Guest Column

Soft on Crime

by Russel Mokhiber

With the corporate crime lobby consolidating control over the law-making process in Washington, D.C. and around the country, it is important to ask fundamental questions about the damage inflicted by corporate crime and why society's leading liberal and conservative opinion shapers continue to run interference for the nation's most egregious wrongdoers.

 Controlling corporate crime is a critically important task for society to tackle, since corporations are its most powerful institutions. Corporate crime and violence, by any definition, is a serious problem in the United States. Exactly how serious a problem only the criminals and their lobbyists and lawyers know for sure. The Federal Bureau of Investigation (FBI) issues each year a "Crime in the United States" report that documents murder, robbery, assault, burglary and other street crimes. But the report ignores corporate and white-collar crimes such as pollution, procurement fraud, financial fraud, public corruption and occupational homicide. No annual "Corporate Crime in the United States" report is compiled.

There is a vigorous public debate on crime in the United States. A multi- million dollar crime bill was recently passed into law. Yet corporate crime and violence did not enter that debate, nor was it addressed in the law. Attorney General Janet Reno says violent crime is her priority. But she does not consider corporate crime violent crime. The corporate crime lobby and its myriad mouthpieces take advantage of this lack of scrutiny or hard data to portray perpetrators of crime predominantly as minorities and the poor, a view often parroted in the media.

 "Crime is generally an occupation of the poor," wrote Washington Post columnist Charles Krauthammer on December 23, 1994. This must have come as a surprise to white-collar and corporate crime lawyers. They know better than most that poverty has little to do with the crime that inflicts the most damage on society. White-collar fraud, generally committed by intelligent people of means - such as doctors, lawyers, accountants and businesspeople - alone costs $200 billion a year. The savings and loan scandal that former Attorney General Dick Thornburgh called "the biggest white-collar swindle in history," cost the nation between $300 billion and $500 billion. In contrast, the FBI estimates that street robbery and burglary combined cost $4.3 billion a year.

 Krauthammer also believes that there is a "rarity" of violent crime among the rich. If true, it is only because much of the violence of the wealthy and powerful either has not been criminalized or, if criminalized, is rarely prosecuted. The federal auto safety law, for example, carries no criminal sanctions. For years, auto safety advocates have sought to add criminal sanctions to the law, but the auto lobby has blocked their passage.

 There is certainly no "rarity' of violence among wealthy and powerful corporations. The handful of the world's corporate criminologists who have studied this issue agree that corporate violence kills and injures far more people than all street violence combined.

 For example, while the FBI pegs the murder rate in the United States at about 24,000 a year, the National Institute of Occupational Safety and Health estimates that occupational diseases alone kill 50,000 U.S. workers a year. In addition, 10,000 U.S. workers die on the job every year.

As a rule, these cases are not criminally prosecuted. In a recent exception, Los Angeles district attorneys charged Chicago-based salt maker Morton International in May 1995 with involuntary manslaughter in connection with the death of a worker, Jorge Torres. Torres, 25, a plant employee, died on May 9, 1994, while cleaning a large salt bin. L.A. District Attorney officials say Torres was crushed and suffocated in a cave-in during the cleaning procedures. The bin held 50 to 60 tons of salt.

Hundreds of thousands have died from asbestos-induced disease, black lung disease (which afflicts coal miners), brown lung disease (afflicting textile workers), auto defects and hazardous pharmaceuticals. The Dalkon Shield IUD injured thousands of women who used it. In 1984, 2,000 to 5,000 people were killed and 200,000 were injured - 30,000 to 40,000 of them seriously - after a Union Carbide affiliate's factory in Bhopal, India belched a deadly gas over the town.

 Krauthammer argues that people fear street crime more than they fear white-collar crime. One reason for this might be that people are constantly barraged with news about street crime. When was the last time the myriad television crime shows ran a story on corporate crime and violence? Blanket O.J. Simpson-trial-style television coverage of tobacco-induced disease, which claims the lives of more than 1,000 U.S. citizens every day, would justifiably increase parents' fear of the tobacco companies' efforts to induce children to begin smoking. And blanket television coverage of industrial pollution would justifiably increase people's fear of corporate-induced cancer.

 "Who, after all, inspires more fear?" Krauthammer asks. "The guy ahead of you, the one you are trying to catch up with? Or the guy behind you, the one who wants what's yours?" To me, this question translates as follows: "Who inspires more fear? The industrial corporations that dominate and pollute cities like Niagara Falls, New York, where I was born and grew up as a young child? Or the street criminals of Washington, D.C., where I have lived for the past 20 years?" The answer: the industrial corporations that dominate and pollute cities like Niagara Falls.

I have lived in Washington, D.C. for 20 years without being subjected to a street crime. The industrial corporations back home in Niagara Falls, on the other hand, have taken a toll. After my father died at a relatively young 52, my mother decided to uproot her young family and leave the city, in no small part because of the industrial violence inflicted on the city's residents by polluting corporations. While we were in Niagara Falls, two of my first cousins, who were brother and sister, died at the age of five and six from leukemia. Since we left, one cousin died from Hodgkin's disease at the age of 31. Another cousin died from a rare form of brain cancer at the age of 35.

I know that it is difficult to prove that corporate violence killed members of my family. Maybe it's a bad gene pool. On the other hand, I also know from reading the work of public health physicians such as Philip Landrigan, chair of the Department of Community Medicine at the Mount Sinai School of Medicine in New York, that toxic chemicals in the environment are important, widespread, proven causes of human disease. "Each year, preventable exposure to chemical toxins sicken and kill thousands of persons of all ages in the United States and around the world," according to Dr. Landrigan.

 Cancer is on the increase in the United States. Breast cancer kills 50,000 women in the United States every year. Bella Abzug and Greenpeace recently released a study linking toxic pollution to breast cancer. The report found that women with the highest concentrations of chlorine-based pesticides and other chemicals in their blood and fat have been found to have breast cancer risks four to 10 times higher than women with lower concentrations. A bill was recently introduced in Congress to phase out chlorine use in the pulp- and paper-making industries in five years. But the bill has little chance in the Corporate Congress.

 Leaders of the Congress openly defend the corporate criminals to which they are firmly attached. Earlier this year, Speaker of the House of Representatives Newt Gingrich, R-Georgia, bristled visibly when he was asked about his association with Southwire Company and why he had not severed his ties to the Richards family which controls the company and which has dumped more than $100,000 into Gingrich's various campaigns and projects.

 The company had been convicted of environmental crimes in South Carolina. In 1992, the company pled guilty to a "knowing failure to report the distribution of hazardous waste" from filters that extract lead and cadmium from copper smelter emissions. This toxic waste was mixed with fertilizer and illegally sold as "fertilizer" to unsuspecting farmers in Bangladesh, who spread it on their crops by hand. "I hardly think that having been convicted of a violation turns one into a criminal company," Gingrich said.

No Law, No Crime

Corporate wrongdoers sometimes avoid criminal prosecution, and the resulting adverse publicity, by successfully working to defeat or weaken legislation that would criminalize their behavior.

Every major federal effort to clamp down on corporate wrongdoing - be it pollution, price-fixing, bribing public officials, occupational death and disease, financial fraud or consumer product hazards - has been fought tooth and nail by corporate wrongdoers seeking to limit their liability.

Until recently, corporations would fight these battles through trade groups such as the Beer Institute, the National Coal Association, the Chamber of Commerce and the American Petroleum Institute. At least then, citizens would know who they were dealing with. Increasingly, corporations are setting up front groups - groups that sound like public interest groups but are established to defend business interests. Examples of such groups include the National Wetlands Coalition, a group supported by oil companies and real estate developers seeking to defeat wetlands protection legislation, and the Coalition for Vehicle Choice, a group funded by auto companies to combat fuel-economy legislation.

Criminal law teaches right from wrong

For centuries, street crimes such as murder, robbery and burglary have been considered "real crimes." Legal scholars have argued that criminal law would be devalued if it were used to penalize behavior not historically thought of as criminal in nature. But the public also learns what is immoral or shameful from what is branded as criminal. It is a legitimate social function to define socially intolerable conduct and teach the difference between right and wrong by bringing criminal cases against corporations and their executives for egregious conduct that injures, kills and steals.

Criminal sanctions are currently inadequate in deterring corporate wrongdoing. The first comprehensive study of antitrust criminal penalties published in 1994 found that the average fine imposed on antitrust criminal price-fixing cases from 1955 to 1993 amounted to only a minuscule percentage of the optimal penalty. The authors said that optimal deterrence was achieved when the expected costs of the antitrust offense to the potential offender equals the external costs of the offense to society.

 The authors looked at 250 price-fixing cases and found that the average fine amounted to four-one hundredths of one percent of the optimal penalty. They concluded that "there is very little deterrence resulting from these criminal prosecutions."


Three Strikes double standard

Three Strikes and You're Out" is the get-tough-on-street-crime philosophy that is sweeping the United States. But it is not being applied to corporate crooks. Though corporations steal millions of dollars, they are rarely convicted of criminal theft. Instead, they are often caught by company whistleblowers and charged by federal or state officials under the civil law.

 In 1994, a group of the nation's largest defense contractors worked the halls of Congress in an effort to weaken the nation's toughest anti- white-collar crime law, the federal False Claims Act. A Washington, D.C.-based public interest group, The Project on Government Oversight, studied the histories of these companies and found that they had been engaged in adjudicated fraudulent activities, some of them criminal, many of them having been convicted three or more times. The study found that since 1990, 20 of the largest defense contractors, those same companies who wanted to weaken the False Claims Act, paid the government over $500 million in penalties and settlements for corporate wrongdoing.

 The study found that General Electric engaged in fraudulent activities 16 times since 1990. Under the criteria of "Three Strikes and You're Out," GE should be disqualified from bidding on government contracts.

 A three strikes and you're out rule for corporations engaged in wrongdoing would also disqualify Boeing(4), Grumman(5), Honeywell (3), Hughes Aircraft (9), Martin Marietta (5), McDonnell Douglas (4), Northrop (4), Raytheon (4), Rockwell (4), Teledyne (5), Texas Instruments (3) and United Technologies (3).

Shame and the Good Society

Much of the path-breaking scholarship on legal intervention and corporate responsibility has been conducted by Australian corporate criminologists John Braithwaite and Brent Fisse. Braithwaite argues that the fundamental problem in societies with rampant white collar crime is the "absence of effective processes of societal shaming."

 "If we are serious about controlling corporate crime, the first priority should be to create a culture in which corporate crime is not tolerated," Braithwaite and Brent Fisse argue in their classic study, The Impact of Publicity on Corporate Offenders. "The informal processes of shaming unwanted conduct and praising exemplary behavior need to be emphasized."

The first step in shaming corporate criminals is to identify them. That means opinion leaders like Krauthammer will have to turn off the O.J. trial, readjust their moral compasses, and come to grips with the crimes of the powerful institutions that control society.