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Robert Reich

BP oil spill settlement: why BP is not a criminal

The Justice Department’s criminal settlement with BP gives their top executives a free pass — allowing the public to believe justice has been done, Reich writes.

By Guest blogger / November 16, 2012

In this February 2011 file photo, BP PLC's CEO Bob Dudley pauses during a results media conference at their headquarters in London. When it comes to criminality, corporate executives are the ones who should be punished, Reich writes.

Alastair Grant/AP

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Justice Department just entered into the largest criminal settlement in U.S. history with the giant oil company BP. BP plead guilty to 14 criminal counts, including manslaughter, and agreed to pay $4 billion over the next five years.

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Robert is chancellor’s professor of public policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Clinton. Time Magazine named him one of the 10 most effective cabinet secretaries of the last century. He has written 13 books, including “The Work of Nations,” his latest best-seller “Aftershock: The Next Economy and America’s Future," and a new e-book, “Beyond Outrage.” His new movie, "Inequality for All," is available on Netflix. He is also a founding editor of the American Prospect magazine and chairman of Common Cause.

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This is loony.

Mind you, I’m appalled by the carelessness and indifference of the BP executives responsible for the disaster in the Gulf of Mexico that killed eleven people on April 20, 2010, and unleashed the worst oil spill in American history.

But it defies logic to make BP itself the criminal. Corporations aren’t people. They can’t know right from wrong. They’re incapable of criminal intent. They have no brains. They’re legal fictions — pieces of paper filed away in a vault in some bank. 

Holding corporations criminally liable reinforces the same fallacy that gave us Citizen’s United v. the Federal Election Commission, in which five justices decided corporations are people under the First Amendment and therefore can spend unlimited amounts on an election. Even if 49 percent of their shareholders are foreign citizens, corporations now have a constitutional right to affect the outcome of American elections.

We don’t know exactly how much corporate money was spent on the last election but it’s a fair guess that were it not for Citizen’s United, the House of Representatives might now be under control of Democrats, and Senate Democrats might have a filibuster-proof majority.

The perfidious notion that corporations are people can lead to even more bizarre results. If corporations are people and they’re headquartered in the United States, then presumably corporations are citizens. That means they have a right to vote as well.

I’ll believe corporations are people when Texas executes one.

Can we please get a grip? The only sentient beings in a corporation are the people who run them or work for them. When it comes to criminality, they’re the ones who should be punished.

Punishing corporations as a whole almost always ends up harming innocent people – especially employees who lose their jobs because the corporation has to trim costs, and retirees whose savings shrink because their shares in the corporation lose value.

Remember the accounting firm Arthur Andersen, convicted in 2002 of obstruction of justice when certain partners destroyed records of the auditing work they did for Enron as the energy giant was imploding? After the firm was convicted, its clients abandoned it and the firm went under. The vast majority of its employees had nothing to do with Enron but lost their jobs anyway. Yet the real perpetrators came out fine. Anderson’s CEO moved to a lucrative job in a private-equity firm, and other senior partners formed a new accounting firm.

Likewise, the people responsible for BP’s deaths and oil spill weren’t BP’s rank-and-file employees or its shareholders. They were the executives who turned a blind eye to safety while in pursuit of their own rising stock options, and who conspired with oil-services giant Halliburton to cut corners on deep water drilling when they knew damn well they were taking risks for the sake of fatter profits.

They’re the ones who should be punished. Failure to punish them simply invites more of the same kind of criminal negligence by executives more interested in lining their pockets than protecting their workers and the environment. (Today brought another tragedy in the Gulf when an oil rig exploded off the Louisiana coast — killing at least two workers and sending four others to hospitals Friday while two others were believed to be missing.)

But the Justice Department’s criminal settlement with BP gives these top executives a free pass — allowing the public to believe justice has been done.

Instead of going after the real criminals, the Department has gone after the schleps who got caught up in the mess. It’s filed manslaughter charges against two BP rig supervisors for allegedly ignoring warning signs of the blowout that set fire to the rig, which later sank. And against a former BP vice president who allegedly lied to Congress when he repeated BP’s public claim that the leak was limited to 5,000 barrels of oil per day when in fact it was more than 60,000 barrels.

The Department’s $4 billion criminal settlement with BP isn’t big enough to affect the oil giant anyway. BP’s market capitalization is $128 billion. Yesterday, BP’s stock price closed at $40.30 a share, up 0.35 percent from the day before the settlement was announced.  

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. This post originally ran on www.robertreich.org.

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