Since Violation Tracker was introduced in 2015, my colleagues and I at the Corporate Research Project have put a lot of effort into identifying the ultimate parent companies of the firms named in the many thousands of individual enforcement records we collect. This has allowed us to show which of those parents have the highest penalty totals linked to their current line-up of divisions and subsidiaries. That dubious distinction has been achieved by the likes of Bank of America, BP and Volkswagen.
Some of the corporations on this list have complained it is unfair to link them to penalties incurred by subsidiaries before they were acquired. We have taken the position that when a company is purchased, the acquirer is in effect buying that entity’s track record. We have thus felt comfortable attributing those past bad acts to the current owners.
Nonetheless, we recognize that Violation Tracker users may want to distinguish between penalties received while the entity has been linked to the current owner and those that occurred before. We thus undertook the task of reconstructing the ownership history of the entities named in the 106,000 entries in Violation Tracker that are linked to one of the more than 3,000 parents for which we aggregate data.
That project is now complete, and the historical data has been incorporated in a newly redesigned Violation Tracker—both in the individual entries and in a list showing the 100 parents with the largest penalty totals based on ownership linkages at the time each penalty was announced.
Before I reveal more about that list, I must report that the cost of this project and the ongoing expenses associated with a very labor-intensive resource compelled us to begin requiring users to purchase a subscription in order to access certain features of the site. Those features include the parent history data and the ability to download search results. Searching and displaying search results (without the historical data) remain free of charge. More details of the subscription system can be found here.
The expanded entries visible to subscribers show the parent at the time of the penalty and the current parent. If the two are different, there is a field summarizing the ownership changes that occurred. For example, an entry on a penalty paid in 2002 by the trucking company Overnite Transportation now notes that its parent at the time was Union Pacific. A new history recap field states: “In 2003 Union Pacific spun off Overnite. In 2005 the company was acquired by United Parcel Service, which sold it to TFI International [the current parent] in 2021.” In addition to accessing such information in individual entries, subscribers can search by historical parent name in the Advanced Search section.
Returning to the list of most penalized parents based on historical ownership linkages, the first finding is that it contains many of the same corporations as the list based on current linkages. In fact, the same name is at the top of both lists: Bank of America. The only difference is that BofA’s historical penalty total–$79 billion—is lower than its total on the current list: $83 billion. That mainly reflects the subtraction of the penalties incurred by Merrill Lynch and Countrywide before they were acquired by BofA amid the financial crisis of 2008.
JPMorgan Chase, number two on the current list, drops to third place on the historical list because of the elimination of penalties related to its big 2008 acquisitions: Washington Mutual and Bear, Stearns. BP rises from third to second. Otherwise, the corporations in the top ten and their rankings are identical in the two lists. The others in that group are: Volkswagen, Citigroup, Wells Fargo, Deutsche Bank, UBS, Goldman Sachs, and Johnson & Johnson. Their penalty totals range from $14 billion to $25 billion on both lists.
Expanding the focus to the full list of the top 100 yields similar results. Eighty-four of the 100 most penalized current parents are also on the list of the 100 most penalized historical parents. Of the remaining 16, four fall slightly above 100 in the historical ranking. The other dozen are parents which, like Bank of America and JPMorgan Chase, bought or merged with other companies with substantial penalty histories.
For example, when Occidental Petroleum bought Anadarko Petroleum in 2019, it took on a business that had earlier been involved in a $5 billion settlement with the Justice Department. Apart from Anadarko, Occidental has accumulated $218 million in penalties.
Among the 16 companies on the historical top 100, but not the current list, is Abbott Laboratories. It gets eliminated from the current list because of its 2013 spinoff of AbbVie, which included businesses with more than $1.5 billion in previous penalties. Without AbbVie, Abbott still has penalties of $785 million.
Any parent company with ownership changes involving businesses with substantial penalty records is going to rank differently on the current and historical lists. Yet these differences do not change the fact that most large corporations have abysmal compliance records no matter how we add up their penalties.