Tuesday, May 27, 2014

Finding a Middle Ground in Holding Financiers Accountable

Finding a Middle Ground in Holding Financiers Accountable

Mehafarid Amir-Khosravi, an Iranian billionaire, was the first of four men hanged for committing bank fraud.   Mr. Amir Khosravi and his colleagues were convicted of embezzlement, bribery, forgery, and money laundering to the tune of $2.7 billion.   Apparently the scandal involved 14 state-owned and private banks and officials close to former Iranian President Mahmoud Ahmadinejad.  According to Reuters[1], 33 bankers and government officials were also given long sentences.  Neither the State prosecutor nor the Iranian Supreme Court held a press conference.  They just made a brief announcement.



Last week Attorney General Eric Holder held a press conference and issued a lengthy press release after getting Credit Suisse to plead guilty to a single charge of tax evasion (see, “Headline Justice: Credit Suisse Pleads Guilty and Chinese Indicted [May 20, 2014].”  Mr. Holder proclaimed, “When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here.”

I’m an opponent of the death penalty, and Iran’s record of imposing capital punishment is appalling.  Thus Mr. Amir-Khosravi’s execution for an economic crime is particularly outrageous.  However, the U.S. Department of Justice might learn a couple of things from the Iranians.  Instead of conducting press conferences laden with all sorts of heated rhetoric, our law enforcement officials would be better served by letting their cases speak for themselves.  Of course, the DOJ’s actions would seem particularly hollow without the rhetoric, because their favorite tactic is to fine financial institutions large sums that they readily can afford to pay.  So the second thing DOJ could learn from the Iranians is to prosecute some of the senior executives responsible for financial irregularities.  Prosecutions would send a much stronger message than press conferences.






[1] http://www.reuters.com/article/2014/05/25/us-iran-corruption-execution-idUSBREA4O08J20140525

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