We have written over the past several months about the massive amounts of corporate wrongdoing in the U.S., including fraudulent conduct. That fraud, if anything, has increased in recent months. Contrary to what some in Corporate America say, a corporate death penalty is very rare, even considering that much of the corporate wrongdoing involves repeat offenders. The Department of Justice, instead of forcing a corporation to plead guilty, in most cases will enter into a deferred and non-prosecution agreement with the company. In those cases, major American corporate wrongdoers pay the fines and penalties imposed and don’t even miss a beat. They keep right on doing what got them in trouble in the first place. There are a number of reasons given for why there is no corporate death penalty, including the following:
• A criminal conviction would risk putting the accused company out of business;
• The collateral consequences of a conviction are too great;
• Convicted companies would go the way of Arthur Andersen;
• Shareholders would lose millions of dollars in the event of a death penalty; and
• Thousands of workers would then be thrown out of work.
I can understand giving an offending corporation a break on its first offense, but find it hard to understand why there isn’t a tougher approach for repeat offenders. The belief apparently is that a corporate criminal conviction is the equivalent of a corporate death penalty. But let’s take a look at the record.
Actually, according to a report in The Corporate Crime Reporter, there were 51 publicly-traded companies that were convicted of a criminal offense between 2001 and 2010. Of those 51 companies, 36 are still in business. In fact they are still listed on the same stock exchange that they were listed on at the time of their conviction. None of the corporations have undergone a merger, acquisition, or name change. Eleven companies merged with or were acquired by another company under favorable circumstances that did not implicate a business failure.
It was reported that only four of the 51 companies “suffered fates that could reasonably be described as business failures.” But none of those four “could reasonably be said to have resulted from the companies’ convictions.” Gabriel Markoff, a graduate of the University of Texas law school, and now a law clerk to a federal judge, did a tremendous amount of research on this subject. Hopefully, his efforts will find a way to get the information into print. He wrote a paper entitled “Arthur Anderson and the Myth of the Corporate Death Penalty: Corporate Criminal Convictions in the Twenty-First Century.” I would really like to see his paper published.
Source: The Corporate Crime Reporter
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