The Great Contradiction in Criminal Justice: Why Corporate Executives Should, But Rarely Do, Go to Jail

Criminal prosecutions serve three purposes: punishing the bad actor, deterring future crime, and expressing social values. As the great legal historian Lawrence M. Friedman wrote: “[C]riminal justice tells us where … the line lies between good and bad. … [T]he history of criminal justice is not only the history of the forms of rewards and punishment; it is also a story about the dominant morality, and hence a history of power.”

Viewed from this perspective, today’s criminal justice system is a sad commentary on the values our society claims to hold dear. America’s 5,000 prisons hold about 2.3 million inmates, more than in any other country that records such statistics, including Russia. An additional 4.1 million people live under the supervision of correctional institutions, primarily on probation, for a total of 6.4 million or one in 34 Americans. African Americans are eight times more likely to be incarcerated than whites. A young black man has a 32 percent chance of going to prison; his white counterpart has a six percent chance. Prisons cost the nation about $60 billion annually and are heavily privatized, spawning yet another corporate lobby with a vested interest in preserving a destructive status quo.

Conservatives have demanded zero tolerance for minor street crimes. These same interest groups also demand deregulation of heavy industry and banks. As this juxtaposition of non-coincidental positions indicates, the dearth of white collar criminal prosecutions is as intentional as the harsh racial discrimination that pervades the status quo. Apparently, conservatives believe that government has an essential role to play in incarcerating its most vulnerable citizens but has no obligation to protect us from the worst threats of industrialization.

Why do prosecutors duck opportunities to indict corporations and their executives for violations that cost lives, cause grievous injuries, and threaten environmental viability? Of course, federal and state laws extend to white collar crimes. Individuals face prison and fines, while government settlements with corporations can exact very large fines and agreements to cease the offensive conduct. In too many cases, corporate managers escape scrutiny and corporations pay modest fines that are an expected cost of doing business. Criminal cases involving pollution had their heyday during the period from 1987 to 2002 but have since slowed to a trickle. Prosecutors at both the federal and state level have never paid sustained attention to crimes involving workplace hazards and the sale of dangerous products, especially food and drugs, leaving erratic civil enforcement as the only deterrent.

Some speculate the prosecutors avoid white collar cases because defendants look like them, and they are fearful that judges and juries will cut well-heeled managers substantial slack. White collar crimes often involve complex regulatory requirements and a tangled web of questionable transactions. Prosecutors are nervous about dumbing these acts and omissions down for the jury and may lack the resources to fight the elite law firms that defend such actions. For example, one of the most notable health and safety cases brought against a corporation in America was the prosecution of Ford Motor Company for reckless homicide by Michael Consentino, the county attorney in Elkhart, Indiana, in 1980. He lost, both because the judge stacked the deck against him and because he had $20,000 to pay all costs, including expert fees, and Ford spent $2 million.

In addition to issues of political will and resources, two additional, intangible factors make street crime prosecutions a refuge and white collar cases forbidden fruit. Prosecutors hate to lose. Although this attitude has never been documented empirically, anyone who has followed the exceedingly rare prosecutions of Wall Street executives in the wake of the 2008 crash sees explicit anecdotal evidence of this phenomenon in the strutting prosecutors do when they win.

The second intangible is the hyper-conservative interpretations of the criminal law pushed by most members of the legal academy. The vast majority of commentators are critical of white collar prosecutions, warning that expansion of the definition of mens rea (a guilty mind) to encompass corporate executives would be unfair and is unsupported by precedent. Their warnings have been so effective that prosecutors almost never push this envelope, instead devolving to the position that a manager has to be standing at the scene of the accident to warrant indictment. Senior executives make decisions about cost-cutting, determine whether the company emphasizes process safety, exert pressure to do work very quickly, and structure bonus programs to reward cutting corners, all of which are primary causes of the operational fiascos that kill and maim people and destroy the environment. But because they are physically removed from the actual scene of the crime (the oil rig during the blowout, the mine when the methane ignited, the chemical processing unit as it overfilled), they are not deemed culpable.

The dearth of white collar prosecutions is also perpetuated by the re-emergence of a shrill campaign against regulation in any form. Spearheaded by regulated industries and conservatives, and tolerated by centrists, few days go by when a member of Congress fails to finger excessive regulation as the root cause of America’s most profound economic problems. Requirements that protect public health, worker and consumer safety, and the environment are not the sole target of these relentless attacks. Efforts to implement the Dodd-Frank Act’s tighter controls on the financial services industry, as well as health care reform, inspire resistance that is at least as passionate.

This deregulatory narrative has overshadowed a series of deeply troubling incidents that have imposed cumulative death and injury tolls in the thousands. These events are the inevitable result of “hollow government”—a term used here to encompass outmoded and weak legal authority, funding shortfalls that prevent the effective implementation of regulatory requirements, and the relentless bashing of the civil service. From the blowout of the Deepwater Horizon in the Gulf of Mexico – death toll eleven – to a Massachusetts pharmacy’s shipment of tainted steroid injections that caused fungal meningitis – death toll 64 – the rote response is to excoriate federal officials for failing to prevent the incident without considering why they are having such difficulties.

In the aftermath of the Deepwater Horizon blowout, for example, an estimated 205 million gallons of crude oil coursed into the Gulf over a period of two and a half months as BP engineers tried frantically to plug the leak. Yet Congress never upgraded the legal authority of Department of Interior regulators in the Gulf and appropriations for enhanced enforcement remain pitifully inadequate. At last reporting, less than 100 inspectors police 3,500 deepwater drilling rigs and platforms.

In my upcoming book, Why Not Jail: Industrial Catastrophes, Corporate Malfeasance, and Government Inaction, to be published by Cambridge University Press in December 2014, I argue that criminal prosecution should be considered by federal and state authorities whenever industrial activities cause grave harm to public health, consumer or worker safety, or the environment. Existing law, including the judicial “responsible corporate officer” doctrine, provides ample authority to support such indictments. Criminal prosecutions should target the highest level of official against whom adequate evidence can be developed, avoiding cases against line supervisors who acted or failed to act because they feared reprisal. Once executives and their corporations are charged criminally, settlements should require defendants to acknowledge their crimes and, where the corporation is the defendant, take every feasible step toward establishing enduring safety protocols that pervade their operations top-to-bottom and side-to-side.

Rena Steinzor is a Professor at University of Maryland Carey Law School and is the President of the Center for Progressive Reform (www.progressivereform.org).