public importance without any meaningful oversight. But one federal judge's hesitant approval of a deferred prosecution agreement with HSBC over extensive money-laundering has recently suggested that here, too, good governance values may be imposed. The fear in America is that prosecutors have been "captured" by the industries they regulate. Senator Jeff Merkley, Democrat from Oregon, called it a ""too big to jail" approach." Over the last decade, more of the truly important corporate prosecutions have been settled through deferred prosecution agreements, or agreements like them. Over 250 of these deals have been entered in federal court since 2001. Well over half (61 percent) of the companies receiving such agreements from 2001-2012 were public corporations or subsidiaries. Almost one-third were Fortune 500 or Global 500 companies. The average fine for such agreements was almost $17 million, although many such companies receive no fine at all. The agreements typically include requirements that the company adopt compliance reforms; about two-thirds do so, although often in vague terms calling for "effective compliance" or "appropriate due diligence." If this prosecution agreement results in structural reforms, then it can be a success. But most of these agreements last just two to three years, most do not involve independent monitors, many describe the required compliance in vague terms, and none of the work done to implement these agreements is made public. In contrast, when a company is convicted, the fines may be much larger, and a judge can supervise the company using probation. The judge in the HSBC case explained he is not supposed to sit there like a "potted plant" while an important corporate prosecution lingers on his docket. He observed that, given a judge's supervisory power over the integrity of judicial proceedings, a deferred prosecution agreement that "so transgresses the bounds of lawfulness or propriety" should not be approved. And while he ultimately did approve the HSBC deal, he insisted on supervising its implementation, and receiving quarterly reports on its progress. There may be a particularly good reason to exercise this sort of authority when the parties come to court with a deferred prosecution agreement. These agreements are the heirs to the sort of institutional reform litigation that played an important role in the civil rights era (and that lasted, in important ways, long beyond it). Back then, trial courts would supervise - often for decades - prison systems, school districts, and mental health facilities. The Supreme Court lost patience with the length of these cases, which turned courts into mini-regulators in their own right. The action in lengthy consent agreements between the government and wrongdoers has moved to the deferred prosecution agreement. But until recently, it looked as if these deals only empowered prosecutors, rather than judges, without requiring much in the way of corresponding accountability. Judges can certainly require too much of regulators, who have traditionally enjoyed a great deal of discretion in deciding whom and how to prosecute. But deferred prosecution agreements are different. Apart from the sufficiency of fines, there are questions about how highly paid experts who oversee agreements are selected, whether they are doing good work and whether agreements really reform firms. The public should know far more about what goes on. In a world where such agreements are proliferating, some judicial oversight is better than none.