Janine Jackson interviewed Brandon Garrett about drug prices for the September 25 CounterSpin. This is a lightly edited transcript.
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Brandon Garrett
Janine Jackson: Volkswagen has admitted to rigging the emissions systems of diesel cars so they would run clean when tested, but at other times emit up to 35 times the legally allowed amount of nitrogen oxide. General Motors admitted to installing defective ignition switches linked to more than 100 deaths. The bank HSBC admitted laundering money for Mexican drug cartels, among others, and of course a number of banks knowingly made millions of fraudulent loans igniting an economic crisis whose repercussions remain with us.
When the actions of corporations kill or harm people, there’s an understandable desire to see someone sanctioned; individuals make choices, after all. But at the same time, corporations–despite the Supreme Court’s reckoning–are not people, and existing legal remedies don’t seem adequate to ensure what we arguably most want: that those crimes do not recur.
Why not? And what’s to be done? Here to discuss the issue is Brandon Garrett. He is the Justice Thurgood Marshall Distinguished Professor of Law at the University of Virginia School of Law, and author of, among other titles, Too Big to Jail: How Prosecutors Compromise With Corporations. He joins us now by phone from Virginia. Welcome to CounterSpin, Brandon Garrett.
Brandon Garrett: Thank you so much for having me.
JJ: It’s two separate questions, why individuals seem rarely to go to prison for what we call corporate crime, and then whether that would be sufficient to discourage corporate crime. But first things first: Are there existing legal grounds to bring charges against individual people for, say, the rigging of emissions systems on cars to beat tests? And if so, why don’t we see more of that?
BG: Yes, absolutely. The federal criminal law in this country is notoriously broad; it’s not hard to satisfy elements of the statutes of mail fraud or wire fraud statutes, and all that you have to prove is that someone tried to deceive others. We have really quite powerful tools to prosecute individuals. But what has disturbed me, and disturbed other onlookers, is that it seems that federal prosecutors do target plenty of individuals and bring serious white-collar cases every year, but when the company settles its case, and when the company is charged with the crimes, the company sometimes seems to insulate its employees from criminal accountability.
JJ: Much was made of the Justice Department’s announcement that they would change the way that they pursue corporate crime cases. A memo was released saying that companies have to name employees responsible for wrongdoing in exchange for any credit in cooperating with investigators. But Attorney General Loretta Lynch is the same one who worked on the deferred prosecution for HSBC, in which we actually heard Justice Department prosecutor Lanny Breuer say, “They’re too big to jail”–he used more words than that. How hopeful are you that this may represent a real change in the way the federal government pursues these cases?
BG: Well, it’s shocking to the extent that some federal prosecutors didn’t think it was their job in the past to target individuals. Some clearly thought that it was enough to settle with the company and to let the company pay ginormous fines–and the fines really have gotten a lot bigger. We never saw billion-dollar criminal settlements by companies. So lawyers in other countries see what’s going on in the US, and they say that’s remarkable, we don’t have corporate criminal accountability like that; we don’t have companies paying billions of dollars in fines. I think that it’s a good thing that the conversation has moved on to the next level, which is, wait a minute, the companies may pay the fines, but the shareholders really pay that, and the people who actually committed the crimes at these big banks or corporations, they’re not the ones who are paying the fines. In fact, often, they get raises, or they keep their jobs.
BP’s 2010 Deepwater Horizon disaster
JJ: Well, then there is the question as to whether fines are sufficient, because these companies have a lot of money. After something like BP and the Deepwater Horizon disaster, you read a lot of stories with numbers thrown around, millions and millions of dollars, they sound like large numbers, and yet one wonders if they are really large enough to be deterrents.
BG: Well, we know that some of these companies haven’t been deterred, because there are some that have been prosecuted multiple times, they are recidivists, and BP is a classic example. They were separately prosecuted for three major environmental disasters several years before the Gulf spill. There was a massive explosion in a Texas refinery, many workers lost their lives, and the families of those workers protested, saying, why is BP being allowed to plead guilty to such a reduced fine? Why aren’t they being put on probation so they could be supervised, to have a judge make sure that they are complying and fixing the conditions at the refinery? And they said, if you let BP do this, this culture of cost-cutting and inattention to safety is just going to continue. I don’t think it was reassuring for them to just say “I told you so” when another horrible disaster happened.
It’s been the same for banks. You have banks enter multiple non-prosecution, deferred-prosecution agreements; some banks have been prosecuted three, four times in the past years. And they can say it was different traders each time, it was a different kind of fraud each time, different type of misconduct each time, but it starts to look like these agreements just aren’t working, that there may be a common culture across the bank that rewards rule-breaking.
JJ: I remember former New York State Attorney General Elliot Spitzer, among others, talking about a death penalty for corporations, talking about–we don’t necessarily know which individual wrote which memo on which date to make this happen. We know that it happened, in many cases it recurred, and the penalty for that is that you get your charter revoked. You no longer get to operate as a company. Is that pie in the sky? Does that make any kind of sense?
BG: Obviously, if a company is through and through criminal, it probably should get the corporate death penalty. In fact, there already is a federal sentencing provision that says if a company is through and through criminal, it should be fined all of its assets. So there is actually a corporate death penalty. It has been used rarely.
JJ: Is there anything else, do you think, that’s necessary to put into place–more resources for regulators, more enforcement slugging arm from the DoJ…. Is there anything else that you think is necessary to move this question down the field?
BG: I do think there are some other changes that could be made. The DoJ has tried to keep so many of the deals out of court. When they do get filed in court, judges ask some pretty sensible questions, like, why are you giving this company leniency when none of its employees have been charged? Did the company really cooperate? I think there would have been pressure on the DoJ to make these changes some time ago if they had been settling these cases in court with judicial review.
I hope that they stop entering so many of these non-prosecution deals, where a company never gets a public filing, nothing is filed in a court. I also hope that judges start to review deferred-prosecution agreements more carefully, and that these cases result in convictions, where the company is on probation and it has a criminal record. Congress could extend the statute of limitations on corporate crimes, with the idea being that these cases are incredibly complicated, and it sometimes takes years for the company to fully cooperate and hand over all the emails and documents.
Congress could also think about new misdemeanor crimes, not felonies, but in some areas of the law there is strict responsible corporate officer liability. The idea is that you are the supervisor, you may not have known what your subordinates are doing, but you have responsibility as the corporate officer. You can’t prosecute someone for a felony if they didn’t have intent, but you can convict them of a misdemeanor. That’s what we do in the food and drug context, and for certain environmental crimes. So we could extend that concept to some additional areas, like the financial industry. That would be a frightening prospect for executives to know that, yes, it’s a misdemeanor, but it’s a serious one. You would be responsible criminally for what your employees do under your watch.
I’m not normally a fan of creating more federal crimes, I think we have too many to begin with, but these are the crimes that really matter. They affect the entire economy, and this is where the priority should be, not on a lot of other regulatory crimes that are strict, like immigration crimes, drug possession crimes, the kind of crimes that also don’t involve intent but for which we put tens of thousands of people away every year.
JJ: We’ve been speaking with Brandon Garrett. His book is called Too Big to Jail. Brandon Garrett, thank you very much for joining us this week on CounterSpin.
BG: Thanks so much.
This piece was reprinted by RINF Alternative News with permission from FAIR.