U.S. may settle with corporations without going to court: official

By Nate Raymond

NEW ORLEANS, March 6 (Reuters) - The U.S. Justice Department is considering altering how it settles criminal cases with corporations to avoid going to court altogether, amid the increasingly active role judges have taken in reviewing such deals, a top official said on Friday.

Leslie Caldwell, head of the Justice Department's criminal division, said prosecutors may move away from using so-called deferred prosecution agreements for corporate settlements after a judge in February rejected a $10.5 million accord with Dutch company Fokker Services B.V.

"I think we're going to think long and hard about when we're going to use them," she said during a panel discussion at an American Bar Association conference in New Orleans.

Prosecutors may instead choose to avoid going to court by using non-prosecution agreements, in which charges are not immediately filed.

While commonly used already by the Justice Department, non-prosecution agreements in the future could include drafts of charging documents that could be filed in court if a violation of the deal occurs, Caldwell said.

Caldwell's comments come amid continued questions over whether the Justice Department overuses deferred prosecution agreements to resolve allegations of corporate misconduct, and whether judges should have greater oversight of such deals.

In 2014, the Justice Department entered into 19 deferred prosecution agreements and 10 non-prosecution agreements with corporations, according to a report in January by the law firm Gibson, Dunn & Crutcher.

Deferred prosecution agreements - which involve filing a criminal case that is put on hold during the term of the settlement - have come under increasing judicial scrutiny.

In February, U.S. District Judge Richard Leon in Washington, D.C., rejected a deferred prosecution agreement with Fokker to resolve criminal charges it illegally shipped aircraft parts to Iran, Sudan and Myanmar.

Prosecutors had agreed to defer and ultimately drop charges against Fokker, as long as the company abided by the terms of the pact. But Leon called the deal "grossly disproportionate" given the seriousness of the company's alleged actions.

In a case of a deferred prosecution agreement getting a green light by a court, U.S. District Judge John Gleeson in Brooklyn, New York, concluded in 2013 he had the authority to review and ultimately approve a deal with HSBC Holdings Plc (HKSE: 0005.HK - news) that was part of a $1.92 billion money laundering settlement.

Caldwell said the Justice Department disagreed that courts have the authority to approve such settlements and review their terms.

"That's a matter of prosecutorial discretion," she said. (Reporting by Nate Raymond in New York; Editing by Frances Kerry)