Are there two justice systems in America, one for the executives of large corporations and another for the rest of us? Senator Elizabeth Warren, D-Mass., thinks so. She published a report on the subject last month, “Rigged Justice: How Weak Enforcement Lets Corporate Offenders Off Easy.”
Warrens maintains that “corporate criminals routinely escape meaningful prosecution for their misconduct.” Rather than pursuing convictions of corporate executives, federal agencies agree to criminal and civil settlements that rarely require any admission of wrongdoing and allow executives go free without any individual accountability.
Warren cites plenty of examples. Standard & Poor agreed in February 2015 to pay a $1.375 billion civil in response to fraud allegations. The federal government alleged S&P had defrauded investors by issuing inflated ratings that misrepresented the true risks of residential mortgage-backed securities and collateralized debt obligations, a significant factor in the 2008 financial crisis. S&P was not required to admit to breaking the law, and no individuals were prosecuted.
Last August, two Citigroup affiliates agreed to pay nearly $180 million to the Securities and Exchange Commission to settle allegations they defrauded investors by selling risky, highly leveraged bonds to investors from 2002 to 2008 with false assurances the bonds were safe and low-risk. Investors lost an estimated $2 billion. Citigroup was not required to admit to any wrongdoing, and no individuals were prosecuted.
Last September, General Motors paid a $900 million fine after covering up an ignition switch problem that had resulted in at least 124 deaths and 275 injuries. The fine represented less than one percent of the company’s annual revenue. No one was subjected to criminal prosecution.
No one faced criminal prosecution for the 2010 Gulf of Mexico Deepwater Horizon oil spill, characterized by Attorney General Loretta as “the worst environmental disaster in American history.” Last October, BP agreed to pay a $20.8 billion fine over 18 years in a settlement, but BP is allowed to deduct $15 billion of the payments from its income for tax purposes, reducing the impact of the civil penalty by over $5 billion.
Warren offers little explanation for why the federal government is lax on prosecuting corporate crime, except to say, “Lax enforcement . . . stems primarily from a lack of important legal tools and persistent underfunding by Congress that often turn the legal rules into little more than suggestions that companies can freely ignore.”
How is it that we don’t put white collar criminals in jail? It’s not that we don’t know how to incarcerate people. We’re actually very good at it. American penal facilities hold over 2.2 million people. The “World Prison Population List,” published by the International Centre for Prison Studies in October 2013, places the U.S. with the highest incarceration rate in the world: 716 inmates per 100,000 people. That beats Cuba (510), Russia (475), El Salvador (422) and Thailand (398).
Apparently, we are zealous about putting “criminals” behind bars, but people who wear suits—not so much.
Jack D’Aurora writes for considerthisbyjd.com
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