Our main story tonight concerns crime.     Once again, voted number one by Reasons to Tiptoe magazine.     (AUDIENCE LAUGHS)     Specifically, we’re going to talk about corporate crime,     something our current president     is famously not that concerned about.     Not only was he convicted     on 34 counts of falsifying business records,     but long before he was president,     CNBC ran a segment about a law banning American companies     from bribing foreign governments.     And I’ll let this anti-corruption activist     pick up the story from there.     I was asked to come on CNBC     and give the anti-corruption argument.     And I remember laughing at the time, saying,     “Well, is there somebody that you found     who’s willing to give the pro-corruption argument?”     Now, every other country goes into these places,     and they do what they have to do.     Sad part, every other country in the world is doing it.     We’re not allowed to.     So it puts us at a huge disadvantage.     Yeah, they clearly got the right guy there.

I can only assume the producer at CNBC said to their assistant,     “We need someone willing to give the pro-corruption argument.     Who’s the most unethical person you can think of?”     To which they replied, “Easy, the Hamburglar.”     To which the producer said, “No, wait, what?     No, like a real person.”     To which they said, “Wait, the Hamburglar’s not real?”     To which the producer said, “Uh, no, he’s a fictional character.”     To which the assistant replied, “Well, there goes that dream.”     To which the producer said, “What dream?”     To which they said, “Of marrying the Hamburglar.”     To which the producer said, “I’m sorry, what?”     To which the assistant said,     “Let’s not talk about it. How about we get Donald Trump?”     To which the producer said, “Oh, that is a good idea.     Are you crying?”     To which the assistant said, “Yeah, sorry,     this Hamburglar news is just hitting me pretty hard.”     To which the producer said,     “Did you really have a crush on a cartoon beef thief?”     To which they replied, “The heart wants what it wants!”

Before storming off to go cry in a bathroom stall.     Anyway, the point is,     of course they got Donald Trump to defend corruption on live TV.     And since taking office,     his administration’s halted or dropped     more than a hundred enforcement actions     against corporate misconduct.     And he even issued the first ever pardon     of a corporation,     pardoning this cryptocurrency exchange,     which had been sentenced to a 100 million dollar fine     for violating an anti-money laundering law.     It is frankly no wonder experts have called this moment     the ripest environment for corruption     by public officials and business executives     in a generation.     Though, to be fair,     it’s not like the environment was exactly unripe     before Trump took office.     Republican and Democratic administrations     have both taken a pretty lax approach     to corporate crime for a while now.

You might have noticed,     stories about corporate malfeasance     rarely end with executives going to jail     or the companies getting shut down.     And tonight’s story     is going to focus on a key reason for that,     deferred prosecution agreements,     or DPAs.     They’re basically an out-of-court settlement     for companies to avoid being prosecuted.     Essentially, the government will come to a company     and say, “Hi, company, government here.”     You did a crime,     and we have enough evidence to prosecute you.”     But instead of then doing that, they strike a deal     where if the company behaves itself     for a certain amount of time,     the criminal charges eventually disappear.     Sometimes they’ll go with an even weaker option,     a non-prosecution agreement     or NPA,     which doesn’t even have to be filed in court.     But either way,     they’re terms that tend to slide past you     whenever you hear them on the news.     ANCHOR: The Justice Department announcing     a deferred prosecution agreement with Teva Pharmaceuticals.     FirstEnergy entered     into what’s called a deferred prosecution agreement.     ANCHOR 2: McKinsey has also entered     into a deferred prosecution agreement.     Uber has entered into a non-prosecution agreement.     ANCHOR 3: Credit Suisse close to finalizing     that deferred prosecution agreement.     What’s known as a deferred prosecution agreement.     Deferred prosecution agreement.     Deferred prosecution agreement.     Every bank on Wall Street has a deferred prosecution     or an NPA.     Every bank has more than one, most likely.     It’s true.     AIG has two NPAs and a DPA.     Barclays has a DPA and an NPA.     Credit Suisse has a DPA.     JP Morgan has an NPA and a DPA.     Lloyds has two DPAs.     The Royal Bank of Scotland has a DPA.     Wachovia has a DPA and an NPA.     And UBS has a DPA and two NPAs.     And just so you know, when I say a sentence like,     “UBS has a DPA and two NPAs,”     I do hear myself.

I’m fully aware that one day this show     will just be me reading one long acronym     for 40 minutes,     we’ll have achieved our perfect form,     and on that day, I’ll finally be allowed to die.     -But the point is… –    …these agreements are absolutely everywhere.     Honestly,     the only things more ubiquitous than DPAs on Wall Street     are fleece vests and undiagnosed sociopaths.

Unfortunately, as you’re about to see,     DPAs don’t really do much.     In fact, sometimes companies that have done massive harm     have used them to literally get away with murder.     So given that, tonight,     let’s talk about deferred prosecution agreements,     where they came from, how ineffective they can be,     and a few amazing examples     of what they can look like in practice.     Let’s start with the fact that DPAs     were never actually intended to be used on corporations.     The concept grew out of a 1974 law     that was meant to help first-time     and juvenile nonviolent offenders     avoid prosecution     so they could focus on rehabilitation.     But that is not how we use them today.     And you can trace the explosion of corporate DPAs     back to one of the most famous times     a large company was prosecuted in this country,     Arthur Andersen.     It was the accounting firm for Enron,     whose name is now synonymous with accounting fraud.     Very basically,     with the help of Andersen,     Enron completely invented future earnings for itself.     And when the government tried to investigate,     Andersen undertook a massive document purge,     during which they deleted around 30,000 computer files and emails     and at one point shredded more documents in three days     than they usually destroyed in a year.     Something that became so famous,     it was even parodied in a Heineken commercial…          …where the documents became snowflakes     and the tagline was,     “To all those who weren’t naughty this year,     happy holidays.”

And just think how remarkable that is.     A beer company thought to themselves,     “You know, we could just show off our crisp,     refreshing product in this commercial, but instead,     let’s give people what they really want this Christmas     and say ‘fuck you’ to an accounting firm.”      But the thing is,     the Justice Department actually got a lot of blowback     for prosecuting Andersen, because at the time,     it was a massive firm with 28,000 employees,     many of whom felt like they’d done nothing wrong.     PROTESTER: I am Andersen! I am Andersen!     DEAN REYNOLDS: After weeks of suffering in silence,     Andersen workers have found their voice.     Fight! Stand tall!     Don’t give up!     By the grace of God, we’re going to win     because we’re Andersen!       Everybody you see out here     is worried about their job right now.     We’re all being penalized for something     that we didn’t have anything to do with.     Yeah, Arthur Andersen’s employees     felt a range of emotions, from resentment to anxiety     to a level of unbridled exuberance     best described as “Price is Right contestant     who just won a Honda Civic.”

And they were right to be concerned.     Andersen being convicted of a felony     meant they lost their accounting license,     which, for an accounting firm,     is generally not great for business.     The company eventually folded,     thousands of people lost their jobs,     and many, like this Andersen partner,     placed the blame squarely on the government.     In the history of the world of business,     this will come out, in my judgment,     as the largest act of corporate murder ever.     Okay, that is a wild overstatement, though,     because what happened to Andersen     is a lot more complicated than that.     The company had started shedding clients     long before their conviction,     and the SEC was already investigating them.     So the truth is,     Andersen was likely heading out of business anyway.     Saying this prosecution is what doomed Andersen     is like saying that the ground is what doomed the Hindenburg.     Sure, it might have been the final issue it encountered,     but things weren’t exactly smooth sailing before then.

But after Andersen, prosecutors became very reluctant     to risk putting a company out of business.     And that is when DPAs became popular.     In the decade prior to Andersen’s collapse,     DPAs and NPAs had been used just 18 times.     But in the 14 years following,     the DOJ entered into 419 such settlements.     And the argument for DPAs     is that they prevent innocent employees     from getting hurt, dissuade future wrongdoing,     and still allow the DOJ to go after individuals.     But there are problems with literally all that.     For starters, nearly half of those getting deferred     and non-prosecution agreements paid no fine at all.     And when it comes to individuals,     in two-thirds of cases,     no employees were prosecuted.     And to show you just how glaringly apparent     this system’s shortcomings can be,     we’re going to focus on three compans,     GM, HSBC, and Boeing.     We actually talked about GM     all the way back in our first season,     but just in case I wasted my precious…     let’s call it “youth,”     -shouting at you…ie –

…about things you don’t remember,     here is a quick refresher on what the company did wrong.     PETE WILLIAMS: Last year,     GM began recalling two and a half million cars     with ignition switches     that could suddenly shut off the engine,     cutting off the power to the airbags     and disabling the power steering and power brakes,     causing crashes.     GM has since determined that the switches caused accidents     that led to 124 deaths and 273 injuries.     Yeah, it was a wild story.     GM sold cars with faulty switches     that could shut off the engine, steering,     brakes, and airbags,     despite the fact that they are,     and this is true, some of the key differences     between something being an automobile     or a metal coffin moving at 70 miles an hour.

And there was evidence the company knew     about the problem.     In 2008, they showed their employees     a PowerPoint encouraging them     to avoid words like “problem”, “safety”, and “defect”     when writing about GM’s cars, and added, as a fun joke,     that they should also probably stay away     from terms like “Kevorkianesque”,     “tomblike,” “maniacal”,     -or “rolling sarcophagus.”     And I kind of hope     that that just inspired GM employees     to use other options instead,     like “The Widowmaker”, “Chitty Chitty Smash Bang”…

…”Final Destination: The Car”,     and the “Lean Mean James Dean machine.”      GM reached a DPA with the government in 2015,     which meant they didn’t have to plead guilty, just…     agree to a “statement of facts” about their misconduct.     For instance, they admitted that by early 2012,     they not only knew about the problem,     they were aware of several fatal incidents     that may have been caused by the defective switch.     And while the law required GM to report such knowledge     to the government within five days,     it took them approximately 20 months.     Which, fun fact, is around the length     of an elephant’s gestational period.     -And if… –   …writing an email takes longer than making     a fucking elephant from scratch…

…there is clearly something else going on.     Now, as part of GM’s DPA,     they did have to pay a 900 million dollar fine,     and Mary Barra, their then and current CEO,     went to great lengths to argue that the deal     was not letting them off easy.     This is a tough agreement.     It further highlights the mistakes that were made     by certain people in GM,     and it imposes significant penalties     and obligations.     Okay, but I don’t know how significant     a 900-million-dollar fine was to a company whose profits     were just under ten billion dollars that year.     I’m not saying it’s nothing,     but nine percent of one year’s profits     just doesn’t seem enough     for essentially marketing the automotive equivalent     of the Titan submersible.

Also, while she said mistakes were made     by “certain people at GM,” notably,     no individuals ended up facing charges     for any part of this.     And that’s something extra galling     for people like Candice Anderson.     She lost control of her car     in a crash that killed her boyfriend.     And when GM conducted an internal review of the accident     in 2007,     they ruled that their car was to blame.     Unfortunately, they never told anyone that,     instead allowing Candice to plead guilty     to negligent homicide five months later.     Thankfully, her conviction has since been overturned,     but the way that she sees it,     that’s not nearly enough.     There’s someone within General Motors     that should be held responsible.     Are you saying that you think individuals     at General Motors should stand trial?     CANDICE ANDERSON: Yeah, I do.     They didn’t have a problem sitting by while I was charged.     -Yeah, I get that.

If someone does something terrible to you,     it is understandable to want them     to get a taste of their own medicine.     It’s one of the many reasons why I’d personally love     to see someone shit on a pigeon.     -Yeah… -(AUDIENCE LAUGHS)     …not so much fun when we do it to you,     is it, pigeons?

And look, thankfully,     GM hasn’t killed any more people     with its cars since then as of taping.     But other companies     with DPAs have shown a much greater propensity     for recidivism.     And that brings us to our second example, HSBC.     A few years back, it got in trouble     for allowing Mexican cartels to launder     at least 881 million dollars in drug trafficking proceeds     and facilitating approximately 660 million     in transactions involving sanction regimes     like Burma, Iran, Cuba, and Libya.     Here is how bad it was.     At one point, Mexican law enforcement     recorded a cartel leader on a wiretap     saying HSBC was “the place to launder money.”

And the Sinaloa cartel deposited so much money in their bank     that the cartel designed special cash boxes     to fit HSBC’s teller windows,     which is surprisingly considerate in a way.     After all, who hasn’t been stuck in a teller line     behind some guy trying to stuff     a blood-soaked duffel full of cash through the window?     Finally, a cartel that thinks about other people’s time.

Now, in response,     HSBC put together a new compliance department,     but it wasn’t exactly inspiring,     as this man will tell you.     His name is Everett Stern, and he once had a dream.     Tell everyone about your dream, Everett.     Sure. I mean, um, I mean,     my– my dream was to join the, um, uh… the CIA.     Okay, thanks, Everett.     That sounds like a really nice dream.     Unfortunately, Everett got rejected by the CIA,     but he did get hired as a compliance officer at HSBC,     which he was excited about,     until he got there.     I remember, like, my first day on the job,     it was a shopping center.     It wasn’t, like, a bank building.     I was expecting to show up at this bank building,     and I’m in this suit.     There were all these people like in jeans and T-shirts,     and I didn’t understand what was going on,     and when I walked in,     there were all these empty cubicles,     and the walls were half painted,     and there were maybe 15 compliance officers     in the whole department.     At the time, I thought I was like this–     they hired me because I was like this smart guy,     and I had it all going and everything,     and no, they hired me because I was an idiot     and I didn’t know what I was doing.

-Yeah.     As far as Everett could see,     HSBC was intentionally looking to hire idiots.     And the only time that that is an acceptable hiring strategy     is if you’re casting a baby food commercial.     “We need to hire, you know, one of those tiny idiots     who doesn’t know what they’re doing. Oh, a baby!     Sorry, a baby. That’s the word. We need to hire a baby.”     And while HSBC was going through the motions     of compliance publicly,     internally, they were going to egregious lengths     to avoid it altogether.     For example, the Treasury keeps a list     of sanctioned organizations     that banks aren’t allowed to do business with.     On that list is a company called TAJCO,     which has had ties to Hezbollah.     HSBC systems should have automatically     flagged any transactions involving TAJCO,     and yet even a self-described idiot     who didn’t know what he was doing     could quickly see that the bank was processing     thousands of dollars for them.     And I’ll let him describe how he discovered it     and what he did next.     I noticed they were putting little dots and dashes     in the actual names in the wire filter.     So for instance,     if you had TAJCO that was sending money     from Hezbollah to some other organization,     instead of T-A-J-C-O,     that’s the normal name for it, in the HSBC wire filter,     it would be T-A-J dot C-O or T-A-J dash C-O.     And that’s how they criminally manipulated     the wire filter to allow money laundering     for terrorists and drug cartels.     This is why, three weeks in,     I started passing information to the CIA.     Fuck yeah, you did, Everett!

Fuck yeah, you did!     That is great news for him and frankly terrible news     for whoever thought it was a good idea to hire     an aspiring CIA officer…

…to oversee your extremely lazy attempts     to launder money for criminals.     And once the government started poking around within HSBC,     they quickly found some pretty compelling evidence.     BRIAN ROSS: Internal documents show HSBC executives     knew exactly what they were doing.     “We are allowing organized criminals     to launder their money,” wrote one executive.     Wow.     It is hard to imagine how the evidence     could get more damning than that,     unless maybe the email signature included the phrase,     “Sent from my crime phone,”     -followed by the “shh” emoji. -(AUDIENCE LAUGHING)     And yet, incredibly,     the government brought no charges against individuals.     The bank itself just got a DPA,     and the terms of it seems more than a little weak.     For example, it agreed to pay a fine     of almost two billion dollars,     which might sound like a lot     until you remember they made over 13 billion in profits     that year alone.     And look, maybe the DOJ really thought that a hefty     but entirely manageable fine     would make HSBC change their ways.     And the bank did agree to monitoring     and apparently even issued their US-based staff certificates     with little parrots on them reading,     “I am a Changed Bird.”

But were they?     Because even that monitoring program     illustrates something immensely frustrating here.     Because DPAs aren’t criminal proceedings,     monitoring reports on whether or not companies are complying     aren’t required to be public records,     so we don’t really know what HSBC did to clean up its act.     But the glimpses we got during that period aren’t great.     As in the bank’s own annual report,     they openly admitted that their monitor     “expressed significant concerns about the pace of their progress     and instances of potential financial crime.”     But despite that, their DPA expired as planned     at the end of 2017     and the government dropped all charges against them.     So they were in the clear…     until the very next month when this happened.     HSBC is said to have agreed to pay     a hundred million dollars to resolve     a US Justice Department investigation     into the rigging of currency rates.     The source tells Bloomberg the deal includes     a deferred prosecution agreement and a promise to help     with the criminal case against former traders.     Yeah, they were caught again and they got another DPA.     That is ridiculous.     At this point, it’s not even a deferred prosecution agreement,     it’s more like prosecutorial edging.     I’ve said it before and I’ll say it again.     Let the government cum.

And that is the thing here.     DPAs and their associated fines have now become a routine cost     of doing business, which is a real problem     because the stakes can be incredibly high,     which brings us to our final company, Boeing.     Last year, we did a whole segment     about its fall from grace     and discussed their infamous 737 MAX planes,     which had been involved in two devastating crashes     that killed 346 people.     I won’t recap the whole thing, but suffice to say,     there were flaws with the aircraft’s design,     and they weren’t exactly a secret within the company.     STEPHANIE GOSK: The 737 MAX became Boeing’s best-selling jet ever.     But in 2017,     just as the planes were taking to the skies worldwide,     a Boeing employee sent this message to a colleague.     “This airplane is designed by clowns,     who in turn are supervised by monkeys.”     Other employees calling the design “piss poor”     and comparing the fixes to patching a “leaky boat.”     In October 2018, Lion Air flight 610,     a 737 MAX, crashed, killing 189 people on board.     In May of that year, as Boeing was pursuing FAA approval     for the MAX flight simulator, one test pilot wrote,     “I’ll be shocked if the FAA approves this turd.”     Yeah, it seems like the only real disagreement     within Boeing was on what hilarious language to use     when describing their catastrophic products.

Okay, so we got “piss poor”, “leaky boat”, “turd.”     You know what, can someone get GM on the phone     and see if we can borrow Kevorkianesque from them?     I kind of like the sound of that.     Following those crashes,     Boeing entered into a DPA in 2021,     admitting to misrepresentations to regulators     about a key software feature tied to the crashes.     It also agreed to pay a fine and show three years     of good behavior in exchange for avoiding prosecution.     It’s an agreement that many felt was toothless,     especially given that one judge involved with the case     later called what Boeing had done     “the deadliest corporate crime in US history.”     And following that DPA,     things didn’t seem to improve much at Boeing     because by the start of 2024,     just two days before their three-year     probationary period was set to end,     this happened.     REPORTER: What was supposed to be a short trip from Portland     to Ontario, California     for Garrett Cunningham turned out to be one     of the most frightening experiences of his life.     GARRETT CUNNINGHAM: A gush of air.     I look to my left, and part of the plane is gone.     Yeah, not ideal.

-It is never good when you feel     a sudden gush of air on a flight.     Even if the plane hasn’t just cracked open,     odds are it’s gonna be     the toddler in the seat behind you     breathing directly on your face,     or your seatmate cracking the lid on a tub     of tuna salad they brought with them.     There is no surprise whoosh of air     that brings good tidings in a metal sky can.

But in this case, yeah,     a door plug blew off a 737 MAX mid-flight,     an incident that was a clear indication,     according to the DOJ,     Boeing had violated its initial DPA.     But instead of then prosecuting them,     the DOJ offered them a plea deal,     which just required them to pay another fine,     boost their spending on safety and compliance programs,     and report to an independent monitor     overseeing their compliance.     And this understandably angered some of the family members     of crash victims.     Here is the mother of one of them     summing it all up.     It seems that, beginning of January,     just two days before the expiration of the DPA,     “Oops!…I Did it Again.”     This is Boeing’s song, “Oops!…I Did it Again.”     Yeah, that woman’s outrage is completely justified,     and it’s honestly smart to cite     the musical canon of Britney Spears     given that Boeing essentially just pled     not that innocent.

But it gets worse.     Because this year,     the Trump administration downgraded     Boeing’s punishment to a non-prosecution agreement,     removing even the hypothetical chance     of prosecuting them over this in the future,     which is just completely infuriating.     Unless, I guess, you’re this guy on CNBC     who chose to announce the news like this.     The DOJ says it expects to file the written agreement     with Boeing by the end of the week.     Should be viewed as good news.     I wouldn’t be surprised to see the stock move higher.     Yeah.     Great news, everyone.     The stock should move higher.     So I guess that’s at least one thing     that Boeing can keep in the fucking air.     -But… –

But even if that is good news for stockholders,     it’s clearly not great for anyone else,     because while it means that Boeing     does have to pay out an additional 444 million dollars     into a crash victims fund,     they also avoid being branded a convicted felon     and will no longer face oversight     by an independent monitor,     but instead will hire a “compliance consultant.”     As one consumer rights advocate puts it,     “This deal isn’t even a slap on the wrist,     it’s barely a feather on the wrist.”     Look, clearly, when it comes to corporate accountability,     we have a problem here.     Because a company engages in flagrant misbehavior,     even putting evidence of it in writing,     people get hurt, they’re caught red-handed,     the government finds them and says,     “You better not do that again,” then they do,     and the whole cycle restarts.     This is not sustainable.     And unfortunately,     I wouldn’t expect any of that to change     for at least, say, three and a half years.     But it is worth asking for a hypothetical future     when we have a government that isn’t run     by a pro-corruption felon.     What could we be doing better     to hold corporations accountable?     Well, we could make DPAs more of a deterrent     by making the fines much more serious     and prosecuting executives a lot more often.     We could also bring both DPAs and NPAs     into the official legal system     so that their monitoring would be more transparent     and companies would build up records of misconduct     instead of constantly getting to wipe their slate clean.     But the hard truth here is,     if we want more accountability,     the government is going to have to show more willingness     to prosecute repeat offenders,     even if it affects a large company’s ability     to do business.     Which really doesn’t seem too much to us,     because you’ve seen tonight     just how much damage companies can do     when they operate unchecked.     And right now,     we have a system where, essentially, corporations can,     with very limited resistance,     sell cars with a surprise off button,     operate as a haven for blood money,     and build planes that unbuild themselves in the sky.     (AUDIENCE LAUGHS)     And I’d argue that to not make significant changes     to a system like that would be,     if I may quote GM’s most cursed PowerPoint     of all time, “fucking maniacal.”