Daily Archives: April 4, 2012

And Justice for Some…

No Fault Corporate Crime


Ten years ago, if you wanted to quickly find out what was going on in the world of corporate crime, you would just type in the word “fined” into a news database.

Up would come a series of penalties or fines brought against big corporations by federal law enforcement officials in Washington, D.C.  Exxon fined for pollution.  Or ADM fined for antitrust violations.

But over the past decade, corporate lobbyists have worked their will in Washington, and enforcement against corporations has been watered down to the point where now corporate crime enforcement is way down the list.

Last night I typed “fined” into Google News – and these were the top five stories that came up:

  • A french perfume executive was fined for making racist remarks.
  • Fifteen people were fined for spitting in India.
  • The NBA fined Los Angeles Clippers foward Reggie Evans $25,000 for making an obscene gesture.
  • Only twenty five dog owners in northeast Scotland have were fined in the last year for dog fouling.
  • And the Houston Dynamo soccer midfielder Colin Clark was fined for using a gay slur at a ball boy.

Story number six did have to do with corporate crime – but it was from Europe.  Last week, the EU fined 14 air-shipping companies a combined $225 million for price fixing.

Now, try typing in the phrase “corporate crime” into Google News.  The phrase has been pretty much banished from American journalism and politics.  So, when you type in the words “corporate crime” into Google News, you will primarily see reports from overseas say the Irish Times or a newspaper in Australia – or you will see a quote from Ralph Nader, or a story from Corporate Crime Reporter.

Last night, I typed in the words “corporate crime” into Google News, and much to my surprise the first thing that came up was a Reuters story about the U.S. Attorney General Eric Holder.  I have been reporting on Holder since he took office three years ago.  As far as I can tell, last month was the first time in his three years as Attorney General that he uttered the phrase “corporate crime.”

And this is what he said at a meeting of state Attorney Generals in Washington.  “We’re gonna make some news with regard to holding individuals responsible for things we tend to think of as corporate crimes,” Holder said.

Get it?  We’re going to hold individuals responsible.  Not hold corporations responsible. Hold individuals responsible for things we tend to think of as corporate crimes.  Now, what Holder said here is important. Because he comes from a corporate law firm – Covington & Burling – where he represented primarily corporations, not individuals. And when he leaves office, Holder most likely will return to Covington & Burling. Where he will represent primarily corporations – not individuals – against federal law enforcement officials, in their increasingly weakened state.

Every week in Corporate Crime Reporter, we run a question/answer format interview with someone who has something to say about corporate crime. When we started Corporate Crime Reporter 25 years ago this month, our first ever interview – the first of now over 1,200 interviews – was with Rudy Giuliani – who at the time was the U.S. Attorney in Manhattan. At the time, Giuliani believed that if you were to bring a case against a major American corporation, you secured a guilty plea, or took the case to trial. Or you just didn’t bring the case. And Giuliani’s view was the view of federal law enforcement back then. Bring a criminal charge if you have a criminal case. And secure a guilty plea. Or don’t bring the case.

As a result, major American corporations were convicted of crimes on a regular basis. Because they engaged in crimes on a regular basis. And the message was sent – you commit a crime, you will be convicted and publically shamed. Today, major American corporations are still committing crimes on a regular basis. But the difference is today major American corporations are rarely convicted of their crimes.

It’s not that they no longer engage in corporate criminal behavior. It’s that they have set up a system where they no longer have to plead guilty to their crimes. Instead, they settle these major corporate crime cases with deferred and non prosecution agreements. These are the criminal equivalents of the neither admit nor deny consent decrees used for decades by the Securities and Exchange Commission and that recently have come under fire by federal judge Jed Rakoff in New York.

And so, if you are a criminal defense attorney at Holder’s former firm of Covingon & Burling, this is how you practice corporate crime law: Your client comes to you with evidence of criminal wrongdoing by the corporation. You approach the Justice Department and disclose it. The Justice Department offers you a deal. The Justice Department says to you – if you cooperate in the criminal investigation against the individuals involved at the company, we will let you off the hook with a deferred or non prosecution agreement. There will be no criminal conviction against your corporate client.

But you must cooperate against the individuals involved. And those individuals will likely be convicted and go to jail. Thus, Holder’s statement – “We’re gonna make some news with regard to holding individuals responsible for things we tend to think of as corporate crimes.”

Last month, we interviewed David Uhlmann. Uhlmann is the former head of the Environmental Crimes Section at the Justice Department. And he’s currently a Professor of Law at the University of Michigan Law School. When Uhlmann was head of the Environmental Crimes Section, he didn’t use deferred and non prosecution agreements in corporate crime cases. Uhlmann says that deferred and non prosecution agreements have no place in major corporate crime cases. These agreements were originally meant for minor street cases, not major corporate crime cases.

When the Department entered into a non-prosecution agreement last year to resolve criminal investigation into the Upper Big Branch mine disaster, Uhlmann wrote a scathing opinion article in the New York Times titled “For 29 Dead Miners, No Justice.”

“Twenty-nine miners died in West Virginia. They died because Massey had a history of mine safety violations,” Uhlmann told us. “They died at a facility where the company kept a double set of books – one for internal purposes, which documented violations, and one for mine safety officials that covered up those violations.

“To enter a non-prosecution agreement in a case where 29 people died and there is so much evidence of criminal wrongdoing reflects poorly on the Justice Department.”

Uhlmann says that the Environmental Crimes Section to this day does not settle corporate crime cases with deferred and non prosecution agreements. Maybe that’s why Holder and his aides stripped the Environmental Crimes Section of authority over the criminal investigation into the Gulf oil spill cases and gave it to the Criminal Division. Uhlmann believes that it will be a travesty of justice if the Department doesn’t secure guilty pleas in the Gulf oil spill cases.

But they didn’t in the Massey Energy case. And the odds are not good that they will in the BP oil spill cases. Not that crimes weren’t committed in the Gulf oil spill cases. They clearly were.

But after all, Holder is from Covington & Burling. And he’s going back to Covington & Burling. And his top deputies came from corporate law firms and they are going back to corporate law firms.

Obviously, this practice of no fault corporate crime has taken hold at the top and been filtered right down through the entire federal enforcement system.

Last month, I caught this headline from a Canadian newspaper: “Wal-Mart Pleads Guilty in Teen’s Death.”  The story began:  “Walmart Canada pled guilty Tuesday in the case of a teenager who was electrocuted on the job last year.”

When I saw that, I went to our federal OSHA web site and searched for a similar case. And I found one also from last month where a Verizon worker was electrocuted on the job. OSHA proposed a civil fine of $140,700. The point is that a criminal conviction sends a message that a civil fine or a deferred and non prosecution can’t. A criminal conviction says to the corporation – what you have done is serious and we are bringing out our most serious weapon to bear – a criminal conviction.

Corporations get it.

What big corporations fear most is the reputational hit of that headline –  “Wal-Mart Pleads Guilty in Teen’s Death.” Corporations will do – and have done – everything in their power to avoid that headline.

So, our criminal justice system is out of whack. We must get back to the days of when you brought a case, you secured a guilty plea or you went to trial. Like Professor Uhlmann says, deferred and non prosecution agreements have no place in corporate crime practice.

And now the question becomes – how to bring back some balance to our corporate criminal justice system? There is a clear power imbalance in Washington with the corporate law firms holding the upper hand. Young law students would much rather go for the fancy offices and big salaries of a corporate law firm than a Justice Department cubicle.

When I was a teenager, I had an uncle who would warn me about U.S. colleges being high priced tool factories for the corporations. The choice of which college or law school to go to wasn’t nearly as important as the choice of what you did with your education. Education for what? – was the question we were asked.

And it was made clear to us that a decision to work for a corporate law firm or not was a moral choice. And that’s what is missing. A moral code and a shaming mechanism to enforce it. We were told, in effect, shame on you if you decide to slave away working to undermine the criminal justice system on behalf of Wal-Mart and BP or Massey Energy.

Sure, every corporation deserves legal representation. But it doesn’t have to be you. We must also shame our public officials into securing convictions when convictions are warranted. To insist on corporate criminal prosecutions in worker death cases where warranted. To do away with deferred and non prosecution agreements in corporate crime cases. To demand action where action is due.

It’s shameful that more than three years since the financial crisis crippled the American economy there has not been a single prosecution of a Wall Street firm even though fraud and financial misrepresentations played a significant role in the meltdown. Even Sixty Minutes pointed this out in December of last year. But still, nothing.

And before he goes back to Covington & Burling, Eric Holder has to be held to account. It is shameful that Holder cares more about individual wrongdoing than he does about corporate wrongdoing. Most importantly, we need to support our local corporate crime police, to bolster their enforcement budgets, to begin to level the playing field between corporate criminals and the police.

Russell Mokhiber edits the Corporate Crime Reporter.

Mario Piperni on Repug Devolution

Creationism and The Right-Wing’s March Backwards

April 4, 2012 By

Goodbye science. Hello 1925. The right’s relentless effort to keep the youth of American ignorant carries on.

A controversial bill that protects teachers who discuss with students “weaknesses” in evolution and other scientific theories is on its way to [Tennessee] Gov. Bill Haslam, who is under pressure from prominent scientists to veto it.

Scientists in Tennessee and across the nation charge the measure is a “backdoor” attempt to allow discussions of religion-based views such as “creationism” and “intelligent designs” in science classrooms.

The House approved the bill Monday night on a 72-23 vote that included changes made last week by the Senate bill’s sponsor, Bo Watson, R-Hixson. There was no debate.

Watson has said he tried to address scientists’ concerns with new language that directs science teachers to discuss evolution, climate change and other areas within the state’s science education “framework.”

Three prominent Tennessee scientists who are members of the National Academy of Sciences charged Monday in a letter published in the Tennessean newspaper that state lawmakers are “doing the unbelievable: attempting to roll the clock back to 1925 by attempting to insert religious beliefs in the teaching of science.”

Henry Drummond (Spencer Tracy) responds in a clip from Inherit The Wind, the film adaptation of the 1925 Scopes Monkey Trial where a Tennessee science teacher was fined for teaching evolution in a state-funded school.

Can’t you understand? That if you take a law like evolution and you make it a crime to teach it in the public schools, tomorrow you can make it a crime to teach it in the private schools? And tomorrow you may make it a crime to read about it. And soon you may ban books and newspapers. And then you may turn Catholic against Protestant, and Protestant against Protestant, and try to foist your own religion upon the mind of man. If you can do one, you can do the other. Because fanaticism and ignorance is forever busy, and needs feeding. And soon, your Honor, with banners flying and with drums beating we’ll be marching backward, BACKWARD, through the glorious ages of that Sixteenth Century when bigots burned the man who dared bring enlightenment and intelligence to the human mind!

They didn’t understand then. They sure as hell don’t understand now. Fixing stupid, they say, is never easy.


(The chimp source photograph is Wikimedia Commons licensed media. The Rick Santorum source photograph is a Creative Commons licensed image from photographer Gage Skidmore. )

Ezra Klein on Dueling Budgets

I love covering budgets. Budgets are where politicians have to be clear about their visions. They have to make the numbers add up, which means they have to be (relatively) honest about their choices. That exercise can reveal surprising truths.

You would never know from the rhetoric in President Obama’s budget speech that there are broad swaths of government policy on which he and Paul Ryan mostly agree. But if you look at their budgets, there’s actually a surprising amount of convergence: Neither man’s budget makes any changes to Social Security. Both budgets are content to find their savings elsewhere. Another: Both men have proposed capping Medicare’s rate of growth at GDP+.5% (that is to say, Medicare’s budget could grow by however fast the economy grew, plus half a percentage point. So if the economy grew by 3%, Medicare’s budget could increase by 3.5%). They would hold Medicare to that growth rate in different ways, but, over the past year, they have actually converged on how much spending is appropriate in Medicare.

That’s a change from past years. Ryan’s 2010 Roadmap included major reforms to Social Security, including private accounts. His previous budget featured much more dramatic reforms to Medicare, including a much lower growth rate. But Ryan has backed off of his cuts to seniors. It is, after all, an election year.

Today, the difference in the two party’s visions is really in their plans for everything else: Ryan’s budget increases defense spending, cuts taxes on the rich, and pays for all that — and for his deficit reduction — with deep cuts to programs for the poor and to the basic services the federal government carries out. The Center on Budget and Policy Priorities estimates that 62 percent of Ryan’s cuts are to programs for the poor. (Graph.)

Obama’s budget, meanwhile, features large tax increases on the rich, some cuts to the defense budget, some cuts to government services, and relatively few cuts to programs for the poor. Consequently, his budget has somewhat less deficit reduction than Ryan does over the next 10 years.

Obama said much of this in his speech. He accurately explained where Ryan’s cuts fall. He admitted that he intends to raise taxes on wealthier Americans. He clearly believes the voters will prefer his approach. And Ryan didn’t contest any of it. He didn’t say his budget doesn’t focus its cuts on programs for the poor, or non-defense discretionary spending. His statement, which you can read in full here, lamented Obama’s “empty promises” and efforts to “divide Americans.” But it didn’t argue that the president got Ryan’s numbers wrong. And that’s because he didn’t: The numbers are there for everyone to see. The same goes for Obama’s budget, which Republicans have often blasted for raising taxes on the rich and doing too little on the deficit.

And that’s why I love budget season. The two parties have laid out their visions, in detail, in ways we can check, and are now arguing over them. That’s what the election should be about.

The Borowitz Report

In Controversial Decision, Supreme Court Replaces Annual Physicals with Strip Searches

Major Expansion of Police Officers’ Role

WASHINGTON (The Borowitz Report) – In a stunning decision on the future of healthcare in America, the Supreme Court decided today that annual physicals were unconstitutional and should be replaced by random strip searches conducted by the nation’s police.

The decision, which appeared to expand the role of the police to include such duties as performing breast and prostate exams, took many in both the healthcare and law enforcement communities by surprise.

Writing for the majority, Justice Antonin Scalia wrote, “While the Constitution makes no provisions for healthcare, it explicitly defends the people’s right to form militias; clearly, the Founders believed that if anyone should be looking up our asses it shouldn’t be a doctor, but someone with a gun.”

By replacing annual checkups with random strip searches, the Court raised worries in the healthcare community that patients would not get the care they need, but those concerns were brushed aside by Justice Samuel Alito.

“Ultimately, the responsibility to secure adequate medical attention falls to the citizen,” he said.  “When a policeman is searching his body cavities, for example, it’s up to the citizen to say, ‘There’s a mole I’d like you to look at.’”

Justice Clarence Thomas wrote that he was personally ready for a random strip search/exam at any moment, adding, “I’ve got nothing on under this robe.”