Wednesday, September 20, 2006

A 'Nonprosecution Agreement' by Any Other Name...

As if the nuances of corporate governance aren't tough enough to fathom, now the government is playing word games. On Aug. 28, Prudential Financial, Inc., signed what it thought was a nonprosecution agreement with Michael Sullivan, the U.S. Attorney in Boston. But once the deal was done, Deputy Attorney General Paul McNulty called a press conference in Washington, D.C., to trumpet the 'deferred prosecution agreement.'

The issue is more than mere semantics, since a deferred prosecution agreement is more damaging to the company than a non-prosecution agreement, and it should have been hashed out in the negotiations. However, it appears that both sides decided to call the agreement, simply, "the Agreement" not labeling it.

Now the name of the document is important, and both sides are arguing over what to call it. Why did they not call it something in the beginning?
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