Arianna Huffington | Crime And (Very Little) Punishment
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Crime And (Very Little) Punishment
By Arianna Huffington
Thursday, 18 July, 2002
Send the bastards to jail! At least, so goes the refrain from America's
newest anti-corporate activists -- the Senate, the House, and the President.
Clearly, corporate crime is finally starting to register on pollsters' seismographs
because suddenly all of official Washington is high on corporate punishment --
drunk on the idea of tossing CEO scofflaws in the slammer. The Big House is
all the rage, with politicians on both sides of the aisle dancin' to the jailhouse
rock.
A day after President Bush took Wall Street to the woodshed and proposed
doubling the maximum prison term for mail fraud and wire fraud, the Senate did
him one better, voting 97-0 to adopt stiff new criminal penalties for securities
fraud, document shredding and the filing of false financial reports.
"Somebody needs to go to jail," Senate Majority Leader Tom Daschle
intoned ominously. "We're going to shackle them and take them to jail,"
growled House Majority Whip Tom DeLay, sounding like he couldn't wait to slap
on the handcuffs himself.
The new consensus along that other Axis of Evil, the one connecting
Washington and Wall Street, is that very publicly hauling a few corporate
crooks off to jail would be a very good thing for the market, for the economy --
and for our political leaders' reelection prospects.
Count me in with the law-and-order crowd. The question is, how many of
corporate America's new breed of robber barons will ever actually see the inside
of a jail cell? If the past is indeed prologue, the answer is very, very few.
In the last ten years, the Securities and Exchange Commission -- which,
despite being the government's top corporate watchdog, doesn't have the
authority to toss even the worst Wall Street cheaters in jail -- turned 609 of its
most offensive offenders over to the Justice Department for potential criminal
prosecution. Of those, only 187 ended up facing criminal charges. And of
those, only 87 went to jail. Eighty-seven. In 10 years. And most white-collar
criminals land in one of those ritzy country club prisons, where inmates play
tennis and make collect calls to their brokers all day.
So despite the PR value of pumping up maximum sentences for corporate
crimes, it's not going to make much of a dent in boardroom thievery since so
few of the perpetrators will ever face criminal prosecution. For a corrupt
corporate chieftain crunching the numbers, the odds will still justify the crime.
Doubling the penalties for those convicted of crimes that are so rarely
prosecuted is not serious reform.
And just why are most prosecutors so reluctant to take on these kinds of
cases, passing up more than half of the ones the SEC sends their way? Well,
for one thing, proving fraudulent intent is tricky business -- and in criminal
cases, it has to be proven beyond a reasonable doubt.
For another, with rare exceptions, most prosecutors just don't have either
the passion for making corporate criminals pay or the mindset that these kinds
of crimes are worth the hassle of pursuing them. Too busy busting prostitutes
in New Orleans, perhaps? Even New York Attorney General Eliot Spitzer, one
of the few who has shown a willingness to take on Wall Street's elite, allowed
Merrill Lynch to walk away with a fine but without having to admit guilt for
brazenly misleading investors -- even though Spitzer had the bankers dead to
rights.
Plus, prosecutors like to win. When they go after a corporate player, they
know they'll be locking horns with the best legal talent that billions can buy --
not running roughshod over some overworked public defender. It's a high-stakes
game that many aren't willing to play.
Compare this tip-toeing on eggshells with the ardor with which our criminal
justice system pursues even the lowest-level drug offenders. In 2000 alone,
646,042 people were arrested in America for simple possession of marijuana.
And while the Drug Enforcement Administration has a budget of $1.8 billion,
even with the extra $100 million Bush wants to toss its way, the SEC will have
to make do with $513 million.
The sentencing side of the criminal justice ledger exhibits the same
inequity: the average sentence for even the biggest white-collar crooks is less
than 36 months; nonviolent, first time federal drug offenders are sent away for
over 64 months. So much for letting the punishment fit the crime.
The bitter truth is that, unlike the majority of nonviolent drug cases,
corporate malfeasance is not a victimless crime. Not with tens of thousands of
laid-off workers, $630 billion lost from corporate pension plans, and more than
$4 trillion in shareholder assets wiped out in the scandal-fueled stock market
swoon.
So when it comes to rooting out corrupt corporate kingpins, will the
president's new "financial crimes SWAT team" have the stomach for the fight?
Can we expect to see undercover "narc-accountants" infiltrating what's left of
the Big Five accounting firms? Middle of the night no-knock raids on companies
that restate their earnings by billions of dollars? Confiscation of an executive's
entire assets simply on the suspicion of fraud? Will corporate cops get to
emulate their drug fighting counterparts and be allowed to keep a percentage of
the money they confiscate? I bet that would help change the reluctance to
target corporate corruption.
Here's the bottom line: our political leaders' tough talk notwithstanding, are
we really serious about declaring war on corporate crime? Or are we merely
going to toss Martha Stewart in jail and move on?
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