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Corp execs: fall guys for corporations

TO: Ohio Committee on Corporations, Law and Democracy / others interested
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Thanks, Greg Coleridge   More information:

Corporate rights advocates can't have it both ways. They want full constitutional protections for corpses when it's convenient and total absence of liability for any wrongdoing -- again when it's convenient.

This from below sums it up: 
"[L]ast week's report argues that if corporations are not people 
for purposes of criminal law, then they shouldn't be considered a 
person for the purposes of constitutional law."


Corporate Crime: Execs Taking Fall while Corporations Go Free.
By Niko Kyriakou,, 3 January 2006

       San Francisco - With help from the U.S. Justice Department and 
state prosecutors, corporations are getting away with serious crimes by 
using their executives as cannon fodder, according to a new report, 
which questions whether this new legal strategy is hindering or 
enabling corporate malfeasance.
       Corporate Crime Reporter released the report Wednesday 
documenting 34 special deals in which major U.S. companies have escaped 
lawsuits through so-called deferred prosecution and non-prosecution 
agreements. Under these deals, prosecutors agree not to file suits 
against corporations in exchange for the company's cooperation in 
convicting their own executives.
       Not since the loudly publicized Arthur Anderson meltdown in 2002 
has a corporation been convicted of a crime.
       Many corporate defense lawyers argue the shift represents a wider 
recognition that individuals-not corporations-think-up crimes, and 
thus, individuals should pay for them.
       A few years ago, most advocates of corporate social 
responsibility agreed that an end to the impunity of corporate 
executives was a good thing, but now some observers are beginning to 
question whether shifting the blame away from the company as a whole 
leads to meaningful institutional reform.
       "There has been a sea change in corporate criminal prosecution 
over the last couple of years," says Russell Mokhiber, editor of the 
Corporate Crime Reporter, a 19-year-old legal newsletter, and author of 
the report.
       Today corporate defense lawyers work with federal prosecutors to 
send executives to jail, the report explained. "In return, federal 
prosecutors are agreeing not to convict the corporation. This has 
undermined corporate criminal liability and may be doing serious damage 
to the federal campaign to deter corporate crime."
       The report, "Crime Without Conviction: The Rise of Deferred and 
Non Prosecution Agreements," includes many of the actual agreements 
bartered between lawyers in high-profile cases like those involving 
Adelphia, Computer Associates, KPMG, Merrill Lynch, Monsanto, Sears, 
Shell, and WorldCom/MCI.
       The study finds that prosecutors have entered into twice as many 
non-prosecution and deferred prosecution agreements with major American 
corporations in the last three years (23 agreements between 2003 and 
2005) than they had in the previous eleven years (11 agreements between 
1992 and 2002).
       Part of the reason companies are going unpunished is that 
prosecutors and the Justice Department have supported the use of 
       Prosecutors, for one, are usually happy to defer attacks onto 
executives because it gives them leverage in cases.
       "Corporations faced with serious wrongdoing by corporate 
executives must promptly accept full responsibility, discipline 
wrongdoers, institute serious institutional reform and fully cooperate 
with the government. If they do, they may escape institutional 
indictment. If they do not, they face the risk of indictment, 
conviction, and corporate death," Leonard Orland, a professor at the 
University of Connecticut's Law School said in the report.
       A felony conviction for accounting crime is viewed as a death 
penalty for some companies because it can lead to debarment of 
government contracts, says Robert Weissman, co-director of Essential 
Action, a non-profit founded by Ralph Nader that encourages citizen 
       But according to the report, prosecutors were effectively told by 
the Justice Department to opt for deferred and non-prosecution 
       This possibility of death to the company may have been what 
initially sparked Justice Department official Larry Thompson to issue a 
memo in 2003 recommending prosecutors to rely more heavily on such 
       The memo lays out nine qualifiers prosecutors should consider 
before deciding to criminally prosecute a corporation, including the 
nature and seriousness of the offense, the pervasiveness of wrongdoing 
within the corporation, the corporation's history of similar conduct, 
collateral consequences, and the corporation's willingness to 
       "The Justice Department came to believe that cooperation from 
corporations wasn't real cooperation. And so the Department, in the 
Thompson memo, demanded 'authentic' cooperation from corporations. And 
now it's getting it," says Ted Wells, a leading corporate and white 
collar crime defense attorney and a partner at Paul Weiss in New York.
       "Part of it is that there is a lot of fear after Arthur Anderson 
being put out of business that sanctions may be too harsh. It's widely 
understood that the industry accounting firms are so concentrated that 
in a sense the remaining few are too big to be prosecuted," says 
       "The country can't afford to restrict the number of large 
accounting firms, partially for competition, partially for distinct and 
overlapping functions," Weissman, who edits the Multinational Monitor, 
a monthly publication that reports on the activities of U.S. 
multinational corporations, told OneWorld.
       Corporate defense attorneys have also argued that corporations 
should not be held responsible for actions taken by individuals.
       In August 2002, Robert Bennett, a partner at Skadden Arps in 
Washington, D.C. and a leading white-collar criminal defense lawyer, 
put it this way: "When you indict a company, you are doing enormous 
damage to its stock. You are doing enormous damage to innocent people. 
When a company gets indicted it has a real impact on them. I really 
question the value of that."
       Joseph Savage, a criminal defense attorney at Goodwin Procter in 
Boston, told Corporate Crime Reporter that "there can be no crime of a 
corporation without an individual act."
       But last week's report argues that if corporations are not people 
for purposes of criminal law, then they shouldn't be considered a 
person for the purposes of constitutional law.
       Like people, corporations are currently granted First Amendment 
guarantees of political speech and commercial speech, Fourth Amendment 
safeguards against unreasonable searches, Fifth Amendment double 
jeopardy and liberty rights, and Sixth and Seventh Amendment rights to 
trial by jury.
       Without the ability to prosecute corporations, the report argues 
that it becomes difficult to change the corporate culture that may 
perpetuate bad behavior.
       "Without this tool, the public would have no adequate deterrent 
to corporate criminal conduct because the culture that condoned, or at 
least acquiesced in, that behavior would be beyond the criminal law's 
power to correct. Only by prosecuting the corporation itself can we 
ensure systemic reform," said then Deputy Attorney General Larry 
Thompson in a 2002 speech to the American Bar Association.
       The report argues that deferred prosecution and non-prosecution 
agreements were originally intended for minor drug cases and juvenile 
delinquency cases.
       The U.S. Attorney's manual is explicit in this regard, stating 
that a major objective of these agreements is to "save prosecutive and 
judicial resources for concentration on major cases."
       The solution to the dilemma should be to have lawsuits against 
both corporations and their executives, depending on the case, 
according to Weissman.
       "The lesson from the report is that there has to be both 
accountability for the execs and for the institution-that both are 
culpable. You need to have accountability punishment and deterrents 
applied to both."
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