By Andrew A. Turner, J.D.
Senator Elizabeth Warren (D-Mass) has released a report, “Rigged Justice: How Weak Enforcement Lets Corporate Offenders Off Easy,” that lists examples in which the government caught big companies breaking the law and “let them off easy.” The report highlights 20 criminal and civil cases in 2015 in which “the federal government failed to require meaningful accountability from either large corporations or their executives involved in wrongdoing.” In most cases, the government just imposed fines without requiring an admission of guilt.
According to the report, these cases illustrate “problematic enforcement patterns” by federal agencies, from financial crimes to student loan rip-offs, from auto safety violations to environmental disasters. The report said that “putting a law on the books is only the first step. The second, and equally important, step is enforcing that law. A law that is not enforced—or weakly enforced—may as well not even be a law at all.”
Despite rhetoric and new policies, settlements and enforcement actions by the Department of Justice (DOJ) and other federal agencies continually fail to impose any serious threat of punishment on corporate offenders, according to the report. It argues that strong enforcement of corporate criminal laws serves to deter future criminal activity “by making would-be lawbreakers think twice before breaking the law and, sometimes, by helping victims recover from their injuries.” However, under the current approach to enforcement, the report states, corporate criminals routinely escape meaningful prosecution for their misconduct.
Financial crimes and offenses. As a past example, the report noted that banking regulatory agencies had the legal authority they needed to stop much of the fraudulent and high-risk conduct that led to the 2008 financial crisis, but the failure to act culminated in taxpayer bailouts.
One of the cases cited from the past year was “The Cartel”—Citigroup, JPMorgan Chase & Co, Barclays, UBS AG, and Royal Bank of Scotland”—a secret group which manipulated exchange rates for more than five years in a way that made the banks billions of dollars at the expense of clients and investors. Although the DOJ required admissions of guilt as part of the settlement, a reflection of the severity of the charges, not one single individual faced any criminal prosecution. Moreover, the Securities and Exchange Commission granted waivers to each bank so that the banks could avoid the collateral consequences that were supposed to accompany a guilty plea.
The report warns that the examples of feeble enforcement against corporate criminals in 2015, “raise the disturbing possibility that some giant corporations—and their executives—have decided that following the law is merely optional. For these companies, punishment for breaking the law is little more than a cost of doing business.”
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