Walmart Pleads Guilty After a Decade of Bribes
nytimes.com
nytimes.com
In a company with a million employees, it’s guaranteed that hundreds if not thousands are doing things that are illegal. That’s just statistics applied to human nature. When the company is multi-national the problem is worse. Conduct like bribery or tax evasion that is condemned in the US is socially accepted in many other countries. When some store manager in Mexico bribes an inspector, the CEO of Wal-Mart has absolutely no idea that it happened. You can probably go several layers down before you find someone who knew.
The touchstone of criminal law is a guilty mind. When someone’s conduct is mharmful, we hold them liable for monetary damages. But only where there is personal moral culpability do we impose criminal sanctions. It’s the difference between wrongful death and murder. Ordinary negligence, and criminal negligence. This is an easy, bright line rule, and shouldn’t be compromised for anything.
If fines are low, companies will continue to behave poorly because it may be profitable to do so.
Also, the CEO may not go to jail, but the local people actually doing the bribery should.
And, speaking of 10 years, they had that long to spread that billion dollars over. They’ve probably made $300B in that time. $1B is a drop in the bucket.
They should have internal policing. When there are billions at stake, I don't understand why these kind of things aren't torn open by lawyers.
Versus for example “technology” which is amoral, because it is itself a tool unaware of the purpose for which it is even being used.
Of course companies are also not immortal, companies “die” all the time.
However, companies certainly can and do act unethically, particularly when there are economic incentives to do so.
A 0.1% of EBITDA fine to Walmart would be hundreds of millions of dollars. They would certainly care about that, and they likely have teams of people who work to ensure compliance for a whole host of regulations which could result in fines at that order of magnitude.
Humans operating within companies may experience moral impulses, but the company as an entity constantly urges its humans to act amorally in service of its profit-seeking.
This analogy doesn't hold for a lot of reasons, but the most obvious is that teachers don't get to choose their students. CEOs can (and should) fire employees that don't live up to their ethical responsibilities.
The behavior you want to penalize the company for is a cashier quietly doing something illegal that helps the company - and the only reason they would do that is if the company is expecting performance out of them that is difficult to achieve without illegal behavior.
A classic example of this is the Wells Fargo fake account scandal. Managers who set impossible quotas for their salespeople, such that the salespeople felt compelled to steal their customers identities, should be arrested for identity theft, yes.
That sounds a lot closer to what happened.
Try page 6...
Nice bits all over from walmarts own investigation:
"The final report that was sent to Walmart in December 2004 omitted references, contained in earlier versions, to MXN $45.6 million (approximately USD $4 million) paid to one of the gestores that Mexico Subsidiary Lawyer A alleged was corrupt."
Then there pieces where it talks about how the invoices are just lump sums rather than properly broken down and employees are claiming the the money is being given to the MX government officials..
"Investigator circulated a report concerning the Mexico Subsidiary allegations that stated that laws had been potentially violated, and recommended several additional investigative steps."
"Walmart did not follow the investigators’ proposed action plans. On or around February 7, 2006, Walmart tasked Mexico Subsidiary Lawyer B with leading the remainder of the investigation."
Of course none of this is going to be an email that says "hey this contractor is paying the government to speed up our permits, lets keep doing business with them."
No its all just looking the other way and doing the minimum to follow the letter of the law and using back channels to cut out the really incriminating parts.
Note that the SEC filing specifically quotes the term “facilitating.” “Facilitating” payments—paying officials to do a non-discretionary duty faster—is not illegal under the FCPA. Bribery under the FCPA only includes payments to induce officials to exercise discretion in your favor.
Holding the CEO liable for employee misdeeds is like holding a principal responsible for teachers getting into fights or having sex.
Or, whatever problems teachers cause
Holding the CEO liable for employee misdeeds is like holding a principal responsible for students getting into fights or having sex.
Just like the principal doesn’t choose the students, management often only hires their direct subordinates. The principal/CEO could expel students/employees directly, but it’s often met with opposition, more the further down the hierarchy they reach.
But, teachers are allowed to have sex.
The solution for corporations and officers to avoid legal consequences is to have standard compliance programs in effect. Failing to account for the inevitable misdeeds of agents is similar to the teacher who leaves his classroom for hours and is surprised to see his students engaged in misconduct.
Of course the whole thing puts companies in a bad place, the law itself is highly problematic. That is why whole thing just sounds like the usual US government trying to get its cut.
That's absolutely absurd. Would a teenaged cashier be absolved of all guilt for murdering a troublesome customer? But the CEO should be held accountable?
If I literally cannot break a law as long as I'm working for a company, then why don't bank robbers get a job at Walmart first and claim robbing banks was for the benefit of Walmart? How could you ever convict anyone if the excuse "my boss implied that this might possibly be beneficial" gets you off Scott free?
People are always responsible for their own actions. As an extreme example, the nazis were all "just following orders". Do you think they are guilty and should be held accountable for their actions, even though someone else asked them to do what they did?
This furthers the interests of the company?
> People are always responsible for their own actions.
Leaders also bear some responsibility for the actions of those within their purview. Why do CEOs get paid so much? Because they get credit (and blame) for the aggregate actions of everyone in the company.
Responsibility isn't zero sum. If the CEO orders a cashier to murder someone, they're an accomplice. If your boss knows you're robbing banks at work and says nothing, they're an accessory.
Let's flip the Nazi analogy around. The foot soldiers should certainly be held accountable for their actions. But — given that all he did was ask others to carry out his wishes — should Hitler?
> No employee is breaking laws in an effort to further the objectives of a company
That's am absolute statement that employees are not to be held accountable.
> Responsibility isn't zero sum.
I totally agree. Doing a bad thing is bad. Ordering someone to do something bad is bad. Absolving someone who did something bad to fulfill your own twisted worldview is also bad.
> No employee is breaking laws in an effort to further the objectives of a company in a vacuum.
In other words: "in a vacuum" (i.e. without any influence or incentives from the company), employees will not break the law for the benefit of the company (as opposed to their own benefit). It's describing their behavior, not absolving them of guilt.
If it is reasonable to think that the leadership should have known about it then sure they can be blamed as well but often that is not something that is reasonable to expect.
No, he can’t make them have less sex if they want to. Yes he also gets paid more if they do.
I do agree that there is a distinction between a company committing a crime because some individual is screwing things up against the policy of the company and a company committing a crime because it sets out to commit crimes. I don't agree that because a company has no brain that it cannot have a guilty mind. If it incentivizes thousands of its employees to do illegal things, including by putting them in situations where illegal behavior is usual and expecting the usual results, that's on the company.
etc etc etc. Unless the CEO knew or directed them to do so, he is one person with 24 hour days like all of us. And Walmart has thousands and thousands of top level managers to manage all aspects of his business.
"But even as employees frequently raised alarm, the company’s top leaders did little to prevent Walmart from being involved in bribery and corruption schemes."
Which means the "top leaders" knew of the problem, and choose to ignore it. It would be a different story if they put real effort into self policing and there was evidence they pushed the guilty contractors/etc but again:
"The plea agreement, which was technically related to the company’s improper record-keeping, ... Federal regulators said Walmart looked the other way as subsidiaries on three continents paid millions of dollars to middlemen who helped the company obtain permits and other government approvals from July 2000 to April 2011."
Which sounds more like a coverup to me.
As an individual citizen, if I intentionally failed to file my taxes properly, report crimes I knew of, or even fire a housekeeper or other low level employee I knew had been committing crimes that benefited me you can be sure I would be getting more than the equivalent of a parking fine.
That is why people are demanding someone be held responsible. It seems those that are reaping the rewards and knew of the crimes are simply being given a free pass.
The parts you quote are the NYT reporting the prosecutor’s allegations as fact. But the passage you quoted also explains everything you need to know about why nobody went to jail.
“The plea agreement, which was technically based on the company’s improper record keeping....”
Wait—so Wal-Mart did all these bad things (they must have, the NYT reported them as fact), but the plea agreement is “technically” based on “improper record keeping?”
If you actually read the facts section of the SEC submission linked from the article, it’s a real snooze fest. There were issues here and there, people were fired, several rounds of compliance programs were instituted, etc. But little to substantiate the prosecution narrative recounted as fact by the NYT. There is a reason Wal-Mart spent a billion dollars investigating this case but the government agreed to settle for less than $300 million—once prosecutors dug in, there wasn’t much of a story there.
I’ll also add:
> As an individual citizen, if I intentionally failed to file my taxes properly, report crimes I knew of, or even fire a housekeeper or other low level employee I knew had been committing crimes that benefited me you can be sure I would be getting more than the equivalent of a parking fine
The IRS’s response to people who intentionally don’t file tax returns—unless the conduct is really outrageous—almost always is to just tell them to file, and pay the deficiency with interest. Except in special circumstances, such as lawyers reporting on other lawyers, ordinary individuals don’t have an obligation to report crimes they’re aware of. Finally, unless it can be argued that you encouraged your housekeeper to commit crimes, or somehow facilitated them, I don’t think there would be anything illegal about not firing him either. Like, you probably can’t criminally prosecute someone for accepting gifts from someone they know is a drug dealer and purchased the gifts with ill-gotten money.
Both sides are happy, no one at walmart goes to jail, they pay some trivial fine, and the prosecutors get a raise and a bullet point on their resume. The public gets to see justice in action...
Likewise, it's not logically consistent to say " well, yeah it looks really bad but because a court can't prove it, I'm going to advocate they they are morally innocent. " Moral and legal aren't the same thing.
Correct, but you shouldn't go to jail for immoral behaviour.
> It's perfectly reasonable to see all the facts, many of which aren't permitted to be considered by a jury, and then say, "wow,these laws are messed up, they let the powerful people get away with crimes. We should change that and hold them accountable."
The IRS does this, and it's horrible, but the accountability comes in the form of an increased tax obligation and not jail time.
Going to jail for doing something that was legal, but has become illegal after the fact, isn't something that benefits anyone but the ruling class, and isn't something that I would advocate for.
Also, if Walmart wasn't in the wrong then why would they agree to a $330M settlement?
Walmart’s operating income was “just” $22M with a final net income of “just” $6.7B (in the ballpark of large tech company quarterly profits).
It’s still true that a $330M settlement is then just 5% of their annual profit (and thus looks like that’s how the number was chosen), but comparing to their $500B revenue isn’t directly meaningful (though it is for your Polish GDP, sort of!).
I think you missed the part where they settled.
> There is a reason Wal-Mart spent a billion dollars investigating this case but the government agreed to settle for less than $300 million—once prosecutors dug in, there wasn’t much of a story there.
Wouldn't that rather suggest that they feared they could be liable for much, much more than a billion, and they jumped at the chance to make it all go away for just a "paltry" $300 million?
Of course. What do we think Walmart level players are? Amateurs? Those kind of jobs never leave much paper trail or proof...
As the PM in one of the most corrupt governments in a small country used to say, to brush off allegations of bribery and other corruption against members of government, "Let he who has proof take it to the prosecutors"...
As in "yeah, good luck trying to prove what we did"...
(Only 2 decades later, when that party had declined, and their influence wasn't as strong, would several top officials, ex ministers etc, end up in jail for those things. Had it still be going strong, there would not be anything done...)
The result of policing kickbacks is a kickback?
Overhead cost
A friend of mine from Nepal said something along the lines of "bribes are just a lubricate to an intentionally slow and unorganized bureaucracy". Places like China, India, Vietnam, & Taiwan all have pretty well know backdoor policies of this.
Its a bit old but https://www.forbes.com/sites/richardlevick/2015/01/21/new-da... and https://www.nytimes.com/2019/06/14/business/china-ge-siemens... are both good read for this.
I've also known of UN project directors who had to convince governmental ministers that the UN's no bribe policy was not just a bargaining method.
Usually a leader's family member or a trusted person will create a consulting business and help you "navigate" local rules and obtain permits. As soon as money is exchanged a phone call is made and you're untouchable. You call it a bribe, they call it their money. Just like their salary, bribes are part of their compensation.
Say, Russia, can close any business, any time they want. It's impossible to comply with all their rules and regs (by design) and even if you could, no court will rule in your favor. So...enter middlemen.
Or put less fancifully, receiving stolen goods is a crime. Where's the line between 'too good to be true' and assuming willful ignorance in a corruption case?
There's also the case of the executives claiming responsibility for all of the success of the company. If the success is theirs, not ours, then the rest of us don't want them to cherry pick. The failure and corruption is theirs too. It's a package deal.
If you want to talk about fixing the quasi-feudalist state we are moving toward and start thinking of companies more like a team, working together, then I'd love to discuss shared responsibilities as part of that reconciliation.
Corporate structures are designed to obfuscate decisions by executives which lead to misdeeds by underlings. Carrie Tolstedt, who designed the Wells Fargo incentive systems which led to the creation of umpteen bogus accounts, ended her career tens of millions of dollars ahead, even after clawbacks.
Since it is impractical to hold individuals accountable because it is so difficult to see inside their minds, the collective corporate entity should be punished. Maleficent companies like Wells Fargo should be dismantled.
And what do you find disproportionately represented in the board room?
So then the CEO had to know this behavior was occurring. Did the CEO and management attempt to do anything about it or did they just maintain plausible deniability, knowing that not having a guilty mind was sufficient to prevent management from being liable?
If the NYT, an external organization, was able to uncover this behavior, why couldn't Walmart have had its own internal investigators tasked with maintaining ethical behavior?
We're not asking for the CEO's heads because they broke the strict letter of the law. We're saying that not breaking he law is the bare minimum the CEO should be responsible for.
Your defense of Walmart's CEO rings hollow for me because it's exactly the argument I'd expect from a lawyer.
Not every company behaves this way, even others with millions of employees. Feel free to call me naive and tell me the others just haven't been caught yet.
Why does this naturally follow?
A bartender can't claim they didn't know the cient they served from behind a screened conveyor belt was too drunk. Thus the law should either allow the same sort of bullshit loopholes for all (a real headache) or they should be held to the same standard.
Or, you know, like putting in jail the person directly responsible both for the deeds and the culture that promoted them...
After they took the money, they want to say "even thought i was paid to run the company, i had no idea this was going on?" not sure it works that way.
These are so trivial for a company like Walmart, and no-one is being individually held responsible. So it just looks like an official bit of us gov bribery, just like the fee's to avoid the security line at the airport. Cloak it in a bit of legal mumble jumbo and the us government gets its payout too.
Frankly though too, these foreign anti-bribery laws seem so antiquated. Every year I have to sit through training for them as part of the corporate hand waving (we can't be responsible we trained our employees). Yet really it pales in comparison to the damage actually being done, and in the cases where the officials will actually take bribes just puts us based companies at a disadvantage to other foreign companies willing to pay the bribes. Especially in cases where the companies from other countries will waltz in with "infrastructure improvements", "cheap loans" whatever...
From TFA:
"But even as employees frequently raised alarm, the company’s top leaders did little to prevent Walmart from being involved in bribery and corruption schemes."
Which is why no-one is going to jail, if it were just a low level employee you can bet they would be charged/fired and jailed. But since it went high in the mgmt chain, they likely can't just pin it on someone. The records likely got looked at, discussed off the record, and then got ignored without anyone's fingerprints on them.
Over the course of human history, bribery has been the norm. I would dare to say that today, by population, it is the norm. It has obvious dirtiness in the US and Western Europe. And the US and Western Europe have tried to force this view on other nations, which have created laws that they don't pursue or prosecute.
But criminalizing actions performed in another country based on morality in the US feels equally dirty. I don't mind the US handing evidence over to another sovereign nation for them to deal with, but prosecuting a crime on another countries soil over something that may not be seen as a crime in that country just doesn't make sense.
I know, Walmart is "evil". It's southern US, and hits rural towns, takes advantage of US laws at scale (which would have been taken advantage of in small chunks that added up to the near total), etc.
But, Amazon which is worse on the Walmart issues (low wages, overworked employees, stressed vendors, killing jobs) and then adds on to it traditional "antitrust" problems of vertical integration, and somehow gets a pass in our community because they're a tech company and "we" shop there. Can we get past the rhetoric and move on to the actual arguments?
Let's say a twenty-year-old Californian goes to Canada, meets a 16-year-old, and they have sex. This is (according to wikipedia, don't rely on me for legal advice!) illegal in California and legal in Canada.
Do you think someone should go to jail?
I'm not defending Amazon here, but Walmart has literally been criticized for all of the exact same things...
Furthermore, bribery abroad may undermine US interests and policies. It’s easy to see why companies would want to pay a bribe to build a store in Brazil (mentioned in the article). Compared to the other costs involved it’s probably pretty cheap and can really speed things up. But that million dollars (or whatever) feeds a system that seeks its own remuneration over serving it’s constituents. It’s not just someone else’s problem. It helps to paper over the enormous drag this rent seeking behavior has on everyone.
Furthermore, the law gives employees a basis to stand on to say no. Now I don’t know if there’s really much to that- I’ve never been propositioned for a bribe, but I imagine that being able to say I can’t, it’s illegal, would help me to say no.
Bribes and cheating are punished because "trust" is a very important thing a society. The disadvantages are plain as day in corruption-infested countries: unreliable and untrustworthy police, criminals getting away with almost anything, the government is openly working on enriching itself at the expense of the population, etc.
While it could be argued as "respectful of local customs/the fault of the host nation" being involved it taints the image of US as a trading partner as a whole and gives a reason for rational actor countries to refuse international businesses from the US for fear they will spread corruption because it worked for them before. By holding them all to the standard of "no bribes ever" it makes it clear that such practices tainting businesses are unacceptable.
If other states are worried about bribery (as opposed to liking it) then it gives them a reason to trust the extranationals - if they report bribery they won't get "Not illegal here" as a reaction but "It is a serious crime thanks for reporting it."
Essentially not doing so could harm the spread of US business which is not good for US economic power from which the rest of the nation's power stems.
People who don’t have experience with 3rd world countriss often think it’s a big deal bribing someone. But it’s not, it’s a simple fact of life. I don’t really see anything wrong with a company doing it either.
In fact, I kind of like paying bribes. Unlike in the US, I don’t really have to worry about doing anything illegal. I can have weed in the car, I can have out of date permits, I can really just do anything I please. I have money, so it’s all good.
Of course, it’s worse if you’re poor. But then again, in America being stopped by the police when you’re poor is probably worse.
Which country?
Obviously if everyone with money can do whatever they want, the trust in institutions plummets and more and more people start cheating, so one ends up with a society of cheaters who think it's normal to bribe.
In some places, you can be drunk, or even kill someone and the cops will let you go for $$. If they take you in, it's not too late, just the price increases, the prosecutor and judge want their cut. A lot of mafia people have sentences cut or charges thrown out.
However, America has the Foreign Corrupt Practices Act, which does mean this could be more complicated. We recognize that someone else jumping off a bridge does not justify our doing so. And though we still have problems at home, we do try to police them. When a corruption scandal breaks, politicians usually are forced out of office; compared to many other places, this is good.
> Regarding payments to foreign officials, the act draws a distinction between bribery and facilitation or "grease payments", which may be permissible under the FCPA, but may still violate local laws. The primary distinction is that grease payments or facilitation payments are made to an official to expedite his performance of the routine duties he is already bound to perform.
Why does the US fine US companies for illegal behavior outside the US? Is it just moral reasons? Or is there a diplomatic reason for it? Or a treaty that requires us to do so?
>In response to these high profile revelations, Congress enacted the FCPA to bring a halt to the bribery of foreign officials and to restore public confidence in the integrity of the American business system.
Stepping back and thinking about the bigger picture, the FCPA is an example of a law that enforces economically beneficial morality. One of the things that makes America a good place to live, and economically successful, is that it’s not a bribe-based society. Bribery is a tax on economically productive activity, and it’s good for the economy as a whole to stamp it out.
Yea it seems stupid now, but there was a time when America looked at the history of Europe and thought "that doesn't look like a good idea".
<sarcasm> It would be like the U.S. having nuclear weapons and then complaining about other countries trying to develop them. Or if the U.S. promoted democracy but then used the C.I.A in South America to overthrow democracies. </sarcasm>
The original 1977 law arose in response to investigations in the wake of the Watergate scandal and public outcry over corruption.
Beyond the public perceptions of corruption, there were significant foreign policy impacts. The US gov was actively working against communists in many countries, but those communists were sometimes being funded by bribes from US companies.
When the law was passed, the goal was to push other countries into implementing and enforcing similar laws to reduce any negative impact on US companies.
It’s very easy to prance around on a high horse and cast out moral judgements when you’ve never had to open offices internationally.
It sounds like no doubt some pockets were unapologetically made fat. It also sounds like they didn’t do a very good job of hiding it. I wonder if that’s because their then line of thinking was “paying to pay” is simply normalized in business.
As I think about where the boundary is drawn for bribery, it’s interesting to see “offering cars and computers to governments” is framed as bribery, while somehow what local municipalities are demanding from giant tech co’s (ie Mt View / Google) is not.
A paltry fine such as this is never going to prevent this behaviour. Determine as part of the investigation any revenue the company made from engaging in the behaviour and take it off them, in addition to the fine.
You can make the argument that 3.5% isn't high enough, but it's not nothing.
Your 3.5% uses 3 months of income as the denominator.
I haven't looked up Walmart's past income, but there are 40 quarters in 10 years, so it's possible they've been fined <0.1% of their income (3.5% / 40).
"How should one interpret [the case] then?" Recognize that Citizen's United is _not_ about corporate personhood, and actually read what the case was about. The number of times I've heard people making snarky remarks about Citizen's United without having read anything about the case is amazing.
In the US, corporate personhood is about:
(1) Corporations having equal protection under the law as persons (ie the 14th amendment applies to corporations).
(2) Coporations having the same rights as persons to draft and enforce contracts, making them "legal entities". This is related to (3).
(3) "Person" as a concept applies to associations of people rather than just individuals; associations of individuals includes corporations. See here: [1]
None of these things were decided in Citizen's United and further, it had no legal bearing on the case law surrounding these things.
Instead Citizen's United was about whether a particular law violated the 1st Amendment. Specifically the law prohibited corporations from releasing media 60 days before an election if it could impact the results of that election by reaching 50,000 or more people in the electorate. But the 1st Amendment makes no distinction between e.g. newspaper companies and other corporations, so the majority opinion was that this law and other laws that limit speech of associations of people infringe on the 1st Amendment.
From the opinion: "If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech."
If corporations are people, we should jail them. If corporations aren't people, why do they have legal rights independent of the individual, jailable people who constitute them?
Compare Walmart committing bribery to me attempting to bribe my way out of speeding ticket.
But that is how the ticket industry works...you get the ticket, hire a lawyer, the lawyer “negotiates” a deal to plead no contest in exchange for no points and a lower $ penalty or at your option take traffic school ( a local private company that no doubt “bribes” its way in to those chushy exclusive county government contracts) and the court will dismiss your ticket like it never happened.
Unlike Walmart which gets to stay a corporation in good standing. And it's executives who suffer no personal harm.
Walmart allegedly bribed foreign officials they didn’t try to bribe the “cops” for bringing the bribery charges. Although you can’t distinguish the legal difference, it doesn’t mean there isn’t one.
Executives do go to jail quite regularly for bribery and companies can and are judicially dissolved also.
For example I was in Las Vegas during the Shot Show when the FBI rolled right into the convention center and arrested executives/VPs of Smith and Wesson for bribing an undercover FBI agent, posing as a African delegate, for a large government contract.
Or how about the VW executives arrested (and convicted) for the emissions scandal?
Or the drug company Executives and CEO recently charged with conspiracy to distribute controlled substances and defraud the US?
We need to make fines meaningful, start holding C-level execs personally responsible in some cases, and bring back the only penalty that matters to an immortal and amoral legal entity: the death penalty, via revocation of the corporate charter. Only then will we see the behavior of corporations start to change.
Any investor should already treat them as disposable sources of revenue so crooked business actors would do the same. It would be like sentencing the gun to the death penalty and letting the robber go free. Instead pursue all those with actual power and liability who don't do the right thing and leave those who did alone as possible (it shouldn't stop enforcement) or reward them.
Otherwise they will be encouraged to "3S" (shoot, shovel, and shut up) their problems instead of cooperating or reporting.
Further, "personhood" means you can sue the corporation, it can hold property, etc. Lawyers usual call "corporate personhood" "legal entity."
Sure it does - if I am killed by a natural person due to negligence, the state can imprison the person who killed me. If I am killed by a corporation due to negligence, the state generally does not imprison any individual, because of the "corporate veil." If you get rid of the corporate veil, then that's totally fine with me. (It's just like, if human beings wish to organize for political action, they don't get any more votes that way - they still only vote as humans.)
> Further, "personhood" means you can sue the corporation, it can hold property, etc. Lawyers usual call "corporate personhood" "legal entity."
So, one of the common effects of prison is deprivation of the right to property - you don't get to access your house or the stuff in it while you're in prison. This is generally considered to be an important part of the deterrence. Why don't we do the same to corporations? Let's say that Walmart doesn't lose any of the property it owns, but for a period of a couple of years, it loses access to it.
Another side effect of jail is a loss or at least serious restriction on communications privileges with the outside world, which we can also equally well apply to corporations. Why don't we say that this applies to corporations too? While Walmart is imprisoned, no communications on behalf of the company can occur, except for access to its lawyer.
To meaningfully create a deterrent effect, there has to be a set of people who cannot avail themselves of the Corporate veil. That group of people would most reasonably be at a minimum the C-Suite, but frankly, I'm not sure you'd do anything but end up creating a practice whereby the "C-Suite" people end up becoming sacrificial, or are specifically structured into having some form of plausible deniability via isolation from information by underlings.
Corporations as a concept were extremely controversial, and rarely granted at first due to concerns of being able to absolve people of legal responsibility for actions undertaken under the flag of the Corp.
I think that a good middle ground would be that upon being judged against, a Corporation must for a period submit to serving a period in which their ability to operate is contingent upon the presence of State agents/regulators tasked with ensuring the previous behavior is remedied and no other problems exist. This includes all results of investigations into potentially illegal behavior becoming a matter of public record. This would have a satisfying parity with the practice of submitting to supervision by a parole officer.
There is some potential for abuse; but seeing as that system works just fine for petty crimes, I don't see why it wouldn't work for corporations.
There's also the bonus that it also in a way "punishes" shareholders by decreasing the opportunity for abnormal growth rates fostered by shady business practices.
Oh, one more thing.
Something may need to be done to prevent corporate engineering where assets are sold to other corporations, owned by a holding company, established for the purpose of buying out the sanctioned corporation's assets, poaching the employees, and effectively picking up where the last Corp left off, but cleaned of the government oversight. I'm thinking any liquidation or selling off of assets has to be handled through bankruptcy court.
You wouldn't necessarily want everyone staying, but I have the feeling no one would be comfortable with taking away the authority and mandate to clean up house from the Board of Directors, but I think the contents of their communique's w.r.t. the sanctioned corporation could become a (sealed for a time) matter of public record, with a State representative as a non-voting, or only tie-breaking vote on the Board
Anyway... My two cents.
This doesn't apply to imprisonment of humans, right? If I go to prison tomorrow, my employer is deprived of my labor, my skills, and my knowledge without due process and through no fault of their own. Sure, they don't have to pay me, but they're also not going to get back their investment in training me and the institutional knowledge I have of how stuff happens at my company. (I am at-will, as it happens, but I'm pretty sure this is not different if I had a fixed-term contract.)
If you make a deal with someone who goes to prison, and they can't execute on that deal, it's your own problem that you made a bad choice of deal partner. Sure, you can sue for breach of contract, but it won't actually get them to do the thing you were hoping they'd do anytime soon. Why is it different when the corporation is the person with whom you made that deal?
Corporations already have the rights of people, because when corporations do crimes, the corporation, and not the people who constitute the corporation, is held legally responsible. What we are objecting to is that corporations are exempt from forms of punishment that are applied to natural persons. Either figure out how to make the punishment apply to corporations, remove that form of punishment from consideration for natural persons, or ignore the corporation for legal purposes and punish the humans behind the abstraction layer. It's pretty straightforward.
(Or get rid of prison for natural persons, I'm on board with that.)
You can read the wikipedia page for "corporate personhood" if you want to learn more about the history of it and specific cases and rights afforded to corporations.
So, not new.
I think people overreact to hearing that corporations are (legal) "persons" when in fact they are not anything like natural persons (no body, no constitutional rights). As I understand it, directors and officers are the ones held personally liable in criminal matters, but corporations can still be liable for negligence and breach of contract etc. IANAL.
Sounds like it is different in the US. Does citizens united somehow make corporations more like people?
As per a former presidential candidate, they are, my friend.
https://www.nytimes.com/2011/08/12/us/politics/12romney.html
https://www.spiegel.de/international/business/suspicions-of-...
https://www.economist.com/business/2018/02/08/airbus-executi...
In cases involving lower valued assets, the owner is almost always punishable: his dog bites you, it's his fault. His contractor lays bad wiring that burns down your house, it's his fault. His kids misdeeds are often legally his fault. And even if he loans his car to someone who crashes into it's legally his fault.
But behind a corporate shield, nothing is ever the owners fault. The more value the company has, the less possibility any owner is to receive legally blame. Not that there's much possibility in the first place.
This remarkable and thoroughly ingrained inconsistency does consistently benefit a certain category of person.
A very practice and effective solution would be to seize some chunk of the shares/value based on the size of the crime and auction them off. The proceeds going to victims or the like and weakening or removing irresponsible investors in favor of someone else. But this option is simply unthinkable and instead there's endless debate on the CEO's culpability.
Are you saying that anyone who owns Wal-Mart stock should go to jail? That's who the owners of Wal-Mart are.
> A very practice and effective solution would be to seize some chunk of the shares/value based on the size of the crime and auction them off. The proceeds going to victims or the like and weakening or removing irresponsible investors in favor of someone else. But this option is simply unthinkable and instead there's endless debate on the CEO's culpability.
In the case of a loaned car, you are not liable for damages that the person you loaned the car to causes(perhaps you're confusing it with insurance liability?). I don't know about the contractor case.
How is your "practical and effective" solution any different from a fine? You fine the company $300 mil, or you seize $300 mil of shares and sell them.
Asset seizure targets the ones culpable rather than just transferring some or all of that burden. And regardless of the size of the penalty, there is no danger to third parties like employees, customers or other organizations along the supply chain.
If the above examples are inadequate, I will add civil asset forfeiture which is applied widely to crimes on the low end of the economic spectrum, even without convictions, but with great parsimony to crimes on the upper end even with conviction.
That sounds potentially very delicate, for a variety of reasons, and interesting.
Can anyone explain a reason why someone who isn't a cad might not agree with the FCPA (ie. for reasons that aren't "money good, ethics bad")? This isn't a dig at Trump. I just don't understand the law well enough to know how angry I should be.
This doesn’t seem to have happened much in practice though so I support the FCPA. Corruption is a big scourge in many countries and it is a really good thing American money is prohibited from exacerbating the issue.
Seems like it would be sensible for the US to push the rest of the world to adopt the same law. We're able to push other countries to adopt our war on drugs laws, why not war on corruption?
By analogy, imagine someone from outside the US making the argument that it's "just our culture" that makes it OK for a lobbyist to walk into a senator's office with a $20,000 check in hand ready to discuss policy. That's a situation almost nobody is happy with here - it's not a "cultural difference" but a difference in how power structures have been built up over time through a concerted effort by very small groups in a larger society.
Or maybe your wife is Secretary of State and OK's a Uranium deal right after you get paid hundreds of thousands of dollars to give a speech to an empty room.
Starting perhaps with US briber- cough cough - campaign financing practices.
If it was done by a foreign superpower which wouldn't be obvious massive hypocrites I would be very afraid for future diplomatic and trade impacts if I was in the US government - especially if reforming wasn't in "my department".
Is this "Brazilian way" legal in Brazil? If so, there is a decent chance that it is allowed under the FCPA.
Parent may argue that Brazilians themselves are thereby insensitive to the "Brazilian way" and should be educated by US corporations as to the social values they should hold.
And let's not pretend that there's no difference between the letter of the law and the cultural norm. Selective enforcement of laws that are out of sync with cultural norms couldn't be more common. There are places in the world where low level corruption is so common that tourists are recommended to carry some cash to pay off police or other grifters so that the tourist can avoid pretty awful consequences when they're totally innocent. Should the US fine those tourists? It doesn't make sense to me.
If say the Catholic Church's response to their sex abuse scandal was to turn over all evidence to the authorities and maybe make own judgements in parallel to defrock or excommunicate based upon the evidence they would be morally upstanding even if their judgement differed in some cases as "not enough evidence by our standard / not enough to be illegal but violates our scriptural standards".
Because they sheltered them for decades their moral authority is a joke and all priests being pedophiles is a dark comedy cliche.
Service to the customer
Respect for the individual
Strive for excellence
Act with integrity”
-Wal Mart’s horseshit values statement, the same as the value statement of every other corporation. Why does every company bother doing this again?
-- Veronica Palmer in TV series 'Better off Ted'