News came over the wires recently about the results of a years long investigation into malfunctioning airbags. The company involved, Takata, agreed to paying a $1 billion fine and pleading guilty to wire fraud because of the issues. Neither one of those events are particularly remarkable, though a $1 billion fine is very large. Indeed, the issue that raises eyebrows here is what happened to several executives at Takata.
According to reports, the U.S. Department of Justice has indicted three former Takata executives over their roles in the malfunctioning airbags issue. They are being charged, according to the story, with wire fraud and conspiracy. The charges are largely based on revelations of several emails, and under the allegation that these executives worked to hide the malfunctioning issues.
To take such steps in the face of a company-wide issue, particularly when the company is paying such a large fine, is remarkable. And going after executives in this fashion is becoming somewhat of a trend. This trend, if it can be called that, was visible because of DOJ actions, and because of a widely circulated memo that was published by the DOJ two years ago. That memo is known as the Yates Memo.
The Yates Memo
The Yates Memo was an announcement of policy and direction by the DOJ regarding corporate malfeasance and wrongdoing. From the get-go the memo outlines that the DOJ going forward will focus on individuals when investigating companies, not the company as a legal institution. In addition, it states that a company may receive credit and leniency when being investigated, but only if the company discloses all the relevant data and information over individual misconduct.
The focus by the Yates Memo on individual behavior reveals a desire from the DOJ to punish those at the top of a company for bad actions. This change in policy was made to increase accountability, but also to prevent bad actions by a company by putting corporate officers and directors on notice. And by offering credit to companies who comply with turning over information, it incentivizes a company to cooperate with authorities.
What Corporate Executives Should Do
This new focus and stories of corporate executives being charged with crimes should make every corporate officer in the country think about what they do everyday to avoid liability. This is particularly true for those involved in the transportation industry. Trucking companies are necessarily part of public safety on the roads. Anything dealing with the safe operation of trucks on the road will come under intense scrutiny when something goes wrong, and if it can be shown an executive knew or could have prevented a problem but did not, then the Yates Memo comes into play.
These are important things for every corporate executive, officer, and director in the transportation industry to think about. Another important factor to think about is compliance with federal and local regulations dealing with safety and other issues. At Anderson and Yamada, P.C., we have been counselling and guiding companies in the trucking industry for decades. Contact us today for all your legal needs.