Spying Moving To The Confines Of Business

Perhaps now there will be an outcry from Republicans... given that the confines of Big Business will be invaded and that Board Members may be exposed to spying by the government.

Bugging the Boardroom

Soon government wiretaps and electronic eavesdropping may not be limited to exposing mobsters and drug lords but will be used by antitrust investigators to bug corporate boardrooms.

A one-page bill now in Congress would add Sherman Antitrust Act violations to the list of predicate crimes that can serve as the basis for court-approved wiretaps, giving far greater investigative power to the Justice Department's Antitrust Division.

The Antitrust Investigative Improvements Act of 2005, Senate Bill 443, sailed through the Senate in October and is currently in the House, where it is part of proposed amendments to the USA Patriot Act. It has the bipartisan sponsorship of Sens. Michael DeWine, R-Ohio; Patrick Leahy, D-Vt.; and Herbert Kohl, D-Wis.

"There is no principled reason for excluding criminal antitrust violations from the list of over 150 predicate offenses for obtaining a wiretap," DeWine said following Senate passage of the measure. "Given the gravity of these crimes, it is time that antitrust violations are added as a predicate offense," he said.

Yet the power to monitor phone calls or even boardroom discussions amounts to a radical change in the way federal prosecutors pursue antitrust cases, according to Mark A. Racanelli, a white-collar defense attorney with the New York office of O'Melveny & Myers and a former federal prosecutor in the Southern District of New York. And it is likely to present some new dilemmas for investigators.

"When you have a boardroom bugged or executives bugged there is an increased chance that legitimate business, strategic business information, can be overheard by the government ... and disclosed," Racanelli said.

"It could be bet-the-company information that is going into an FBI speaker a couple blocks away, then into an FBI memo and into a prosecutor's office and finally going into a public complaint or indictment," he said.

Generally, the government is mindful about exposing trade secrets, but sometimes you have rogue players in the company and the disclosure of future plans that would be very valuable to competitors, he said.

The new power is consistent with 20 years of increased government use of criminal sanctions to enforce antitrust law, according to Tyler A. Baker, the head of antitrust litigation for Fenwick & West in Mountain View, Calif.

In 2004, Congress increased criminal penalties of the Sherman Act by raising maximum prison terms from three years to 10 years, and increasing the potential corporate fine from $10 million to $100 million and individual fines from $350,000 to $1 million.