Corporate Crime and Punishment

There's been several articles in the paper lately addressing this subject. The gist of which is that when a corporation is convicted of criminal activity, the corporation pays a large fine. But by the time the slow wheels of justice have turned, the individuals who actually made the decision(s) to break the law have moved on to greener pastures and thus are not punished at all. Therefore, the people being punished aren't actually the people who committed the crime.

One way to correct this discrepancy is to hold the individuals and those supervising them directly responsible. My suggestion is that when a corporation is convicted of a crime that in addition to the corporate fine, the individuals responsible for that department be fined their bonus + 20% of their salary for the year(s) the crime took place. The supervisors should be fined the proportion of their bonus that is related to that department.

Example 1 - The Boston office commits a crime then the people in charge of Boston loose 100% of their bonus, the Northeast US supervisors lose 30% of their bonus, the US supervisor loses 5% of his bonus and the global CEO loses 0.5% of his bonus for the year(s) in question.

Example 2 - The northeast, southeast and northwest regions are all involved in the same criminal activity. The local and regional supervisors all lose 100% of their bonuses. The US supervisor loses 75% of his bonus and the global CEO loses 30% of his bonus for the year(s) in question.

This would punish people proportionally relative to their level of responsibility. No one expects the global CEO to micromanage every local office and thus a purely local problem would result in very little punishment at that level. On the other hand I do expect the CEO to stop any widespread malfeasance, so in that case the punishment is significant.

I have personally known people who had their lives shortened by corporate malpractice. In separate cases two lost their family's life savings and committed suicide, while others died early in shame and poverty. Just so some low life could asset strip a company & add another billion to his portfolio. My opinion is that in large scale company fraud the perpetrators actually kill more than a nutter with an assault rifle, so if proven they should get a similar sentence. Trading in the Gucci suit for a set of prison fatigues might discourage some of the other psychopaths from doing the same.

I have a question for those who are interested. How do you arrest a corporation? If an accountant embezzles money, when he is caught, he is arrested, booked and jailed. How do we do the same thing to a company?

That, as Brigade XO pointed out, is the problem. Since the corporation is legally separate from the individuals who run it, who is accountable? If the individuals who commit a crime can simply move on, is the corporation still accountable? After all, no one currently employed committed any crime. The individuals who committed the crime are no longer part of the corp. and thus are not liable for the actions. How do we solve this?

Corporations are not moral beings. They do not act at all. Agents for the corporations act on the corporation's owners behalf. Those agents have the responsibility for their illegal actions. Punishing the corporation or owners who do not make the decisions is stupid.

I can see fines to make the shareholders/owners sensitive to the activities of their management agents, but criminal action should be meeted out to those who actually decided to commit any illegal acts. This should be true where ever those individuals might be when the criminal action is taken.

Letting agents who perform illegalities off the hook to assert it was the corporation that is responsibile for those actions is like accepting the nazi's just following orders defense. It does not fly and shouldn't be allowed to.

KNick wrote:I have a question for those who are interested. How do you arrest a corporation? If an accountant embezzles money, when he is caught, he is arrested, booked and jailed. How do we do the same thing to a company?

That, as Brigade XO pointed out, is the problem. Since the corporation is legally separate from the individuals who run it, who is accountable? If the individuals who commit a crime can simply move on, is the corporation still accountable? After all, no one currently employed committed any crime. The individuals who committed the crime are no longer part of the corp. and thus are not liable for the actions. How do we solve this?

Hi KNick

?? How about trying to enforce the statement "The Buck Stops Here" and apply it to whoever was responsible for the crime.

Company owners/presidents usually draw a very good salary.

?? When getting such large rewards, should there not be risks in proportion ??

I admit, there would be difficulties enforcing these ideals - - -

?? Comments ??

R

KNick wrote:I have a question for those who are interested. How do you arrest a corporation? If an accountant embezzles money, when he is caught, he is arrested, booked and jailed. How do we do the same thing to a company?

That, as Brigade XO pointed out, is the problem. Since the corporation is legally separate from the individuals who run it, who is accountable? If the individuals who commit a crime can simply move on, is the corporation still accountable? After all, no one currently employed committed any crime. The individuals who committed the crime are no longer part of the corp. and thus are not liable for the actions. How do we solve this?

PeterZ wrote:Corporations are not moral beings. They do not act at all. Agents for the corporations act on the corporation's owners behalf. Those agents have the responsibility for their illegal actions. Punishing the corporation or owners who do not make the decisions is stupid.

I can see fines to make the shareholders/owners sensitive to the activities of their management agents, but criminal action should be meeted out to those who actually decided to commit any illegal acts. This should be true where ever those individuals might be when the criminal action is taken.

Letting agents who perform illegalities off the hook to assert it was the corporation that is responsibile for those actions is like accepting the nazi's just following orders defense. It does not fly and shouldn't be allowed to.

I agree with you completely, PeterZ. However, under the new laws, corporations are legally individuals. My point is that when the Court decided that peculiar rendition of the law, they ignored this aspect completely.

KNick wrote:

PeterZ wrote:Corporations are not moral beings. They do not act at all. Agents for the corporations act on the corporation's owners behalf. Those agents have the responsibility for their illegal actions. Punishing the corporation or owners who do not make the decisions is stupid.

I can see fines to make the shareholders/owners sensitive to the activities of their management agents, but criminal action should be meeted out to those who actually decided to commit any illegal acts. This should be true where ever those individuals might be when the criminal action is taken.

Letting agents who perform illegalities off the hook to assert it was the corporation that is responsibile for those actions is like accepting the nazi's just following orders defense. It does not fly and shouldn't be allowed to.

I agree with you completely, PeterZ. However, under the new laws, corporations are legally individuals. My point is that when the Court decided that peculiar rendition of the law, they ignored this aspect completely.

That's not true. Corporations cannot be persons under the law. If they can be, the shareholder would be practicing slavery. No, corporations are entities, but not individuals. They do not have the ability to act absent assigned agents. That is almost assuredly a fundemental assumption the law is based on. Going further doesn't pass the reasonable man test.

Letting agents who perform illegalities off the hook to assert it was the corporation that is responsibile for those actions is like accepting the nazi's just following orders defense. It does not fly and shouldn't be allowed to.

It's not just the agents, but also their supervisors. It's not always possible to prove it but they know (or should know if they're doing their job) what their subordinates are up to. ESPECIALLY when multiple agents are committing the same crime. In some of the more complex financial shenanigans the laws are so complex that the low level agents actually committing the offense don't realize what they are doing. But the puppetmasters behind the scenes who are raking in the truly gigantic bonuses sure do!

According to the US Supreme Court,
in decisions made more than a century ago,
and confirmed consistently:

"Corporations **are** 'persons' under the law."
They have all of the legal rights that any person has.
As for the shareholders,
they are not "slaveholders," they are "brain cells!"

If this proves the law to be a jackass,
then what else is new?

Howard "Map-addict" Wilkins
who notes that all arguments in this thread are
either "libertarian" or "liberal"

PeterZ wrote:
Corporations cannot be persons under the law.

Howard T. Map-addict wrote:According to the US Supreme Court,
in decisions made more than a century ago,
and confirmed consistently:

"Corporations **are** 'persons' under the law."
They have all of the legal rights that any person has.
As for the shareholders,
they are not "slaveholders," they are "brain cells!"

If this proves the law to be a jackass,
then what else is new?

Howard "Map-addict" Wilkins
who notes that all arguments in this thread are
either "libertarian" or "liberal"

PeterZ wrote:
Corporations cannot be persons under the law.

"Corporations are people with all the rights and responsibilities of natural born persons except the right to procreate and the right to vote." US Supreme Court Chief Justice Marshall.

Right now the first line of defense in this arena is shareholder authority and vigillance. Unfortunately, the laws of the USA make this harder. CEOs who do not come up through the ranks in the company, Executive compensation packages that do not reflect the unit performance and twisting of certain concepts to remove the consequences of actions all contribute to the current chaos.

"Shareholder value" and "Shareholder Interest" are both held to mean "Share Price above all else" even when the majority of shareholders make it clear they want different action/interpretations.

"Due diligence" historically means "Do your homework first", but now means "They didn't play fair". There is a requirement that US companies reveal plans and status during merger and acquisition talks honestly, there is also a requirement that both management teams still do their homework. If they both drop the ball, "oops."

All this is contrary to Shareholder Interest.

I seem to recall reading of a requiremnt imposed during the Roosevelt Administration imposing criminal charges on managers whose decisions violated the law or who failed to meet deadlines for fixing problems and someone was hurt. This was mostly health and safety violations, if someone was hurt before the deadline "oh well", if they were hurt after the dealine and the court decides the delay contributed to the injury or death, then every manager who could have fixed the problem and did not was up on criminal charges.

It lasted less than two years, overturned under Taft right after his election.

Ultimately, the only solution I know of is vigilance.