The Criminal Element
The criminal element has seeped deep into every nook and cranny of American society. Forget about the underworld -- these crooks dominate every aspect of our market, culture, and politics. They cast a deep dark shadow over life in turn of the century America.
We buy gas from them (Exxon, Chevron, Unocal). We take pictures with their cameras and film (Eastman Kodak). We drink their beer (Coors). We buy insurance from them to guard against financial catastrophe if we get sick (Blue Cross Blue Shield). And then when we get sick, we buy pharmaceuticals from them (Pfizer, Warner Lambert, Ortho Pharmaceuticals). We do our laundry washers and dryers from them (General Electric). We vacation with them (Royal Caribbean Cruise Lines). We buy our food from them (Archer Daniels Midland, Southland, Tyson Foods, U.S. Sugar).
We drive with them (Hyundai) and fly with them (Korean Air Lines). All of these companies and more turned up on Corporate Crime Reporter's list of the Top 100 Corporate Criminals of the 1990s, released this past week at a news conference at the National Press Club.
Standing before a roomful of reporters and cameras (including a C-Span camera which took us live to our TV nation), we made the following points:
Every year, the major business magazines put out their annual surveys of big business in America.
You have the Fortune 500, the Forbes 400, the Forbes Platinum 100, the International 800 -- among others.
These lists rank big corporations by sales, assets, profits and market share. The point of these surveys is simple -- to identify and glorify the biggest and most profitable corporations.
The point of releasing The Top 100 Corporate Criminals of the Decade, on the other hand, was to focus public attention on the pervasive criminality that has corrupted the marketplace and that is given little sustained attention and analysis by politicians and news outlets.
To compile The Top 100 Corporate Criminals of the 1990s, we used the most narrow and conservative of definitions -- corporations that have pled guilty or no contest to crimes and have been criminally fined. And still, with the most narrow and conservative of definitions of corporate crime, we came up with society's most powerful actors.
Six corporations that made the list of the Top 100 Corporate Criminals were criminal recidivist companies during the 1990s. Exxon, Royal Caribbean, Rockwell International, Warner-Lambert, Teledyne, and United Technologies each pled guilty to more than one crime during the 1990s.
And we warned that we in no way imply that these corporations are in any way the worst or have committed the most egregious crimes. We did not try to assess and compare the damage committed by these corporate criminals or by other corporate wrongdoers. We warned that companies that are criminally prosecuted represent only the tip of a very large iceberg of corporate wrongdoing.
For every company convicted of health care fraud, there are hundreds of others who get away with ripping off Medicare and Medicaid, or face only mild slap-on-the-wrist fines and civil penalties when caught.
For every company convicted of polluting the nation's waterways, there are many others who are not prosecuted because their corporate defense lawyers are able to offer up a low-level employee to go to jail in exchange for a promise from prosecutors not to touch the company or high-level executives.
For every corporation convicted of bribery or of giving money directly to a public official in violation of federal law, there are thousands who give money legally through political action committees to candidates and political parties. They profit from a system that effectively has legalized bribery.
For every corporation convicted of selling illegal pesticides, there are hundreds more who are not prosecuted because their lobbyists have worked their way in Washington to ensure that dangerous pesticides remain legal.
For every corporation convicted of reckless homicide in the death of a worker, there are hundreds of others that don't even get investigated for reckless homicide when a worker is killed on the job. Only a few district attorneys across the country (Michael McCann, the DA in Milwaukee County, Wisconsin, being one) regularly investigate workplace deaths as homicides.
We pointed out that corporations define the laws under which they live.
An argument can be made that the most egregious wrongful corporate acts -- the genetic engineering of the food supply, or the systematic pollution of the nation's air and waterways, or the bribery by corporate criminals of the political parties -- are totally legal.
But What Do We Do?
A Law and Order Regulation for Corporations
If you commit a felony, you lose the right to vote.
What happens to corporations that break the law? They don't have the right to vote. But do they lose any rights or privileges?
In what may be one of its most important corporate accountability initiatives (there haven't been many), the Clinton administration is suggesting that chronic violators of labor, environmental, tax, antitrust or employment laws should be denied the privilege of entering contracts with the federal government.
Vice President Gore first floated the idea in a 1997 speech to the AFL-CIO. A business outcry persuaded the administration to put the proposal on hold, but two years later it decided to move forward.
In July the administration proposed regulations that would clarify federal procurement officers' duty to ensure that government contractors have a "satisfactory record of integrity and business ethics." Under the regulations, corporations that repeatedly or seriously transgress worker rights, health, safety, environmental, tax or antitrust laws would be deemed ineligible for federal government contracts.
Big business is up in arms about the proposal -- a sign that it may be of consequence. The U.S. Chamber of Commerce along with an alphabet-soup full of business trade associations have organized the National Alliance Against Blacklisting to block the proposal.
The Alliance is planning a full-blown campaign against the regulations. It is revving up arguments about how the regulations would bestow on procurement officers the power to act arbitrarily, how corporations could be unfairly penalized for failing to comply with confusing and technical federal rules, and how the regulations improperly side the federal government with labor in labor-management disputes.
The business groups are right about one thing: the Clinton administration has hit upon a potentially powerful tool to discipline large corporations.
The federal government spends approximately $200 billion a year on procurement, buying goods and services from firms that employ approximately 20 percent of the U.S. workforce. Government contracts make up a significant revenue stream for many firms, including many of the largest companies in the country. In refusing to contract with polluting, consumer-cheating, racially or sexually discriminating, tax-avoiding, clearcutting, price-fixing and other miscreant companies, the government can leverage its buying power to promote more responsible corporate behavior.
Consider the issues of worker rights and worker safety. A 1995 study by the General Accounting Office (GAO), the congressional research agency, found that 80 federal contractors, receiving more than $23 billion in federal government business in fiscal year 1993, had violated the National Labor Relations Act. Six contractors -- McDonnell Douglas, Westinghouse, Raytheon, United Technologies, AT&T and Fluor -- received almost 90 percent of the $23 billion.
A 1996 GAO study found that 261 federal contractors, receiving more than $38 billion in federal government business in fiscal year 1994, received penalties of at least $15,000 for violating Occupational Safety and Health Act regulations. The biggest of these contractors included General Electric, Lockheed Martin, Westinghouse, United Technologies, General Motors, Boeing and Textron.
The current U.S. labor law regime imposes virtually no meaningful penalties on businesses that violate worker rights. The standard sanction imposed against a company that fires a worker for supporting a union is an order to reinstate the worker with back pay -- there are no punitive damages available. Serious violators of workplace health and safety regulations typically walk away with small fines.
By contrast, the threat of losing major government contracts is a much more serious and costly penalty. The proposed procurement regulations would make federal contractors much more wary of recklessly disregarding worker rights and worker safety.
Given the generally weak penalties for corporate law-breaking in the United States, the same holds in other spheres. Too frequently, corporations are able to brush off fines and sanctions for law-breaking.
When corporations calculate, overtly or implicitly, whether they should respect the law, they consider the odds of getting caught and the size of the likely penalty if they are caught. Other factors go into such decisions of course -- potential civil liability, the social pressure to comply with the law or simple respect for the law -- but no one seriously doubts that enforcement vigor and the size of sanctions affect corporate adherence to the law.
If the regulation, really a very modest step, is enacted, the answer to the question, "Do corporate law breakers lose any privileges or rights?" will finally be, "Yes."
For more details on the proposed regulation, see the Essential Action web page, http://www.essentialaction.org/anti-scofflaw.
The federal government is now accepting comments on the proposed regulation. Business groups are weighing in heavily against it; and so if the proposal is to be enacted, it is vital that citizens and public interest groups submit comments in support of the regulation.
It is easy to submit comments -- even a comment that says nothing more than, "I support the principle that the federal government should not contract with companies that seriously transgress the law" is valuable, and comments can be submitted by e-mail (as well as regular mail).
For background on the proposed regulation, and tips on what to say in comments, see the Essential Action web page, http://www.essentialaction.org/anti-scofflaw. You can e-mail comments directly to the agency from this page.