By Adam Lashinsky
December 27, 2018

The December arrest of Huawei chief financial officer Meng Wanzhou at an airport in Vancouver was shocking in its own right. Here was a top-ranking executive of a global technology company—and the daughter of the founding chairman, no less—being hauled off like a common criminal on nonspecific charges related to alleged violations of laws involving U.S. sanctions against doing business in Iran.

More shocking still was that Meng, now out on bail pending a U.S. extradition request, was just one of many high-profile executives who lately found themselves incarcerated for various white-collar crimes around the world. Two weeks earlier, the Brazilian-born automotive titan Carlos Ghosn was arrested in Tokyo, also nabbed at an airport, accused of underreporting his income and thus evading taxes. Days after Meng’s arrest, a top Alibaba executive, Yang Weidong, formerly head of the Internet giant’s music-streaming business, was apprehended by police “for alleged acceptance of improper payments,” according to an Alibaba securities filing in the U.S., where its shares trade.

Each case is different, of course, as are the jurisdictions in which the various bigwigs have been locked up. Taken together, however, the arrests give the impression of an executive class suddenly less safe from criminal prosecution while otherwise jetting around the globe doing their jobs. And yet, the anti-corporate crowd ought not abandon their pitchforks just yet. While it may seem that white-collar criminals are finally getting their just deserts, evidence suggests the prosecutions remain relative rarities in the realm of corporate malfeasance.

The U.S., at least theoretically, aspires to put more executives behind bars. Indeed, a heightened focus on prosecuting individual corporate miscreants is an official policy goal. In 2015, then Deputy Attorney General Sally Yates issued a much-discussed seven-page memorandum on “individual accountability for corporate wrongdoing,” commonly known in criminal and civil legal circles as the Yates Memo. (Yates would achieve broader fame in 2017 when, during a brief stint as acting attorney general, she instructed Justice Department lawyers to not enforce President Trump’s travel ban on several majority-Muslim countries, an act for which she was promptly fired.) Yates’s guidance, a response to widespread anger that not one banking executive was locked up after the financial crisis of 2008–2009, noted that determining criminal intent can be tough in large corporations, particularly with “high-level executives, who may be insulated from the day-to-day activity in which the misconduct occurs.” Yet only by “seeking accountability,” she wrote, could proper deterrence be established.

Yang: Liu Wei Gz—Imaginechina; Schmidt: Detroit Free Press/ZUMA Wire/Alamy; Meng: Alexei Druzhinin—TASS/Alamy; Ghosn: Eric Piermont—AFP/Getty Images

The memo got the legal community’s attention. Barbara Linney, a lawyer specializing in export-control compliance and economic sanctions with the Washington, D.C., firm Miller & Chevalier, calls it “a high-profile statement that kicked off this view in the Department of Justice that individuals should not be immune from charges.”

The government has gone after individuals, in particular regarding sanctions-law violations. Although the instance of the Huawei CFO has become a flash point in the trade war between the U.S. and China, hers is not an isolated case. “When a senior executive from a global company is detained, that catches headlines,” says Linney, also an adjunct professor at Georgetown University’s law school. “But there’s been a steady stream of cases in which individuals have been charged.” For example, in 2017 a banker with Turkey’s state-controlled Halkbank was convicted in federal court in New York for his role in evading sanctions on Iran and sentenced to nearly three years in jail.

Still, the new policy direction is not making a significant impact when it comes to prosecution of U.S. corporate officers. “People thought the Yates Memo would change that,” says Brandon Garrett, a law professor at Duke University and author of the 2014 book Too Big to Jail: How Prosecutors Compromise With Corporations. “But I haven’t seen numbers to suggest it has.”

In Japan, where Ghosn’s arrest triggered international headlines, prosecution of CEOs is rare—even rarer than in the U.S., which in past decades convicted executives like Jeffrey Skilling of Enron, Michael Milken of Drexel Burnham Lambert, and Bernard Ebbers of WorldCom. “In fact, it would be easier to make a list of people who weren’t prosecuted for white-collar crime,” says Ulrike Schaede, professor of Japanese business at the University of California at San Diego’s School of Global Policy and Strategy.

Examples abound of Japanese scandals in which executives resign but aren’t punished. No one went to jail in Toshiba’s $1.2 billion accounting scandal, for instance. At the regional Suruga Bank, executives weren’t prosecuted for a scheme last year that forced unwanted accounts on unwitting customers. (The case has been likened to the imbroglio at Wells Fargo where, you guessed it, no one has gone to jail.) And in a 2011 scandal at camera maker Olympus, a newly installed British CEO blew the whistle on a massive fraud. He was fired, but his predecessor, while sentenced to prison, never served time behind bars.

Says Schaede of the Ghosn and Olympus scandals, “The worry is that this means Japan will have trouble attracting foreign talent in the executive lounge. It smacks of getting the gaijin—the Japanese word for foreigner, literally ‘outside person’—out of Japan.”

China is arguably a special case. Executives routinely go missing, typically caught up in the “anti-corruption” dragnet initiated by the country’s President, Xi Jinping. Alibaba, which noted in its securities filing that its executive Yang had been removed from his position the week before he was taken into custody, says it is cooperating with authorities—and little else.

If criminal convictions aren’t necessarily on the rise, there at least is a sense that prosecutors and legislators are beginning to take the subject more seriously. “There’s a global conversation about the right way to approach corporate crime,” says Garrett, the Too Big to Jail author. He notes in particular legislative activity in Canada, France, Ireland, and the U.K. around corporate crime, and kernels of interest in countries like Taiwan, Spain, and Brazil, where his book has been translated.

The incarcerated CEO remains a rare bird, in other words—but he or she may soon be less of a black swan.

Editor’s note, January 4, 2019: An earlier version of this article incorrectly said the predecessor to the British CEO of Japan’s Olympus wasn’t charged with wrongdoing. In fact, the previous CEO pleaded guilty to fraud charges, received a suspended sentence, and served no prison time.

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