Fighting Corporate Crime
In response to corporate crime waves, the government usually passes a series of meek reforms (like the Sarbanes Oxley law of 2002). Over the years, our citizen groups have introduced numerous proposals to crack down on corporate crime, including: the FBI creation of an annual Corporate Crime in the United States report; tripling the budgets of the federal corporate crime police; adopting three-strikes-and-you’re-out policies for corporate criminals; banning corporate criminals from government contracts; expanding the False Claims Act to include environmental and securities fraud areas; and creative sentencing alternatives, such as sentencing fit coal mine executives, convicted of violating safety laws resulting in casualties, to working with the miners in the mines.
Some of the shrewdest observers of corporate crime come from that former penal colony, Australia. John Braithwaite, who has written many books on corporate crime, argues, “If we are serious about controlling corporate crime, the first priority should be to create a culture in which corporate crime is not tolerated.” He believes that “the moral educative functions of corporate criminal law are best achieved with heavy reliance on adverse publicity as a social control mechanism.”
“The policy instruments for harnessing shame against corporate offenders include adverse publicity orders as a formal sanction, the calling of press conferences following corporate convictions, encouraging consumer activism and investigative journalism,” he writes.
What is needed is political leadership free from negative corporate influence, leadership that will not just talk the talk on corporate crime enforcement, but deliver justice to the American people. For too long people have suffered at the hands of big corporations that defraud consumers; pollute our air, water, and soil; bribe our public officials, injure and destroy the health of workers, and steal from our governments. Creating a culture in which corporate crime is not tolerated in word, law, or deed is long overdue.
This is a citizens’ agenda for cracking down on corporate crime.
Establish a public online corporate crime database at the Department of Justice. The FBI should also produce an annual corporate and white-collar crime report as an analogue to its “Crime in the United States” report, which focuses on street crime.
Increase Corporate Crime Prosecution Budgets of the Securities and Exchange Commission and especially the Department of Justices corporate crime division have been chronically under funded. Without proper resources, it is difficult to apply the rule of law to corporate criminals. As a result, government prosecutors and regulators are forced to settle for weak fines and ignore many more violators entirely.
Ban Corporate Criminals from Government Contracts. Enact a tough, serious debarment statute that would deny federal business to serious and/or repeat corporate lawbreakers. These standards should apply to corporate contracts in Iraq. The federal government spends $265 billion a year on goods and services. Let’s make sure taxpayer money isn’t supporting corporate criminals.
Punish corporate tax escapees by closing the offshore reincorporation loophole and banning government contracts and subsidies for companies that relocate their headquarters to an offshore tax haven. Give the IRS more power and resources to go after corporate tax cheats. Require publicly traded corporations to make their tax returns public.
Restore the Rights of Defrauded Investors. Repeal self-styled securities “reform laws that block defrauded investors from seeking restitution, such as the Private Securities Litigation Reform Act of 1995, which allowed the aiders and abettors of massive corporate crime (e.g., accountants and lawyers) to escape civil liability.
Grant shareholders the right to democratically nominate and elect the corporate board of directors by opening up proxy access to minority shareholders and introducing cumulative voting and competitive elections. Require shareholders to approve all major business decisions, including executive compensation. Shareholders, after all, are the owners.
Require shareholder authorization of top executive compensation annual shareholder meeting. Require that stock options, which now account for about half of executive compensation, be counted on financial statements as an expense (which they are). Eliminate tax deductions for compensation above twenty-five times the compensation received by the lowest paid worker in a corporation.
Regulate all over the-counter financial instruments, including derivatives, so that they are subject to the same or equivalent audit and reporting requirements as other financial instruments traded on the stock exchanges. Rules should be enacted regarding collateral-margin, reporting and dealer licensing in order to maintain regulatory parity and ensure that markets are transparent and problems can be detected before they become a crisis.
Enact corporate sunshine laws that force corporations to provide better information about their records on the environment, human rights, worker safety, and taxes, as well as their criminal and civil litigation records.
End Conflicts of Interest on Wall Street. Reenact structural reforms that separate commercial and investment banking services and prevent other conflicts of interest among financial entities, such as those that have dominated big banks in recent years.
Corporations must be held more responsible for the retirement security of their employees. At a minimum we need to give workers a voice on the pension board; not require workers to stuff their 401 (k) plans with company stock; and give workers a right to vote for their 401 (k) stock.
In addition, an Office of Participant Advocacy should be created in the Department of Labor to monitor pension plans.
Establish a Congressional Commission on Corporate Power to explore various legal and economic proposals that would rein in unaccountable giant corporations. The Commission should seek ways to improve upon the current state corporate chartering system through federal chartering of global corporations and propose ways to correct the evasive legal status of corporations, such as being treated as persons under our Constitution. The Commission should be led by a congressionally appointed expert on corporate and constitutional law, and should hold public citizen hearings in at least ten cities.
If you are in the mood for fun, ask your Member of Congress for an update on what he or she is doing to stop the corporate crime wave.
Ralph Nader is the author of: The Good Fight : Declare Your Independence and Close the Democracy Gap (Harper Collins Books). http://www.ralphnadersgoodfight.com/