But you want something that will have an effect on the corporation, something that will have an effect on the new cogs in the machinery. It seems now that if you send all the execs to prison, the corporation dies - a la Enron. That’s not necessarily a good result, either for the economy or for justice.
Let’s say we want Pfizer to be punished, to feel the pain, but we don’t want to destroy it, but neither do we want the people inculcated in the corporate culture who are taking over the vacated slots to feel that the trouble is past, and they’re back to business as usual. How do we do that?
Seems to me that some sort of probation officer type of thing could be an answer.
Well, Enron was dead long before anyone went to jail. Biggest corporate bankruptcy ever, remember? (It didn’t hold the record very long, alas.)
One thing that happens in some cases is corporate receivership – the company is placed under the control of a regulatory body or court official of some kind, who can investigate wrongdoing and sell off assets or wind down operations in an orderly fashion. In the US this happens sometimes to financial institutions (e.g. FDIC receivership) and insurance companies in some states. I don’t think there’s any general power at the federal level for placing a corporation in receivership for criminal offenses. Maybe it would be a useful enforcement tool.
Not only that, but what about a change in the tax code forbidding the company in question from using the fines and civil settlements to reduce its earnings for tax purposes for that financial year?
So, say Pfizer has the following (hypothetical) bottom lines:
Income: $50 billion
Expenditure: $44 billion (includes $2 billion in fines and settlements related to the case)
Profit: $6 billion
Taxed on $6 billion
After a change in tax law:
Income: $50 billion
Expenditure: $44 billion (includes $2 billion in fines and settlements related to the case)
Profit: 6 billion
Taxed on 8 billion (fines and settlements not allowed to reduce declared profit)
Caveat: this rests on my meager understanding of corporate tax law. I am currently under the impression that fines like this can be used to reduce corporate profit for tax purposes. If this is not the case, then mea culpa.
In the case of Enron, I don’t feel any sympathy. However, it is possible to have a mix of “penalties”, where the company is fined, and the exec actually doing the “bad stuff” gets arrested. People do go to jail, for things such as falsifying test data or reports, juggling books, all sorts of shady things. And yet, the company goes on (without them). As far as being “too big to fail”, as has been said in the recent past, I don’t know. I don’t believe it myself, ans companies (even big ones) have failed in the past, and someone else simply moved in to fill the gap.
The problem with these kinds of hypothetical corporate sentences is that they can’t withstand constitutional scrutiny. Punishments have to be fair and apply roughly equally to persons convicted of the same crime. Many, many companies make little or no money from patented inventions. Consider if, say, Wal-Mart were convicted of some equally bad crime. Yanking a year off any patents they own would barely scratch them; 99% of their revenue is from retail sales.
The only way you can punish a corporation that can be applied equally to any hypothetical offender is to fine them. They can also be punished in domain-specific ways by the removal of government licenses – Arthur Andersen ceased to exist after its criminal conviction because felons can’t have CPA licenses, for example. A true case of a “corporate death penalty” if there ever was one. (Although AA was actually a professional partnership and not a corporation.)
But would Wal-mart ever be convicted of misrepresenting a product they patented? In other words, could a non-drug company even perform this particular crime?
But half of Pfizer’s $2 billion payout was in fines, and the other half in settlements. And these two articles (1, 2) suggest that there is enough ambiguity in the laws and the tax code that some companies get away with deducting some of this stuff.
For example, article #2 notes:
We need, IMO, a tax code that says that ANY payment for this sort of dishonest behavior, whether fine or settlement, is not deductible.
Pfizer is in the middle of breaking itself up. It has nothing in the pipeline and is desperately buying other companies to keep the short-term earnings look good. I honestly don’t think I’d ever want to take a job there these days.
It’s an interesting question to how much the corporate officers did know. I can tell you it’s remarkably easy to fail to hear about what’s going on, particulary given that the unethical drug marketing was apparently in the purview of the sales team and may not have been on the radar of anybody else.
That can’t possibly be correct – there are all sorts of laws on the books that have that sort of inconsistent impact. For example, it’s the law in most jurisidictions that if you own a building and let it degrade into a vermin-infested firetrap, the government can confiscate it on public-safety grounds. Clearly, this has a bigger impact on Joe Blow (who owns no other property and let it decay because he can’t afford the upkeep) than on John Doe (who just plain forgot how many homes he owns and let that one slip between the cracks). As far at the law is concerned, them’s the breaks.
I believe this demonstrates that we are all interdependent, just this happens to be so big that the results are immediately obvious, but anyone anyone hurts diminishes us all, this applies to crime and punishment, both criminal and government, both are a hit against humanity, both hurt us all.