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"Shareholders benefit when the corporation engages in nefarious conduct"

The Case for a Corporate Homicide Law

by RUSSELL MOKHIBER

When Ira Reiner was the District Attorney for Los Angeles County back twenty‑five years ago or so, he had a policy of opening a criminal investigation every time a worker died on the job.

Not that he would prosecute every case.

But he would investigate every case as a corporate crime.

And sometimes he would bring criminal charges against the corporation for the death of a worker.

Today, you rarely see a prosecutor bring criminal charges against a corporation for the death of a worker.

Instead, the Occupational Safety and Health Administration (OSHA) imposes minimal civil fines on companies for worker deaths.

Just in the past two months, OSHA fined one company $28,000 and another $77,000 for worker deaths.

In 2007, after a few high profile worker death cases, the UK passed a corporate homicide law.

The law allows prosecutors to bring homicide charges against the corporation for the death of workers or consumers. Similar laws are being debated in New Zealand and Australia.

In just the last two years, 108 homicide prosecutions have been opened in the UK against corporations under the law.

Do OSHA and its chief David Michaels support passage of such a law in the United States?

“Although they are not technically manslaughter cases, the OSH Act provides for criminal penalties for employers whose willful violation of an OSHA standard causes death to any employee,” an OSHA spokesperson said in response to the question.

“Because, under federal law, only the Department of Justice may prosecute criminal cases, we refer appropriate cases to the Department of Justice for prosecution under this provision. We also assist in the prosecution of cases involving worker deaths under other statutes, such as the Clean Air Act and the Clean Water Act, which provide more severe sanctions than those available under the OSH Act. In addition, we assist local prosecutors seeking actual manslaughter convictions in worker deaths.”

Any other questions, the OSHA spokesperson asked, via e-mail?

Yes, back to the original question.

Do David Michaels and OSHA support the passage of a federal corporate homicide statute in the US similar to the one passed in the UK?

No answer.

So, OSHA isn’t taking a corporate homicide law seriously.

But James Harlow is.

Harlow is a 2012 graduate of Duke School of Law.

While at Duke, he wrote a law review article titled Corporate Criminal Liability for Homicide: A Statutory Framework.

In it, he lays out a draft statute that begins with these words:

“An organization is guilty of corporate homicide when it knowingly, recklessly or negligently causes the death of a human being.”

In the article supporting the draft statute, Harlow argues that “a corporation may be directly responsible for the deaths of the employees, consumers, and members of the general public with whom it interacts.”

“In situations of systemic internal misconduct or corporate recidivism, civil regulatory penalties and private lawsuits are insufficient to vindicate society’s interest in punishing the entity responsible for these deaths.”

“There are instances when a corporate entity is a truly blameworthy actor, rather than ‑‑ or in addition to ‑‑ individual employees, and when a criminal sanction against the corporation would have the greatest effect. This may be particularly true for large corporations given their complex bureaucratic structures.”

“Current homicide schemes are ill equipped to accommodate corporate defendants. Historically, there have been few significant corporate prosecutions for homicide. Those that have occurred have tended to be against small companies in which ownership and management were united in the same individuals, who were also charged individually.”

“The paucity of successful prosecutions suggests that current law does not provide prosecutors with the power to bring corporate homicide charges or, that if the power exists, its lack of clarity discourages prosecutors from bringing cases.”

Why not just hold individual executives criminally responsible? Why the corporation?

“The individual employees in the vast majority of these cases are acting the way they are acting because of their role within the corporation,” Harlow told said last week.

“The corporation is at the heart of the criminal conduct. There is a need to express to the corporation the moral sanction and blameworthiness that comes with the criminal law.”

But aren’t you only hurting innocent shareholders if you hold the corporation liable?

“These shareholders benefit when the corporation engages in nefarious conduct,” Harlow said. “And they are profiting from that.”

“As far as civil regulatory schemes, there are times when the civil regulatory schemes don’t have teeth – for whatever reason – the regulators being overworked or underfunded, or the regulatory scheme itself doesn’t provide the sanctions necessary to make the corporation change its ways.”

“In those instances for serial regulatory violators, the criminal law can serve as an instrument to help turn around the corporation and prevent future wrongdoing by those most culpable corporations.”

Harlow says that “the expression of a community’s moral condemnation, even when applied to corporations, is unique to criminal law and goes beyond the utilitarian goals of rehabilitation and deterrence. There is significant intrinsic value to this expressive force when it is applied to corporations in the same way that it is applied to individuals.”

Harlow writes that “organizational theorists recognize that an organization’s culture is closely intertwined with its leadership.”

“Management may create a culture that sacrifices safety for profits, or it may create a safety‑first culture. The desire for profits can be a powerful ‑‑ even irresistible ‑‑ force that can cause a corporation to hazard great risks. In such cases, the corporation may be the truly blameworthy actor, rather than any one employee.”

Is Harlow saying that you can indict a corporation for its culture?
“Corporate culture is evidence that can and should be considered against a corporation,” Harlow says. “You are able to divine a corporate culture from its written policies, its de facto policies, and its ethos, as testified to by employees, mid‑level managers, senior managers. It is possible to put your hand on a corporate culture and a corporate ethos. You shouldn’t indict a corporation solely because you think it has a bad culture, or exclusively a profit maximizing culture that sacrifices safety. But it certainly could be evidence brought against a corporation.”

Harlow’s draft law would impose a maximum $10 million fine per death on the corporation. But perhaps more important, he would impose a maximum five years of probation.

And he believes that the federal government should create a corporate crime unit within the probation office.

“There are enough federal corporate crime cases that it would be worthwhile to see whether there should be some centralized unit that represents the U.S. government’s interest in terms of corporate probation,” Harlow says. “It’s worthy of study and debate. It might be preferable to the present system of corporate monitorships, where former high level prosecutors sit in the boardroom.”

[For the complete q/a format Interview with James Harlow, see 27 Corporate Crime Reporter 28(12), July 15, 2013, print edition only.]

Russell Mokhiber edits the Corporate Crime Reporter.