Commentary -

Corporate culprits Might curtail, If they ever, Went to jail

By Bill Collins

So it’s now decided that Northeast Utilities will pay $10 million in fines and donations. It seems the company knowingly and criminally polluted Long Island Sound, and lied about how well its Millstone workers were trained. After sheepishly admitting to this dangerous behavior, NU vows that it’s doing better now. Wall Street, as usual, has taken such wrongdoing in stride, and has not punished the company’s stock. In fact, experts foresee no negative impact at all, save being down $10 million.

However Tom Swan, director of the Connecticut Citizens Action Group, wanted more. He thought a little jail time would be appropriate, if only our prisons weren’t already overcrowded.

Mr Swan is too generous. We somehow manage to find cells for folks who grow a few marijuana plants, or who sass police officers. I’ll bet we could also unearth spots for a few NU officials who chose to pour lethal stuff into the Sound and to lie about nuclear training. The citizens downwind of Millstone would sleep better if they believed all that radiation was being handled by folks who knew what they were doing. As it is, the place was closed for two years, trying to catch up. Mindful, we’re toying here with the potential of the biggest industrial calamity in American history. Jail seems to be exactly what was called for, not — get this — endowing a chair in ethics.

But that’s the way it goes with corporate wrongdoing. Nobody goes to jail. If you send your insurance company some bad checks, you can do time. But if they fix your damaged car with dangerously substandard parts, all they have to do is pay you, if you catch them. State Farm just had to cough up $456 million to 4.7 million customers for doing that. It’s nice that justice corralled them, but nobody was prosecuted.

The recent vitamin price-fixing case was even bigger. Hoffman-LaRoche and BASF paid a total of $725 million in fines for collusion. We’re not just talking here about the pills you and I pop with breakfast. We mean the additives to almost every food in our cupboard and refrigerator. And humans weren’t the only ones affected. The same companies controlled the price of vitamins for animals.

Fortunately this case, like the Northeast Utilities case, and unlike State Farm, was a criminal prosecution. These fines were the largest in price-fixing history. But what happened to the individual malefactors? Not much. They got one guy. He’s doing four months in the slammer, less good time, and had to pony up $100,000. Lucky for him he wasn’t carrying a joint. Actually, they don’t search guys like him for joints.

Then there are the banks. Remember B.C.C.I.? It paid $1.5 billion in fines and disappeared from the earth, taking former-Secretary Clark Clifford with it. But no one went to jail. Bankers don’t go to jail. That axiom may be proved again with this new Bank of New York case. It appears that BONY laundered billions in dirty Russian money. So far no criminal charges.

Connecticut could have put the first dent in this corporate executive immunity. It could have jailed a couple chaps at NU. A little hard time would do more to clean up corporate behavior than all the fines in history.

(Bill Collins, a former mayor of Norwalk, is a syndicated columnist.)