Monday, October 01, 2012

Criminal corporations: Prof argues 'corporate criminal liability is a question of corporate power'

The US Supreme Court's Citizens United ruling, famously echoed by GOP presidential candidate Mitt Romney, held that corporations are people (and thus possess free speech rights). But that hasn't stopped some in academic and corporate circles from maintaining that corporations should be exempt from criminal law. This author, for example, in 2009 compared criminal punishment of corporations to punishing animals or inanimate objects (likening it to a biblical practice archaically referred to as "deodand"). Others argue criminal law should focus on the individuals engaged in misconduct instead of punishing a "legal fiction." But the Corporate Crime Reporter alerts us to a rebuttal to such views in a story which opens:
The question of corporate criminal liability is a question of corporate power.

That’s according to Charles R.P. Pouncy, a professor of law at Florida International School of Law in Miami. Pouncy is author of, most recently, Reevaluating Corporate Criminal Responsibility: It’s All About Corporate Power (Stetson Law Review, 2012).
Pouncy tackles head on the increasingly popular idea that we should eliminate corporate criminal liability.
“The notion that corporations, and derivatively, capital, should be exempt from punishment under the criminal law — which expresses societal standards and expectations — is inconsistent with the expectations of most members of the communities that corporations inhabit,” he writes.

“This challenge against using the criminal law to control corporate behavior is a component of a larger struggle . . .to determine which forces will control the shape of future society,” he writes. “It is a struggle about which institutions will structure the nature of the world we live in.”

“Will human societies be controlled by the institutions that have structured their existence for the last few thousand years —  kinship, community, religion/philosophy, and social provisioning?” Pouncy asks. “Or will economic institutions, specifically the institutions of the corporation and capital, dominate society and subordinate its human members to the interests of its artificial citizens and their advocates?”

“The question of the corporation’s and capital’s accountability to the criminal law is one of the frontlines in determining whether the . . . principles organizing human societies are designed to serve the interest of corporations or of people. Therefore, this question is central to whether human power will be supplanted by the power of artificial entities.”
I recall a humorous sign from one of the Occupy Wall Street rallies that declared, "I'll believe corporations are people when Texas executes one."

In truth, though corporations theoretically may be held criminally liable, in practice that itself a legal fiction. When companies are caught engaging in bribery or money laundering, for example, they're inevitably allowed to squeeze out from under criminal charges via civil penalties and financial settlements under "deferred plea agreements." Rarely if ever are the companies themselves or corporate officials who made such decisions held criminally responsible for such behavior. If corporations are people, though, why shouldn't they be subject to criminal sanctions?

Prof. Pouncy contends that, "money alone does not satisfy society’s need to condemn the behaviors it finds damaging to its interests," arguing that "the prospect of having to endure moral condemnation" under criminal law supplies greater deterrent. For my part, I think a) that the idea that corporations are people is BS and b) symbolic condemnation matters much less to corporations than financial liability. I'd rather see individual corporate decision makers held criminally responsible, with corporations punished through regulatory sanctions and civil liability. But in the wake of Citizens United, the personhood of corporations, however absurd, now has been enshrined as the law of the land. And if corporations are people, it follows they can be criminals.


Anonymous said...

Well the finer points of this argument are semantics. The fact reamins we have no method to effectively regulate corporations. They launder money, hijack our banking system with impunity and greed unchecked. Ultimately the consumers and taxpayers get blindsided. It is one thing to eat at McDonalds everyday and die of a heart attack, you knew the risk. However corporate criminal activity, unexposed is morally wrong and costly. Without a windy discussion of finantial markets, suffice it to say our corporate/government control are worse than before the world was nearly brought to its knees in 2009. The moral compass is gone and there is disincentive to do the right thing.

ckikerintulia said...

I agree Scott, if corporations have the rights of citizens, they have the responsibilities of citizens. They should be legally responsible for criminal acts; while a corporation cannot be given a lethal injection, it could be legally dissolved by a criminal court. It would open up a plethora of what corporate misdeeds are misdemeanors and what are the various degrees of felonies.

I think the best solution, and perhaps not as unlikely at it might seem, would be a constitutional amendment overturning Citizens United.

Not very far off subject is the comparison of unions and corporations. Citizens United I think gave unions the same "free speech" rights that it gave corporations. Some want to restrict the power of unions to engage politically by requiring that their members give consent. What's good for the goose is good for the gander, so if unions have to get member consent, corporations should have to get shareholder consent.

I will try to jump through the hoops below and prove that I'm a person, not some artificial entity.

Arce said...

IT would be possible to create a legal death and benefit the populace thereby. Auction off the assets of the corporation, recoup the salaries, bonuses cna other payments to executives and board members for the period including and subsequent to the crime, and put the money into the government coffers. Could solve the national debt and deficit problem. If it had been done in 2009-2010, imagine were we could be today with the money in the federal till to support job creation efforts.

jdgalt said...

To my knowledge, the only time a corporation has ever been convicted of a crime in the US was Arthur Andersen (the accounting firm) in the Enron case -- and while the conviction was later overturned, it did amount to an irreversible "death sentence" since AA lost its licenses to practice accounting in all 50 states and DC as a direct result.

As for Citizens United: At least when corporations engage in political speech, they have to do it with their own earned money. Unions have the power to extort the money from their opponents and that is unacceptable in America.

ckikerintulia said...

A corporation has its own earned money? What about the shareholders? Should they not have a say in things?