Justice Department Ending Settlement Payouts to Outside Groups

(CN) - Attorney General Jeff Sessions announced Wednesday that the Justice Department will no longer allow big companies and banks to settle cases by donating to outside organizations, ending a little-known practice that had become something of an obsession for conservative Republicans.

In a memo sent to all 94 U.S. attorneys' offices Wednesday morning, Sessions said he is ending the practice of allowing companies to meet some of their settlement burdens by giving money to groups that were neither victims nor parties to the case.

The settlement strategy was implemented by the Obama administration and members of the GOP claimed it effectively created a "slush fund" for liberal interest groups. Among the third-party community organizations who received funds through settlements since the policy was enacted were the National Council of La Raza, Habitat for Humanity and the National Urban League.

From now on, Sessions said, settlement proceeds should go to the U.S. Treasury Department or victims.

“When the federal government settles a case against a corporate wrongdoer, any settlement funds should go first to the victims and then to the American people — not to bankroll third-party special interest groups or the political friends of whoever is in power,” the memo said. “Unfortunately, in recent years the Department of Justice has sometimes required or encouraged defendants to make these payments to third parties as a condition of settlement.”

“With this directive, we are ending this practice and ensuring that settlement funds are only used to compensate victims, redress harm, and punish and deter unlawful conduct,” he added.

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