Multiple corporate personality disorder
By Russell Mokhiber and Robert Weissman
Jan. 16 — Steal from the grocery store, go to jail.
Double park, pay the ticket.
Doesn’t this simple principle apply to corporations and their executives?
As of this writing, of all of the corporate crimes committed that have
cost the United States hundreds of billions of dollars over the past
couple of years, only two top level executives are in prison. That’s
it — two.
Now, ask yourself, if working class people committed crimes that cost
the nation hundreds of billions of dollars — inconceivable as it
is — how many would be in prison? The whole lot of them. So, how
is it that corporations and their executives get away with it?
It’s the nature of the beast.
And perhaps that’s why we should consider doing away with it —
the corporation that is.
After all, if a corporation means a legal structure to allow human beings
to get away with wrongdoing without paying a price, then it’s a
machine that produces injustice.
Let’s say that a corporation is caught fixing its books, committing
in effect a $2.7 billion fraud. That would be a case very similar to
the case of HealthSouth.
Under US federal law, if a health care corporation is convicted of a
serious crime, that company can no longer do business with the government,
in this case the Medicare and Medicaid program. And in HealthSouth’s
case, that means life and death. So, the company hires one of the nation’s
best corporate crime defense attorneys — Bob Bennett and says to
him, “Save us from the corporate death penalty.”
And Bob goes to the US Attorney prosecuting the case and says, “Hey,
look, we blew it, here’s my phone number, we’ll give you everything
you want. Just don’t indict us. Please don’t indict us.”
And the US Attorney indicts 16 top executives. And the company is on
the road to getting off scot free.
That’s one way a corporation morphs to get out of accepting responsibility
for its sins — blame the human beings. But sometimes, the corporate
executives say, “Hey, we don’t have to take the heat. Let’s
cough up a defunct subsidiary to plead guilty — and the government
can ban that unit from doing business with Medicare. Who cares about
a defunct subsidiary? That unit never did business with Medicare anyway.”
So, there’s a guilty plea, there’s a corporate fine, there
is a touch of adverse publicity — but nobody’s hurt. Crime
without punishment. Or let’s say that the corporation wants to
plea to a lesser offense, but not draw any publicity to the case. This
too happens. The corporate lawyer can go to the Justice Department and
cut a deal where the Department will agree not to put out a press release
about the case. A number of criminal defense lawyers have told us they
have done this. The Justice Department issued a memo earlier this year
titled “Federal Prosecution of Business Organization.”
The memo gives prosecutors discretion to grant corporations immunity
from prosecution in exchange for cooperation. These immunity agreements,
known as deferred prosecution agreements, or pre-trial diversion, were
previously reserved for minor street crimes. They were never intended
for major corporate crimes. In fact, the U.S. Attorneys’ Manual
explicitly states that a major objective of pretrial diversion is to
“save prosecutive and judicial resources for concentration on major
cases.” Since the memo was issued, there have been a rash of deferred
prosecution agreements in cases involving large corporations, including
a settlement with a Puerto Rican bank on money laundering charges and
a Pittsburgh bank on securities law charges.
And some corporate crime defense attorneys believe that it is possible
to enter these agreements with the Justice Department so as to avoid
any publicity. “This is a favorable change for companies,”
said Alan Vinegrad, a partner at Covington & Burling in New York.
“The memo now explicitly says that pre-trial diversion, which had
been reserved for small, individual, minor crimes, is now available
for corporations.” Vinegrad said that while there have been a handful
of publicized pre-trial diversion cases by corporations, it is conceivable
that the Justice Department can cut these kind of deals with companies
without filing a public document — and therefore without any publicity
to the case. Harry Glasbeek is a professor of criminal law at York University
in Toronto. He has studied corporate crime and written a book about
it called Wealth By Stealth: Corporate Crime, Corporate Law, and the
Perversion of Democracy.
Glasbeek says that the creation of the corporation allowed for this
“fungibility of responsibility.”
“Sometimes the executives plead the corporation to relieve the
executives from responsibility,” Glasbeek told us recently. “Sometimes
the corporation causes the executives to plead, a couple of people take
the fall. And it is very difficult. We have created a separate entity
with separate property. So, you have multiple personalities with different
legal duties and rights that the actors are allowed to take on at any
one time. That allows a shifting of responsibility that we cannot control.”
We call it Multiple Corporate Personality Disorder (MCPD). Glasbeek
says this disorder undermines our notion of responsibility, which “supposedly
depends on the individual taking responsibility for his or her own actions.”
“What we have designed is a creature that allows that responsibility
to be shifted at the whim of those people who are actually operating
that system,” Glasbeek said. “That’s an endemic design
flaw.” Glasbeek has no illusions that criminal prosecution will
bring corporate criminals to justice.
“My notion of prosecuting more often is to bring attention to this
embedded difficulty — it is not because I believe that this will
actually change the situation in and of itself,” he said. We believe
that justice can be done — and must be done. But only two things
work in bringing justice to corporations. One is to criminally convict
the corporate criminals and apply the death penalty in cases of serious
wrongdoing.
And the other is to criminally prosecute high-ranking corporate executives
who commit serious crimes and throw them in prison.
