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Sent to you by pakurilecz via Google Reader: Sarbanes-Oxley’s Impact on
Record Retention Policy via Electronic Data Records Law | How to Win
E-Discovery by Benjamin Wright on 11/24/08
Arthur Andersen’s Records Management Crime

The US legal system is giving all enterprises reasons to be more
liberal in their retention of records, especially e-mail. One reason is
a change in obstruction of justice law.

The traditional obstruction of justice statute, 18 U.S.C. §1512(b),
punishes anyone who corruptly persuades another person to destroy
documents to impair their use in an official proceeding. Under that
traditional statute, a criminal court convicted Arthur Andersen for
destroying Enron-related papers and electronic records. The jury in
Andersen’s trial said Andersen’s record management practices violated
the statute.

But one month after Andersen’s jury trial, Congress adopted the
Sarbanes-Oxley Act (SOX). SOX modified obstruction of justice law by
making it easier to convict people who destroy records. SOX included
new 18 U.S.C. §1519, which now punishes anyone who destroys, conceals,
or covers up any record to impede or influence a federal lawsuit or an
investigation by any federal agency, or

in relation to or contemplation of any such matter or case.

Notice the differences between the traditional §1512(b) and new §1519.
Under traditional §1512(b) a crime was committed only if the
defendant "corruptly persuaded another person" to destroy documents. It
might be hard for a prosecutor in a criminal trial to show corrupt
persuasion of a second person. Further, the exact words of §1512(b)
seem not to apply if the defendant directly destroyed documents. In new
§1519, Congress omits the traditional “corruptly persuades another
person” element. Further, new §1519 employs expansive language -- “in
relation to or contemplation of any such matter or case” – to stretch
the law to cover destruction of records in any way connected to a
specifically anticipated lawsuit or investigation.

Enterprises be aware. The effect of §1519 is powerful. To win an
obstruction of justice conviction, the prosecutor does not have to work
as hard as he or she did in the Andersen case. The prosecutor no longer
has to show the defendant acted "corruptly" to "persuade" someone else
to destroy documents. Now, it is enough for the prosecutor to simply
show that the defendant intended to destroy records with federal
litigation in mind.

With new §1519, Congress emphasized its intolerance of people who mulch
records in view of a lawsuit or investigation, even one that is not
pending or imminent. Hear how Senate Report 107-146 interprets new 18
U.S.C. §1519: “This statute is specifically meant NOT to include any
technical requirements, which some courts read into other obstruction
of justice statutes, to tie the obstructive conduct to a pending or
imminent matter. It is also meant to do away with the distinctions,
which some courts have read into obstruction statutes, between court
proceedings, investigations, regulatory or administrative
proceedings . . . and less formal governmental inquiries. The intent of
the provision is simple: people should not be destroying, altering or
falsifying documents to obstruct any governmental function.”

Think about that statement from a record management perspective at a
complex enterprise. The statement seems to imply that the enterprise
must implement a litigation hold with respect to future
(specifically-anticipated) lawsuits/investigations, even though they
are not pending or imminent. It is tough to know what is and is not
anticipated somewhere out there in the future. But the risk is that
later, after the lawsuit gets going, the court may judge the
enterprise's decisions retrospectively, with the benefit of 20-20
hindsight. The court may determine, "Oh, you could have seen this
coming (even though it was not imminent), so you should have
implemented a legal hold."

Given that it is now easier to be convicted for destroying records, the
logical response for an enterprise is to keep more records longer . . .
to give itself a wider margin for error.

SOX’s new contribution to obstruction of justice law should be viewed
in the context of recent cases punishing premature destruction of
electronic records. In that context, one sees a whole legal system that
expects more lavish record retention than in the past.

–Benjamin Wright

Mr. Wright is an advisor to Messaging Architects, a firm looking to the
future of data records management.

Reference: B. Wright, “Shredding Documents Post-Arthur Andersen:
Reforming Corporate Record Retention Policies for the Information Age,”
a paper published 2002.


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