A half century ago, Supreme Court Justice Hugo Black reminded us in
Griffin v. Illinois (1956) that there "can be no equal justice where the
kind of trial a man gets depends on the amount of money he has." The corporate
executive with a team of high powered attorneys has a different legal experience
than the poor person with an underpaid court appointed lawyer. And it's not
just a few indigents who need court-appointed lawyers; some 80 percent of defendants
nationwide rely on public defenders.
The recent convictions of Enron's billionaire swindlers Kenneth Lay and Jeffrey
Skilling lend hope to those of us who dream of a more equitable legal system.
But before we put Justice Black's dictum to rest, keep in mind that Lay and
Skilling are out on bail, and that they still might end up with a light sentence
or skip free on some technicality.
In recent years prominent firms such as Enron, Adelphia, R. J. Reynolds, WorldCom,
Time Warner, Tyco, Arthur Andersen, Refco, Bristol Meyers, ImClone, Global Crossing,
and HealthSouth have been investigated for accounting and tax fraud, manipulating
stock values, insider trading, and obstructing justice, criminal acts that have
delivered economic ruin upon shareholders and employees. As of June 2006 only
a handful of executives from these companies have seen the inside of a prison.
Think of the magnitude of their crimes, the heartless damage wreaked upon many
thousands of employees who saw their jobs, retirement funds, and financial security
stolen from them. So much misery for the many so that the favored few might
gleefully romp and frolic in increasingly obscene wealth.
What kind of punishment awaits most corporate brigands? Martha Stewart did
a grueling five months in a federal women's camp. Dennis Koziowski, former Tyco
CEO, looted some $600 million to fund his lavish lifestyle, for that he got
8 to 25 years in a minimum security prison, and is eligible for parole in about
six years, unless he wins an earlier reversal or sentence reduction.
After getting a 15-year sentence for looting $100 million from Adelphia, John
Rigas is free pending his appeal. So is Bernard Ebbers, former CEO of WorldCom
(on a 25-year sentence), who wiped out a company worth $115 billion at its peak.
Corporate crime is not a rarity but a regularity. The Justice
Department found that most giant companies have committed felonies. Many are
repeat offenders. Over the years, General Electric has been convicted of 282
counts of contract fraud and fined $20 million. But nobody at GE is doing time.
(Imagine a street criminal with 282 felony convictions who is allowed to walk
Charged with 216 violations involving toxic substances, WorldCom was fined
$625,000. Over a sixteen year period major oil firms cheated the government
of nearly $856 million in royalties by understating the value of the oil they
pumped from public lands, but nobody went to prison in any of these cases.
Honeywell ignored defects in gas heaters resulting in twenty two deaths and
seventy seven crippling injuries, for which it was fined $800,000. Johns Manville
suppressed information about the asbestos poisoning of its workers; when ordered
to pay damages in civil court it declared bankruptcy to avoid payment. Nobody
ended up behind bars in either of these cases.
An executive of Eli Lilly failed to inform the government about the effects
of a drug suspected of causing forty nine deaths in the United States and several
hundred abroad. He was fined $15,000. For dumping toxic chemicals into well
water that was subsequently linked to eight leukemia deaths, W. R. Grace was
fined $10,000. Charged with unlawfully burning toxic wastes into the atmosphere
for twenty years, Potomac Electric Power Co. of Washington, D.C. was fined the
crushing sum of $500. In none of these cases did anyone see the inside of a
In 2005 the Bank of New York agreed to pay $38 million in penalties and victim
compensation arising from a case of money laundering and fraud, but nobody ended
up having to share a conjugal cell with Big Spike.
That same year Halliburton executives failed to make payments to pension participants
as legally required; instead they used some of the funds for executive pensions
and bonuses. Halliburton was required to pay almost $9 million and an undisclosed
tax penalty, but none of the company suits went to prison.
In 2006, Custer Battles was found guilty of defrauding the United States of
millions of dollars in government contracts in Iraq. The company was slated
to pay triple damages but again nobody went to prison.
That creepy fellow James Watt, Interior Secretary under the Reagan administration,
helped rich clients illegally pocket millions in federal low-income housing
funds. Watt was able to sidestep eighteen felony charges of perjury and plead
guilty to a misdemeanor, for which he got five years probation and a $5,000
As of 2006 there was an estimated $450 billion shortfall in retirement and
disability funds, as numerous companies have defaulted on their pension payments.
Federal law requires companies to honor their obligations to these funds but
there is no real enforcement mechanism.
When Firestone pled guilty to filing false tax returns concealing $12.6 million
in income, it was fined $10,000, and no one went to jail. Over seven hundred
people a year are imprisoned for tax evasion, almost all of them for sums far
smaller than the amount Firestone concealed.
Even when the fine is more substantial, it usually represents a mere fraction
of company profits and fails to compensate for the damage wreaked. Over several
years Food Lion cheated its employees of at least $200 million by forcing them
to work "off the clock," but in a court settlement the company paid
back only $13 million. Who says crime doesn't pay?
In 2004 Halliburton paid a $7.5 million fine for false earnings reports. Halliburton
was also accused of grossly overcharging the government for gasoline intended
for U.S. armed forces in Iraq. Meanwhile, for work done on a government nuclear
plant, Bechtel inflated its bill for labor, materials, travel, entertainment,
and supplies--then gave itself a $250,000 bonus.
Nobody at Halliburton or Bechtel went to prison for these huge thefts. And
as we all know, both companies are still gorging themselves on fat government
Someone who robs a liquor store is far more likely to do time than people who
steal hundreds of millions of dollars from shareholders, employees, consumers,
Penalties often are uncollected or suspended. Over one hundred savings and
loan (S&L) plea bargainers, who escaped long prison terms by promising to
make penalty repayments of $133.8 million, repaid less than 1 percent of that
Claiming it did not have enough lawyers and investigators, the government failed
to pursue more than one thousand S&L fraud and embezzlement conspiracies,
amounting to hundreds of billions in losses for U.S. taxpayers.
The Bush Jr. administration decreased major fines for mining safety violations
and in nearly half the cases did not bother to collect the fines. No wonder
miners continue to perish in preventable accidents.
Frequently corporate criminals continue to live in luxury but claim they do
not have the money to make restitution to their victims. They are able to hide
many assets before penalties are established.
When corporate felons actually are given prison terms, the sentence is usually
light and sometimes not even served. S&L defendants, convicted of having
stolen hundreds of millions of dollars, spent fewer months behind bars on average
than car thieves and at relatively comfortable minimum security prisons.
The two ringleaders of Archer Daniels Midland Co. who stole millions from their
customers were sentenced to only three years. The average sentence for corporate
criminals who do time is about eleven months.
Let's go back some years to Wall Street investor Michael Milken who pled guilty
to securities violations and was sentenced to ten years reduced to twenty two
months, most of which was spent doing community service. Corporate criminals
sentenced to community service seldom do but a small portion of it, if any.
Milken had to pay back $1.1 billion to settle criminal and civil charges but
retained a vast fortune of $1.2 billion from his dealings.
Likewise, Ivan Boesky walked off with $25 million after paying his fine for
insider trading and doing a brief spell behind bars. Every major participant
in these late 1980s Wall Street investment crimes emerged from the experience
as a wealthy man. Again, who says crime doesn't pay?
Opinion surveys find that a majority of the public believes that wrongdoing
is widespread in the business world. Some 90 percent think that big corporations
have too much influence over government. Only 2 percent consider company bosses
"very trustworthy." You've got to hand it to the American people.
Buried alive under an avalanche of media disinformation and puffery, they still
sometimes get it right.
Sure it does us good to see some corporate predators get their asses kicked
in court. And we should demand that it happen more often.
But keep in mind that corporate crime is endemic to a system bound by limitless
greed and pitiless theft, a system whose operational imperative is "accumulate,
accumulate, accumulate," a system faithfully serviced by reactionary plutocrats
in the White House who themselves partake of the plunder.
Michael Parenti's recent books include The Assassination
of Julius Caesar (New Press), Superpatriotism (City Lights), and The Culture
Struggle (Seven Stories Press). For more information visit: www.michaelparenti.org.