General Motors confessed last week that it had lied to the government and the public about an ignition switch malfunction linked to at least 124 deaths and over 1,200 injuries. Consequently, the automaker has agreed to pay a fine of $900 million to settle federal criminal charges and has set aside another $575 million to settle individual claims.
But no GM employees who participated in the prolonged cover-up have been indicted.
The GM case follows just over a year after federal prosecutors nailed Toyota for lying to the government about the reasons for accidents caused by uncontrolled acceleration. Toyota paid a fine of $1.2 billion. But no Toyota employees were prosecuted.
British Petroleum has been assessed a fine of $18.7 billion for the 2010 Deepwater Horizon offshore oil well explosion that killed 11. Five years later, cases against four employees on related charges are still pending.
Now Volkswagen faces huge federal fines in an automobile emissions scandal. Will we see individuals prosecuted for their actions? It would be a surprising departure from administration practice.
It has been estimated that 49 financial institutions have paid $190 billion in fines and settlements for actions they took that helped bring on the 2008 collapse of the stock market. But only three high level bankers have been prosecuted for those actions, and only one has been convicted.
In contrast, over 800 bankers went to jail for actions that caused the savings and loan crisis of the 1980s.
The threat of criminal prosecution is a well-known deterrent to crime. Why, then, is the Obama administration so reluctant to prosecute corporate officers for crimes committed by their companies?
President Obama has said financial crimes are hard to prove, but as federal District Judge Jed S. Rakoff has written, allegations of fraud were given prominence in government analyses of the financial crisis.
Former Attorney General Eric Holder at one time held the view that criminal prosecutions could destroy corporations, though he subsequently denied that he believed that some companies were “too big to jail.”
Whatever the reason, the hard fact is that in the current environment, companies can break the law, pay a fine and pass the loss on to shareholders without any of the responsible individuals facing criminal action.
That is only partial justice.
Those responsible also should be held to account.