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The Criminal Element


Russell Mikhiber and Robert Weissman

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.

 

 

 

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