Hui Chen, a former prosecutor for the Department of Justice, said that the real issue behind Boeing's rejected plea deal is the flawed corporate monitorship system. This statement was made in an opinion piece on January 5.
"The monitorship system is fundamentally broken and in dire need of reform," said Chen. "There will be no way, at the end of its monitorship, to objectively determine whether Boeing has become more ethical and able to better prevent misconduct. Law and consulting firms fight to be selected as monitors because they make incredible amounts of money from the fees the companies they monitor must pay them. Paying monitors millions in fees for not stopping recidivism is foolish."
According to The Washington Post op-ed, the rejection of Boeing’s plea deal highlights flaws in the corporate monitorship system, which is intended to oversee compliance reforms in companies facing legal penalties. The court objected to the selection criteria for the independent compliance monitor, revealing broader issues with how monitors are chosen, compensated, and evaluated. Prosecutors use monitorships to influence corporate culture; companies accept them to avoid trials; and law firms benefit financially. However, the process lacks transparency. The op-ed notes that without clear performance metrics, it is difficult to determine whether monitorships achieve their goal of reducing corporate misconduct.
Corporate monitorships can impose substantial financial burdens on companies, with costs sometimes exceeding $50 million over a three-year period. According to Crowell reports, the selection process for monitors is often opaque, leading to concerns about the criteria used and potential biases in appointments. Additionally, the broad authority granted to monitors can result in extensive oversight that may disrupt regular business operations.
Corporate monitorships are intended to ensure compliance and prevent future misconduct but often impose financial and operational burdens on companies. For instance, in November 2023, Binance agreed to a $4.3 billion settlement with U.S. authorities, which included appointing an independent compliance monitor for five years as per the U.S. Treasury. This monitorship requires the company to fund extensive oversight activities potentially diverting resources from core business operations.
Despite a 60-day suspension in its Securities and Exchange Commission (SEC) case, Binance remains under regulatory scrutiny as authorities continue assessing its compliance measures. The case pause was requested jointly by Binance and the SEC to allow time for the agency’s new crypto task force to shape clearer regulatory guidelines that may impact the lawsuit’s outcome.
Hui Chen is a global ethics and compliance expert with extensive experience in corporate compliance programs and enforcement practices. She was the first Compliance Counsel Expert at the U.S. Department of Justice where she advised federal prosecutors on corporate fraud, bribery, and regulatory oversight. According to her website, Chen has also held senior compliance roles at Microsoft, Pfizer, and Standard Chartered Bank working across multiple industries and international jurisdictions.
