The BBC World Business Report recently aired a slightly revised version of this commentary:
America treats its criminals harshly, and not just the worst offenders.
If you get caught selling small amounts of marijuana, or get caught stealing on a couple occasions, you are liable to get a significant jail term.
Once you get out, you may well find you have to pay thousands of dollars in court costs and other fees.
Get placed on probation, and you may have to pay the costs of your probation officer.
You may be deprived of your right to vote. You will find it very hard to get a job.
Everywhere you go — to coach a kids’ baseball team, for example — people ask: Have you been convicted of a crime? When you acknowledge your conviction, you are shunned.
Yes, America treats its criminals harshly … Well, not all criminals.
One class of criminals often is able to avoid conviction altogether — even when caught red handed: Corporate criminals.
Over the last five years, a remarkable trend has emerged: Government prosecutors choose not to prosecute corporate criminals, even when they have the goods on the corporate crooks.
Instead, they cut deals — known as non-prosecution or deferred prosecution agreements — where the corporation agrees to pay a fine and change its ways. If the company abides by the deal, the prosecutor doesn’t file charges, or drops charges already filed.
Prosecutors have cut almost two dozen such deals with big companies over the last five years, according to a recent report from Corporate Crime Reporter. Companies that commit securities crimes or other crimes of fraud now have every reason to expect they will escape conviction.
Perhaps the most notorious involved the accounting and consulting firm KPMG. KPMG promoted a tax scam that looted the U.S. Treasury of at least $2.5 billion. But instead of a prosecution, conviction and sentence, the firm agreed to pay a fine of $456 million and make some changes in its business practices.
A real person who cheated the government on such a scale would spend serious time in the slammer. But KPMG escaped without even the taint of a prosecution. In announcing the deal, the CEO sounded like a child caught with his hand in the cookie jar — but nothing more serious. “We regret the past tax practices,” said the CEO. We’ve “learned much from the experience.” Not exactly the tone of contrition prosecutors, or society, would demand from a small-time thief.
Prosecutors justify the no-prosecution approach on the grounds that innocent parties — a company’s shareholders, or employees, for example — may be hurt by criminal prosecution of corporations. But there are other innocent parties here — namely, the victims of corporate wrongdoing — and the refusal to prosecute corporate crooks means there will be more in the future.
For if there is any group for whom America’s harsh treatment of criminals makes sense, it is corporations. Because corporations coldly calculate risks and benefits, they are most likely to be responsive to hard-hitting penalties.
Instead, there’s a double standard in the United States that dishes out severe treatment for crime in the streets, but offers gentle handling of crime in the suites.