Crime and Punishment, Corporate Style

The Supreme Court says that corporations have the same rights as individuals. When they misbehave, shouldn't they face consequences as serious as those imposed upon an individual?

It goes without saying that a person who commits a crime ought to face punishment proportional to the offense.

Large and midsize corporations, which employ thousands of employees, have far vaster reach and power than even the wealthiest ordinary citizens. So their crimes can be breathtaking in scope.

The 1984 industrial catastrophe at a pesticide plant in Bhopal, India killed 15,000 people. An additional 200,000 have since suffered serious injuries. Compared to the boards of directors of Union Carbide and Dow Chemical, which bought the company in 2001, Ted Bundy was small potatoes.

Unlike small-time serial killers, however, corporations get away with murder. For at least a year, management of the Toyota auto company knew that brakes in millions of its cars might fail. A 2009 ABC News investigation found that at least 16 people had died.

"Safety analysts found an estimated 2000 cases in which owners of Toyota cars including Camry, Prius and Lexus, reported that their cars surged without warning up to speeds of 100 miles per hour," reported the network. Yet Toyota did nothing. Instead they blamed their customers, saying they were resting their floormats on the gas pedals.

On May 18, Toyota finally faced the wrath of the federal government. Its "punishment": a paltry $16.5 million fine, not one cent of which went to the victims or their families. The fine, which amounted to a ridiculous 5.5 percent of its 2009 profit, went into the U.S. Treasury's general fund -- in other words, to kill Afghans and Iraqis.

Available to Congress and the President is a far more appropriate punishment: nationalization without compensation. Toyota's American operations ought to be seized and operated by the federal government. The top officials of the parent company in Japan, whose willful negligence murdered at least 16 American citizens, ought to be extradited and face trial in U.S. federal court.

Extreme? Expropriating private property is commonplace -- when the target is Joe and Jane Sixpack. Just ask hundreds of homeowners of New London, Conn. When the city destroyed an entire neighborhood to build a luxury office development, the U.S. Supreme Court backed them up, radically expanding the concept of eminent domain. Unlike a lot of evil corporations, those homeowners didn't do anything wrong.

The U.S. government has not only the right but the duty to take over criminal corporations.

A 5.5 percent fine is a slap on the wrist. Nationalizing a company, on the other hand, protects the public interest. Hitting corporations in the balance sheet is a genuine deterrent to the managers of other companies contemplating lawless behavior. It brings in significant cash assets that can be used to compensate the victims of the company's criminal activities.

Nationalization can also serve the interest of public safety. The mine explosion that left at least 25 coal miners dead in West Virginia earlier this year left members of the public feeling helpless and frustrated at the slow and inept rescue attempt by Massey Energy, the site's owner and operator. Setting aside the obvious argument that natural resources ought to be exploited for the benefit of the American people rather than private businesspeople, the rescue operation would have benefited from the involvement of top experts at such government agencies as the Army Corps of Engineers.

In 2009, the Upper Big Branch mine received 450 safety violations. Massey Energy paid the U.S. Mine Safety and Health Administration less than $1 million total. That's less than one percent of its annual profits. That's roughly $2,000 per violation.

If you get caught speeding in Virginia, you'll pay more than what Massey Energy pays for deliberately risking the lives of its employees.

British Petroleum is spending $6 million a day on its response to the explosion at its Deepwater Horizon oil drilling platform in the Gulf of Mexico. But that's a drop in the bucket next to the cost that will be borne by the people of Louisiana, Alabama, Mississippi and Florida.

The disaster is spilling the equivalent of one Exxon Valdez wreck into the Gulf every four days -- and it's been three weeks. Thousands of fishermen will be ruined. The tourism industry, already in trouble due to the economic collapse, will be devastated. The full extent of the ecological damage -- dead animals and aquatic plants, huge dead zones devoid of oxygen -- won't be understood for years.

BP failed to ensure that a "blowout preventer" at the Deepwater Horizon would work in the event of an emergency. But their real crime was drilling for oil 5,000 feet down in the first place.

Here again, it's easy to see how nationalization might help. Rather than wait for the clueless execs at BP to come up with a solution, a BP seized by the federal government (its American operations, anyway) would come under the jurisdiction of an organization that could assign experts from NOAA and the U.S. Navy, among other agencies, to stop the leak. After the leak is plugged, the publicly-owned former BP's profits would help defray the costs of the cleanup and extend benefits to fisherman and other victims.

Imagine the possibilities. What if Too Big to Fail had been turned into Too Big to Resist?

As a nationalized asset Citibank, which received $306 billion in bailouts, would be worth $152 trillion to taxpayers. Goldman Sachs got $15 billion; they're worth $70 trillion. Sell them off and no one would ever pay college tuition again. Or to see a doctor. Or we could give everyone a 50 percent tax cut. We're a rich country -- the problem is that out-of-control corporations are hogging the wealth.

Businessmen charter corporations for the express purpose of avoiding individual legal liability. Isn't it high time we started holding criminal businessmen accountable?