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Getting personal with corporate crime

The US Justice Department plans to favor prosecution of individual wrongdoers over the levying of corporate fines.

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    US Attorney General Loretta Lynch speaks in East Haven, Conn. The Justice Department issued new guidance to its prosecutors Sept. 9 aimed at encouraging more white-collar criminal cases against corporate executives.
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Which action would send a stronger signal to corporate executives who may be tempted to break the law: the possibility of having a fine levied on their business or the possibility that they could be personally convicted of a crime?

In recent years the US Justice Department has pointed to what it has termed its successful prosecutions of corporate wrongdoing. The penalties have sometimes reached into the billions of dollars. Last year, for example, the Justice Department won a criminal case against the French bank BNP Paribas that resulted in the bank paying a record $8.9 billion fine. But no BNP employee was charged with a crime.

Such news of big financial penalties against corporations hasn’t seemed to impress Americans. One of the biggest continuing memes to come out of the 2008 banking scandal was this: No top Wall Street executive involved ever served a day in jail. Responsibility for the misconduct, which helped lead to a worldwide Great Recession and untold suffering, belongs to faceless corporations, it seems, but not to any actual people.

This week the Justice Department announced that it will be changing course and will now look first to prosecute individuals involved in corporate wrongdoing, worrying less about extracting the largest possible financial penalty.

“Americans should never believe, even incorrectly, that one’s criminal activity will go unpunished simply because it was committed on behalf of a corporation,” Sally Yates, a US deputy attorney general, was to say in a speech today in New York, according to a transcript released earlier. “Our mission here is not to recover the largest amount of money from the greatest number of corporations; our job is to seek accountability from those who break our laws and victimize our citizens. It’s the only way to truly deter corporate wrongdoing.”

Whether the new guidelines lead to real changes in the Justice Department’s approach remains to be seen. It may be difficult, for example, to tie top executives directly to misdeeds by underlings.

And while effective immediately, the new policy won’t apply to major investigations already well under way, such as whether General Motors failed to promptly recall millions of vehicles with faulty ignition switches.

The change supports the idea that in the American judicial system justice is blind, offering no special privilege to those with power or wealth.

Deputy Attorney General Yates put the reason for the change well in her prepared text: “Crime is crime. And it is our obligation at the Justice Department to ensure that we are holding lawbreakers accountable regardless of whether they commit their crimes on the street corner or in the board room.”

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