USA TODAY International Edition
Justice gets tough, finally, on alleged corporate criminals
When a corporation is accused of a crime, it seems obvious that some person or persons at the company committed it. But for years, corporations have managed to defy this logic: After all manner of fraud, market manipulation and negligence, corporations often paid big fines to the government while culpable executives walked off unscathed.
Now, belatedly, the times are a changin’, at least judging by a pair of Justice Department actions last week:
Three former executives at Japanese air bag maker Takata were indicted on charges of fabricating test results to hide an air bag defect ultimately linked to more than 180 injuries and at least 11 deaths in the United States alone. The company knew as early as 2000 that air bag inflators, made with a volatile and cheaper compound, could rupture. But even as people started to die, Takata manipulated data, sold tens of millions of the faulty air bags to U. S. automakers and kept its deadly secret.
Six executives at German automaker Volkswagen also faced indictment in connection with the company’s diesel emissions manipulations. Volkswagen installed devices in supposedly “clean- diesel” cars sold to U. S. consumers — devices that allowed cars to pass government emissions tests while spewing pollution on the road.
Both companies settled corporate criminal charges and agreed to pay enormous fines in addition to penalties that went to the government for violating regulations. But fines come out of the pockets of shareholders, who are primarily innocent bystanders, and provide less deterrence than the prospect of prison time for employees who break the law.
Over the past decade, the Justice Department has taken heat, justifiably in some cases, when it failed to hold executives responsible for company actions — as if companies ran on cruise control, crimes were immaculately conceived, and top executives were too big to jail.
In a case that defies logic, not a single individual was charged when General Motors concealed a faulty ignition switch that allowed cars to suddenly stall or prevented air bags from deploying. Cars crashed, GM lawyers secretly settled complaints with victims’ families, and more than 120 people were killed. All the while, GM hid the defect from regulators.
Perhaps the Justice Department is finally moving in the right direction. In 2015, the department issued a new policy to make indictments of individual executives a higher priority. If a company wants credit for cooperation, Deputy Attorney General Sally Yates announced, “it must identify all individuals involved in the wrongdoing, regardless of their position, status or seniority … and provide all relevant facts of their misconduct.” Yates vowed: “We’re not going to let corporations plead ignorance.”
It is welcome to see this gettough policy bearing fruit, but the indictments come awfully late in the eight- year administration. The Trump administration will have to press these prosecutions forward, extradite defendants from foreign countries, and win the cases in court.
Such prosecutions are seldom easy, but for the sake of the public they are worth pursuing, as is a policy to hold real people accountable for corporate crimes.