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January 13, 2008

A"sweet deal" is too simplistic a description of the contract given to a firm headed by former U.S. Attorney General John Ashcroft to monitor an out-of-court settlement negotiated by federal prosecutors in New Jersey. U.S. Attorney Christopher J. Christie recommended his former boss' firm, the Ashcroft Group, for the contract last fall without notifying anyone - including his superiors in Washington - or soliciting any public bids. It was a sweet deal, but it also qualifies as a big dose of favoritism.

Windfall would accurately describe the staggering amount of money Mr. Ashcroft's firm is expected to earn over 18 months - $28 million to $52 million - for monitoring the agreement with Zimmer Holdings. The Indiana medical supply company was able to avert criminal charges related to alleged paybacks to physicians as part of the settlement, which was first reported by the Newark Star-Ledger. The deal has Justice Department officials reviewing procedures for identifying monitors for these kinds of settlements. But these discussions are overdue.

The deal negotiated with Zimmer by Mr. Christie's office wasn't the first of its kind for his office or for Justice. During the Bush administration, these deferred prosecutions, or nonprosecutions, have increased from five in 2003 to 35 in 2007, according to a study by two Texas lawyers, and they include cases for securities and tax fraud against corporations such as Bristol Myers and AOL.

To oversee the Justice Department settlements, companies hire the monitors and negotiate their fees, which should raise concerns about their objectivity. The settlements would be better monitored by an independent, neutral third party such as a retired federal judge under a recommended fee structure. That's whom federal courts often turn to in similar civil cases.

Attorney General Michael B. Mukasey, a former federal judge, has rightly recognized that Mr. Christie's choice of monitors in this and other cases has the whiff of political favoritism; he should revamp the department's policy on settlement monitors to ensure that these lucrative contracts aren't being used as rewards for friends, mentors or former bosses.

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