Corporate Crime in America

On December 7, 1984, four days after the Union Carbide plant in Bhopal, India leaked cyanide gas into the air killing at least 2,500 persons Carbide chairman Warren M. Anderson was arrested by Indian authorities and charged with criminal negligence. Anderson and two local Carbide officials were picked up moments after arriving in Bhopal to inspect the scene of one of the worst chemical disasters in history.

"We are convinced," Arjun Singh, chief minister of the state of Madhya Pradesh told reporters, "that each of them has constructive and criminal liability for the events that have led to this great tragedy. This government cannot remain a helpless spectator to the tragedy and knows its duty toward thousands of innocent citizens whose lives have been so rudely and traumatically affected on the part of the management of Union Carbide."

Six hours after his arrest, Anderson was released on $2,000 bail, but only after what U.S. embassy officials admitted were delicate negotiations between the U.S. and Indian government. The Anderson arrest came on the heels of a string of criminal prosecutions of corporations and executives in the United States.

In October 1983, four officials of a Chicago, Illinois company that recovered silver from used photographic and x-ray film were indicted for murder in connection with the poisoning death of a worker. The company, Film Recovery Systems, Inc., was charged with involuntary manslaughter. In February 1983, Stephan Golab, a 61-year-old Polish immigrant collapsed and died near an open vat of cyanide at the now bankrupt Film Recovery plant. Richard M. Daley, Jr., the chief prosecutor in the case, described the plant as "a huge gas chamber."

The indictments charge that Film Recovery used drums of lethal chemicals with burned-off warning labels. The skull--and--crossbones poison symbols had been obscured. "Our investigation found that Film Recovery Systems primarily recruited undocumented workers, relying on the fact that they could not understand English and also were afraid that their illegal status would be exposed," prosecutor Daley charged. "Because of these circumstances, the firm and its officers believed that the employees would not complain about the lethal working conditions."

Prosecutors say the case, which has yet to come to trial, is the first in U.S. history charging a corporate executive with murder in a work-related incident.

In November 1983, a federal grand jury in Harrisburg, Pennsylvania handed down an eleven-count indictment charging Metropolitan Edison Co., the owner and operator of the ill-fated Three Mile Island nuclear power plant, with falsifying safety records in the months leading up to the March 1979 accident. The indictment charged Met Ed with five counts of violating provisions of its operating license, five counts of violating Nuclear Regulatory Commission regulations, and one count of violating the federal false statements statute.

Members of the Harrisburg community who had fought to keep the plant shut down eagerly anticipated a trial, which they hoped would reveal the true story of the Three Mile Island accident.

On February 29, 1984, however, in a surprise move, federal prosecutors announced a deal with Met Ed. Met Ed agreed to plead guilty to the charge of violating NRC regulations as well as pleading no-contest to two counts of license violations and four counts of violating NRC regulations. In return, prosecutors agreed not to bring additional charges against Met Ed or its subsidiaries in connection with the operation of the second Three Mile Island unit.

On July 12, 1984, the Justice Department charged pharmaceutical multinational SmithKline and four of its officers with fourteen counts of failing to notify the Food and Drug Administration of adverse side effects among users of Selacryn, a drug marketed to control high blood pressure. Of the 265,000 persons who used Selacryn during its eight month marketing life, 60 died and 513 suffered liver damage.

"The majority of these injuries were preventable had SmithKline not violated the drug laws," according to Dr. Sidney Wolfe of Public Citizen's Health Research Group, a public interest group based in Washington, D.C.

The Justice Department's charge listed an additional twenty counts of mislabelling through false and misleading literature packaged with the drug. The action was believed to be the first criminal proceeding brought against a company for failure to report adverse reactions. On December 13, 1984, SmithKline pleaded guilty to all 34 charges. Three SmithKline executives pleaded no contest to 14 counts of failing to report.

The U.S. prosecutions coupled with the Bhopal disaster and Anderson's subsequent arrest, have intensified debate over the role of criminal sanctions in curbing corporate lawlessness.

Congressman John Conyers (D-MI) has announced plans to introduce a bill that would subject a company manager who knowingly conceals a dangerous product or business practice to up to 10 years in prison, a $250,000 fine, or both.

Conyers' bill is modeled after a similar measure introduced in 1979 by Congressman George Miller (D-CA). With the Kepone, Love Canal, Pinto, and asbestos scandals fresh in the public mind, Miller argued for strong criminal penalties to forestall future catastrophes.

"You will find," Miller told his congressional colleagues, "that in more cases than you might imagine, the very highest corporate leaders in our nation have conspicuously decided to conceal a workplace hazard, or to market an unsafe product, because they valued profit over people. I think that kind of conduct is a crime." The Miller bill ran into an immediate buzzsaw of protest from the corporate community, led by the powerful Business Roundtable, and died a quick death.

The Conyers bill faces opposition not only from corporations, but also from legal experts concerned about the efficacy of sending corporate executives to jail. Some point out the difficulty of legally finding corporate executives directly responsible for an industrial accident. Others believe that if Conyers--style legislation ever becomes law, some corporations might try to insulate their top executives from information that could implicate them in criminal activity. In a time of growing awareness about the nature and extent of corporate crime, these concerns could get swept aside in a rush to impose strong "law and order" legislation to curb corporate excesses.

THE COST: DOLLARS AND DEATHS

Criminologists who specialize in corporate behavior believe that corporate crime and violence, both detected and undetected, prosecuted and not prosecuted, is on the whole more pervasive and damaging than crime and violence in the streets.

The electrical price-fixing conspiracy of the early 1960s, for example, robbed American consumers of more ($2 billion) than an entire year's worth of burglaries.

Each day, twenty Americans die from black lung contracted in coal mines. One hundred and thirty perish in automobile accidents. At a minimum, more than a fifth of the auto victims could be saved if the industry installed airbags - a technology available since the 1960s.

Sulphur compounds emitted from electric power plants are responsible for an estimated 13,000 deaths, 45 million aggravated heart and lung cases, and 6.8 million asthma attacks each year.

Over the next thirty to thirty-five years, workplace inhalation of asbestos fiber will be responsible for an estimated 2.5 million premature cancer deaths at a rate of 67,000 per year - more than 1,000 a week. Respiratory ailments due to brown lung (cotton dust) disease, afflict 84,000 cotton mill workers and have permanently disabled at least 35,000.

Much of this carnage is the direct result of corporate criminal activity, but because of the scarcity of research in the field, no one can be sure how much. Corporate criminologist Marshall Clinard places the economic cost of corporate crime in the billions of dollars, and supplies the following indicators:

• The Senate Judiciary Subcommittee on Antitrust and Monopoly estimates that faulty goods, monopolistic practices, and similar law violations annually cost consumers between $174 and $231 billion.

• A Department of Justice estimate puts the loss to taxpayers from reported and unreported corporate violations of federal regulations at $10 to $20 billion each year.

• During the 1970's Lockheed Corporation admitted to making illegal payments of more than $220 million primarily in concealed foreign payments.

CRIME AND PUNISHMENT

Efforts to control corporate crime through legal proceedings face a number of formidable obstacles. Most federal laws designed to control corporate behavior carry only civil sanctions. Some provide for either civil or criminal penalties, but few mandate strictly criminal sanctions. Moreover, corporate destruction of documents and other tactics of delay and obfuscation make it exceedingly difficult to meet the higher standard of proof required to win a criminal conviction.

As a result, the vast majority of federal cases brought against corporations seek civil, not criminal, penalties. The vast majority of these civil cases result in generally ineffective, slap-on-the-wrist settlements known as "consent decrees." The heavy reliance on civil sanctions has allowed corporations to sidestep the criminal justice system, thereby avoiding the stigma of the criminal process and criminal sentences.

Even when a corporation is successfully prosecuted for a crime, rarely are the sanctions effective. And the penalties imposed against street criminals are, in many instances, harsher than those imposed against corporate wrongdoers and criminals. No corporate executive went to jail, nor was any corporation criminally convicted for the marketing of Thalidomide, a drug that caused 8,000 "Thalidomide babies" to be born with severe birth defects during the early 1960s. By contrast, Wallace Richard Stewart of Kentucky was sentenced in July 1983 to ten years in prison for stealing a pizza.

When General Motors was convicted in 1949 of conspiracy to destroy the nation's mass transit systems, surely one of the most serious corporate crimes in U. S history, the company was fined $5,000 But in New York in 1983, a $50 theft drew a sentence of life imprisonment.

In 1978, Olin Corporation was convicted of false filings to conceal illegal shipments of arms to South Africa. The company was fined $40,000. No Olin executive went to jail. William Rummel. though, got life in prison under a Texas habitual offenders statute for stealing u total of $229.1 1 over a nine year period And Elizabeth McAllister, a peace activist, was sentenced to three years in jail for participating in an anti-nuclear demonstration at an upstate New York army base.

There is no corporate crime equi%alent of the Federal Bureau of Investigation's Uniform Crime Reporting System, a detailed, timely, centralized data base that reports street offenses. The lack of a centralized, comprehensive data source has hindered efforts to survey the nature and extent of the problem.

From the information that is available, however, some legislators are moving to reorm an inequitable system. "Simple justice" may prove the guiding standard. As an aide to Rep. Conyers recently put it, "There's a growing concensus that the only way to deal with these problems is to impose very serious criminal penalties and actually put these people behind bars.

Russell Mokhiber is an attorney specializing in corporate crime.