A corporate lawyer representing General Electric, Martin Marietta, ITT and other wealthy firms with checkered pasts recently came up with a memorable metaphor in service of her clients. A "corporate death penalty" could result if the Justice Department carries out proposals for tough, mandatory fines for companies convicted of such crimes as overcharging the government, polluting waterways or dumping toxic wastes.
The overblown metaphor, raising the specter of a death sentence on corporate profits if stiff fines are imposed, had a taker in Attorney General Richard Thornburgh. The U.S. Sentencing Commission had proposed requiring federal judges to hit convicted corporations with fines as high as hundreds of millions of dollars. Thornburgh, a wrist slapper, tenderly reversed his department's "strong support" for the commission's proposals.
What might have been dismissed as a lapse is now seen to be a pattern. On May 25, more than 200 members of Congress wrote to President Bush to ask why a reign of laxity has overtaken the Justice Department's prosecution of financial institution fraud and embezzlement cases. "As of February 1990, there were more than 21,000 fraud and embezzlement referrals and complaints unaddressed by the FBI," the letter stated. "Two hundred and thirty-four of these referrals involve potential losses of $1 million or more." Under the 1989 Institutions Reform, Recovery and Enforcement Act, Congress authorized $75 million to pursue and prosecute fraud and embezzlement cases. As the load grows larger, the concern gets smaller. The department has sought only $50 million for the next three years to carry out the law.
If street hoodlums in ski masks were holding up banks and S&Ls in million-dollar heists, who in the Justice Department or White House would be calling for less, if any, punishment? Would the lawyer representing General Electric plead for leniency for the same hoodlums? In the late 1970s, a decade before the S&L corruptions, it was estimated that six times more money was stolen by bank employees with pens than by bank robbers with guns.
Thornburgh, whose fanatical obsession to suppress Justice Department leaks led him to take a lie detector test to prove to the world that he wasn't leaking information himself, borders on the grandiose in posing as a fierce chaser of boardroom offenders. When he called a press conference in late February to announce an indictment of Exxon Corp. and Exxon Shipping on criminal felony and misdemeanor charges arising from the March 1989 Alaskan oil spill, Thornburgh said he was "throwing the book" at the company. Aside from it being judges, not attorneys, who throw the book at defendants, Thornburgh neglected to mention that he had been considering settling claims against Exxon. It was after environmental groups and the state of Alaska protested this possible sweetheart settlement that Thornburgh came on as a crime-buster. Even then, it was only the companies, and no executives, being indicted.
Thornburgh's posturing in the Exxon case, as well as backing off the imposition of hard sentences after complaints from large corporations, is standard policy. Russell Mokhiber, editor of the Corporate Crime Reporter, a Washington newsletter, says the attorney general "always talks tough and sometimes acts tough but only when it comes to small companies and individuals. When it's the big boys -- Fortune 500 companies, the Business Round Table crowd -- he goes limp."
With the feds becoming fangless, leadership in prosecuting business world criminals for negligence, manslaughter and environmental violence is coming from state legislatures and district attorneys. Minnesota, where now-retired Judge Miles Lord once meted out sentences to boardroom deviants as if they were street thugs, has a new Environmental Crimes Investigation Team. In California, the Corporate Criminal Liability Act, which would include the threat of jail time for executives and not merely company fines that are seen as a business cost, has passed the Assembly and is before the Senate.
It is the national upsurge in criminal prosecutions that led corporate lawyers to persuade the Justice Department to call off its hounds. Some of America's richest corporations have committed crimes as destructive and as heinous as any psychopathic street criminal. Yet the hesitancy of an attorney general to punish upper-class brigands assures that maximum-security prisons will keep on housing the lower classes.