FDL Book Salon Welcomes Brandon L. Garrett, Too Big to Jail: How Prosecutors Compromise With Corporations
Six years after the Financial Crisis of 2008 — with its $13 trillion global price tag, including $2 trillion in property values lost, 8.7 million jobs destroyed, and evidence of corporate lawlessness seemingly in plain sight — the public policy problematic might boil down to a single question: where are the prosecutions?
After all, the public over the years has seen far more vigorous prosecutorial responses to events that did considerably less damage. Total taxpayer losses from the Savings & Loans scandal of the late 1980s – about $180 billion – would hardly have amounted to a down payment on the cost of the recent upheaval. The bailout of American International Group amounted to about that alone.
While plenty of theories and speculation abound, someone – finally — arrives with a deep understanding of the problem of corporate prosecutions, and with the data to back up some troubling findings.
Brandon L. Garrett, a professor at the University of Virginia Law School, performs an invaluable public service by examining the problem of white-collar and corporate prosecution in both its historical context and across industries to describe the evolution of the practice and some of the practical, legal, and it must be added, cultural obstacles to bringing corporate lawlessness to heel.
The book, Too Big to Jail: How Prosecutors Compromise With Corporations, describes in vivid detail the disastrous consequences of the 2002 conviction of accounting giant Arthur Anderson, a Pyrrhic victory if there ever was one. Not only was the corporate conviction overturned; but as Garrett shows, the legal and public policy fallout helped to shift the course of Justice Department prosecutions toward the systematic deployment of so-called “deferred prosecutions” and other maneuvers short of indictment and trial. It is under this new regime that even corporations found to have committed egregious wrongdoing see few, if any, of its executives prosecuted individually and chalk up the fines and restitutions as just one more cost of doing business – costs borne, by the way, by current corporate shareholders, and none of individuals actually involved. And while these non-prosecutions typically include requirements for internal reforms, even these are vague, and for the most part, unsupervised.
The most lasting contribution of Too Big to Jail could be its companion data base of more than 300 deferred prosecutions and non-prosecution agreements and more than 2,000 federal corporate criminal convictions. Among the findings: in 65% of the documented cases, no officers or employees were prosecuted; no individuals were charged in 75% of cases in which corporations were prosecuted and convicted. The findings raise the question: how can an organization made up of individuals commit a crime without any of the individuals participating?
Meanwhile, we learn even in cases when prosecutors don’t bring crimes and impose reforms instead, three-fourths of the cases do not include any corporate monitors, meaning there is no one to oversee whether the reforms are actually implemented.
Garrett shows with chilling detail the consequences of this widening culture of prosecutorial laxity: corporate lawlessness, the costs of which are borne by society as a whole.
The poster child might be the recidivist actor, BP, which is well known for its role in the 2010 Deep Water Horizon disaster. Less well known was its role in the fatal explosion of Texas City, Texas, refinery, which was later to be caused by criminal misbehavior.
As a Texas City refinery worker quoted in the book says:
“They’re still doing it… If you get hurt, they throw a little money at it and go on.”
[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions. Please take other conversations to a previous thread. – bev]