For public corporations, the deferred prosecution agreement (or “DPA”) has become the default rule. Whatever the crisis or scandal—foreign corrupt practices, securities fraud, opioids—the response of the public corporation is to cut a deal with the U.S. Attorney under which it conducts an internal investigation, agrees to a joint “Statement of Facts” describing the misconduct, pays a substantial fine, and possibly agrees to some modest governance and monitoring reforms. The payoff to the defendant is that it is not indicted, and if it can avoid another similar episode for a short probation period, the charges will be effectively erased at the end of that period.

Such a resolution is attractive for each side: the prosecution can “declare a victory” in a case where it lacked the manpower or budget to dig deeply or proceed on its own; the defendant corporation avoids the reputational damage associated with a trial and also escapes the collateral civil liability (from follow-on class actions) that would likely ensue if it plead guilty to a crime. Who loses? The short answer is the public, which is denied transparency and the truth. Although a “Statement of Facts” will typically accompany a DPA, its disclosures are heavily edited and sanitized by defense counsel. In fact, both sides have a strong incentive to massage the facts to make themselves look good.

Few examples better illustrate this tendency than the DPA entered into by the Department of Justice (“DOJ”) and The Boeing Corporation (“Boeing”) on January 7, 2021. The DOJ alleged that Boeing had misled the Federal Aviation Administration (“FAA”) about its new model 737 MAX, which had markedly different flight characteristics than its predecessors. Had the FAA known more, it would have almost certainly mandated more extensive flight simulator training. This failure to alert the FAA to these changes may have been a proximate cause of two 737 MAX crashes in 2018 and 2019 that killed 346 passengers.

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