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The Marketplace Report: Cutting Deals for Corporations

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FARAI CHIDEYA, host:

Back now with DAY TO DAY. I'm Farai Chideya.

This first decade of the millennium has witnessed a lot of high-profile corporate crime; think WorldCom, Arthur Andersen, Adelphia. But a new report out today concludes government prosecutors are going out of their way to avoid convictions of corporations. Joining us is John Dimsdale from "Marketplace's" Washington bureau.

John, what are the findings?

JOHN DIMSDALE reporting:

Well, the Corporate Crime Reporter, which is a weekly legal newsletter, looked at 34 criminal cases against corporations where the government agreed to let the company off the hook in exchange for cooperation from executives to go after the suspected criminals in the company. The newsletter concludes that over the past three or four years, there's a trend away from prosecutions of corporations as a whole in favor of plea agreements that send individuals to jail, but means no criminal record for the company itself.

CHIDEYA: Well, can a corporation be criminally liable? It seems like only people can commit crimes.

DIMSDALE: Well, in many ways, a corporation is treated by the legal system as a person. The reason is corporations are given individual rights, such as the right to free speech when they advertise or make product claims and the right against unreasonable searches and seizures. But by not enforcing liability against the entire company, Russell Mokhiber, the editor of the Corporate Crime Reporter here in Washington, says prosecutors are giving up a valuable crime-fighting tool.

Mr. RUSSELL MOKHIBER (Editor, Corporate Crime Reporter): One way to address the culture of corruption within a corporation is to stick it to the corporation with a conviction and let the sanction of adverse publicity work. And if we take that away, we really severely undermine the whole war against corporate crime.

CHIDEYA: So what kinds of deals are prosecutors reaching with corporations?

DIMSDALE: They're called deferred prosecution deals. The investigators will threaten to take the whole company to court, but they say, `If individual executives and board members cooperate and turn in the bad guys, we'll let the company as a whole avoid a criminal record.'

And there are some good arguments for shielding corporations. Fraud is usually committed only by a few individuals, and it's unfair to thousands of innocent employees to tar the entire company. But today's report finds that the deferred prosecution deals are also rife for their own type of corruption. They're not always reviewed by a judge, and editor Mokhiber says sometimes the prosecutor takes some license.

Mr. MOKHIBER: In the Bristol-Myers Squibb case, the US attorney said, `OK, deferred prosecution agreement. But I want you to fund a chair of business ethics at Seton Hall Law School,' which happens to be the law school where he graduated from.

DIMSDALE: That's Russell Mokhiber, editor of the Corporate Crime Reporter. He says in the last three years, there have been twice as many of these deferred prosecution deals than there were in the previous 11 years.

Coming up later today on "Marketplace," we're looking at why gas prices in Baghdad have shot up 500 percent just since the Iraqi elections.

CHIDEYA: John Dimsdale of public radio's daily business show "Marketplace." "Marketplace" is produced by American Public Media.

Thanks, John.

DIMSDALE: You're welcome. Transcript provided by NPR, Copyright NPR.

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