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Why BP isn’t a criminal

Robert Reich, professor of public policy | November 16, 2012

The 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.

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.

Cross-posted from Robert Reich’s blog.

Comments to “Why BP isn’t a criminal

  1. RR: Agreed, corporations are not people. For purposes of criminal law, and tort liability, and perhaps more, the DIRECTORS and IN-LINE OFFICERS should be held accountable (as criminals, and for at least a part of total money damages, in proper cases), for only holding these high-and-mighty folks accountable can scare the class of directors and high officers into paying sufficient attention to other things than lining their own (or their shareholders’) pockets to prevent crimes, carelessness, etc.

    And ANY insurance policy aimed at paying the damages assessed against officers and directors for serious malfeasance should be made VOID as against public policy, else there is no punishment and no effect.

  2. I am sure that there are other issues that you are concerned about that take priority. Like, why isn’t Texas Governor Rick Perry a criminal after violating an international law? Look up Umberto Leal Garcia. Why isn’t the United States guilty of genocide after dumping around 300 tons of depleted uranium in the country of Iraq alone? It is this looney people of America which leads to looney laws of all kinds. We seriously need to prioritize the issues.

  3. Once again, perfectly stated Professor Reich! I’ve always said that this whole “publicly traded company” scheme has always been a big sham. Foolish shareholders think they are benefitting, when the actual board of directors and the CEOs are just props that figure out how best to line their pockets and put forth a “short term strategy” to show instant profits, even though it may be extremely harmful to the long-term viability of the company.

    I hate to generalize, but this applies to a majority of so called “corporations” out there. Yes there are a few shining examples of integrity and excellence like Eric Schmidt, the exemplary CEO of Google, but unfortunately they are few and far between.

    • Vic, am i hearing you right???

      Corporations ARE people! They are simply people acting collectively to take advantage of synergy. You tax a corporations, you tax people. You sue a corporations, people lose money (as Prof. points out). Likewise, on election day, people can chose to further freedom of speech and act collectively through corporations.

  4. Citizens United also permitted unions to use member involuntary dues for political outreach to non-members. In the 2012 election, this was almost four times as much money as from corporate sources.

    Funny that Prof. Reich, a former _labour_ secretary, wouldn’t mention that. Perhaps his posts are political arguments, not academic analysis?


  5. And of course, Al Qaeda isn’t a terrorist. Only flesh and blood humans can be terrorists.

    And retaliating against the country of Afghanistan for crimes committed by a few individual Saudi Arabians is entirely immoral, instead only the individuals should be targeted.

    Similarly, the bombing of Pearl Harbor was a crime committed by individual bomber pilots. Targeting the Japanese state was wrong.

    Lets be real. Organizations inspire collective belonging and loyalty — so they also share some degree of collective responsibility. A least to the extent that people have a say. Since the chain of command goes up to the shareholders, they need to be held accountable. Only then will they stop voting for sociopaths on the board.

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