Corporate Crime

Tracking and Trouncing Corporate Crime

If there were any question as to which corporation has racked up the largest quantity of business penalties, the issue has been resolved with the announcement that BP will pay more than $20 billion to resolve the outstanding federal and state civil claims connected to the 2010 Deepwater Horizon disaster in the Gulf of Mexico.

While the true cost to the company is lessened by the fact that it will be able to deduct about three-quarters of the total, the after-tax bite will still be in the billions. This is on top of the $4 billion BP had to pay in 2012 to resolve related criminal charges plus billions more in fines and settlements relating to the company’s other environmental and workplace safety sins.

All these amounts will be tallied in the Violation Tracker database my colleagues and I at the Corporate Research Project of Good Jobs First will release later this month.

BP’s reign as the penalty “leader” will soon face a new challenge from Volkswagen, which is looking at massive payouts in connection with its scheme to circumvent federal emissions regulations. VW’s new chief executive Matthias Muller just admitted that the $7 billion the company has set aside to deal with the problem “will not be enough.”

Although it is difficult to avoid a feeling of schadenfreude in light of the German company’s apparently unscrupulous behavior, Muller’s statement that employment cuts may be necessary is troubling. Those who lose their jobs at VW’s operations, perhaps including the plant in Chattanooga, Tennessee, will undoubtedly be workers who had nothing to do with the emissions cheating.

A broader question raised by Muller’s comment is that of what will be enough to get big business to stop behaving badly. At one time, the notion of extracting billions of dollars in payments from a large corporation was seen as a radical idea, something akin to appropriation. Now it is commonplace.

Yet has this done more than allow prosecutors to give the impression they are tough on corporate crime? I’m as fond as the next corporate critic of seeing corporate miscreants pay heavily for their misdeeds — after all, I’ve been spending months preparing a database on that very subject — but the ultimate goal is to prevent the wicked behavior.

That is going to require aggressive new measures, though it is difficult to say exactly what those should be. Those angry French workers who stormed a boardroom and ripped the clothes off executives had an intriguing approach.

The first step is to acknowledge the extent of the corporate crime problem and focus more public attention on the issue. That won’t be easy, given that all too many policymakers in this country are adherents of the Reaganite notion that government is always the problem.

But I’d like to believe that at some point the accumulation of corporate mayhem and harm it causes will change enough minds that strong action is inevitable. Then all unethical executives will have to hold on tightly to their shirts.

Volkswagen Deserves Its Day in Criminal Court

Volkswagen’s scheme to circumvent federal emissions regulations for millions of its cars cries out for tough prosecution. Yet it turns out that a little known loophole in the Clean Air Act exempts the automobile industry from criminal penalties.

EPA and Justice Department prosecutors are apparently considering whether criminal charges can be brought under other statutes, but it remains to be seen whether they will be successful. An inability to do so would be a major embarrassment for DOJ, which recently proclaimed its intention to move away from deferred prosecution agreements and get tougher with corporate culprits.

In case anyone questions the appropriateness of criminal charges in environmental cases, it is worth recalling that this approach has ample precedents. While it is true that many of the cases in the EPA’s criminal docket involve individuals at fly-by-night firms, that’s not always the case.

In fact, as part of the preparation for the Violation Tracker database my colleagues and I at Good Jobs First will release later this month, I’ve been going through the records. Here are some of the highlights:

The granddaddy of criminal environmental cases was the prosecution of BP for its role in the 2010 Deepwater Horizon disaster that killed 11 people and did untold damage to the Gulf of Mexico. In November 2012 BP pled guilty to environmental crimes (involving the Clean Water and Migratory Bird Treaty Acts) as well as felony manslaughter and obstruction of Congress. It was required to pay criminal fines and penalties of $4 billion.

In February 2013 Transocean, the company from which BP leased the ill-fated drilling rig, pleaded guilty to charges of violating the Clean Water Act in the period leading up to the accident and was sentenced to pay $400 million in criminal fines and penalties. Halliburton, which was responsible for cement work at the site, pleaded guilty to a charge of destroying evidence.

Oil companies are not the only defendants. In 2013 Wal-Mart Stores pleaded guilty to six counts of violating the Clean Water Act by illegally handling and disposing of hazardous materials at its retail outlets across the country. It had to pay $81 million in penalties.

This year, Duke Energy pleaded guilty to nine criminal violations of the Clean Water Act at several of its facilities in North Carolina and paid a $68 million criminal fine and was required to spend $34 million on environmental projects.

Volkswagen certainly belongs on this dishonor roll of environmental culprits. In fact, it probably deserves harsher punishment than even BP, given the brazen and intentional aspects of its behavior.

In reporting on the auto industry loophole, the Wall Street Journal quoted former Michigan Rep. John Dingell as justifying the provision by saying that civil penalties were “easier, speedier quicker” than criminal sanctions and warning regarding the latter: “The risk of them going out of business is very real.”

In cases such as this one, the convenience of prosecutors should not be a priority, and there are many people who may think that VW’s disappearance would not be a bad thing.

Think Irresponsible

volkswagen-clean-diesel-ad.w529.h352 In the competition among industries to see which can act in the most irresponsible manner, we have a new winner. After nearly a decade during which banks and oil giants like BP were the epitome of corporate misconduct, the big automakers are now on top.

The news that Volkswagen inserted devices in millions of its “clean diesel” cars to disguise their pollution levels is the latest in a series of major scandals involving car companies. It comes on the heels of criminal charges against General Motors for failing to report a safety defect linked to more than 100 deaths. The Justice Department, unfortunately, deferred prosecution of those charges in a deal that required GM to pay $900 million. That looks like a bargain compared to the possibility that the EPA could sock Volkswagen, which once employed an ad campaign called Think Small, with penalties of some $18 billion.

Last year, Justice announced a deferred prosecution agreement with Toyota that required the Japanese company to pay $1.2 billion to settle charges that it tried to cover up the causes of a sudden acceleration problem. Later that year, Hyundai and Kia had to pay $100 million to settle DOJ and EPA allegations that they understated greenhouse gas emissions from more than 1 million cars and trucks.

This past July, Fiat Chrysler was hit with by the National Highway Traffic Safety Administration with a fine of $105 million — a record for that agency, which long had a cozy relationship with the industry — for deficiencies in its recall of defective vehicles.

Even Honda, which once had a squeaky clean reputation, was fined $70 million earlier this year by NHTSA for underreporting deaths and injuries relating to defective airbags. Those airbags were produced by the Japanese company Takata, which resisted making changes in its production process despite incidents in which the devices exploded violently, sending shrapnel flying into drivers and passengers.

The ascendance of the auto industry to the top of the corporate wrongdoing charts is actually an encore for what was a long-running performance. During the 1960s, GM inadvertently gave rise to the modern public interest movement in its ham-handed response to the issues raised by a young Ralph Nader about the safety problems of its Corvair compact. The 1970s were the era of the Ford Pinto with its fragile fuel tanks that blew up in even mild rear-end collisions. The 1990s were marked by the scandal over defective tires produced by Bridgestone/Firestone.

Although carmakers were not in the forefront of corporate misbehavior during the past decade, the industry’s record was far from unblemished. In 2005 VW presaged its current problems when it paid $1.1 million to the Justice Department to settle allegations that it failed to notify regulators and correct a defective oxygen sensor in more than 300,000 Golfs, Jettas and New Beetles.

And to make matters worse, through these decades the auto giants kept up a drumbeat of criticism of supposed regulatory excesses and, in the cases of GM and Chrysler, did not hesitate to ask for large bailouts when their markets collapsed.

The American love affair with the automobile has also put us in bed with corporate irresponsibility on a major scale.

What’s Good for GM is Good for GM’s Executives

The famous statement from the 1950s to the effect that what was good for General Motors was good for the country needs to be updated.

Based on a settlement just announced by the Justice Department, we should be saying: what is good for GM is good for Mary Barra and bad for the country.

Barra, the chief executive of the automaker, and the company’s other top executives are celebrating the fact that they were able to negotiate a deal with federal prosecutors that contains no charges against individuals in connection with the failure to disclose a safety defect that has been linked to more than 120 deaths.

This came just a week after the adoption of a new policy by Justice that was supposedly going to make sure that individuals, including high-level executives, are targeted in major cases of corporate misconduct. That policy states that companies are not supposed to receive cooperation credit (lighter penalties) unless they hand over evidence relating to actual persons. Yet GM apparently got such credit.

What’s even more shocking about the GM deal is that the company did not have to enter a guilty plea on the criminal charges that had been brought against it. Instead, it was given the opportunity to enter into a deferred prosecution agreement — the widely criticized practice of letting a company buy its way out of legal jeopardy by promising to be good in the future.

The Justice Department was supposedly moving away from what had become virtually automatic use of this device in cases involving large corporations. The GM deal diverges from the guilty pleas that had been extracted in several cases such as those involving major banks such as Citi and JPMorgan Chase.

Finally, the settlement is a disappointment because the amount of the penalty extracted, $900 million, is hardly punitive for a company of GM’s size and is well below the $1.2 billion Toyota had to pay to resolve similar charges last year.

An unwillingness to come down hard on large corporate malefactors is all too common, but what sets the GM case apart is that it is one of those rare instances in which the misconduct has been directly linked to many deaths. The automaker was, in a sense, being accused of murder — actually, of being a serial killer. And real people were involved in the irresponsible decisions that led to those deaths.

Yet GM was offered a deal that is the equivalent of probation and a fine, while its executives did not even get a slap on the wrist. If a street murder case were resolved with such light punishment, the prosecutor would be tarred and feathered. But when it comes to corporate crimes — and crimes involving corporate executives — the rules are very different.

Justice Talks Tough on Prosecuting Crime in the Suites

avery The Justice Department is trying to get more serious about prosecuting corporate crime. It has just taken what could be a significant step in that direction.

According to an internal memo written by Deputy Attorney General Sally Q. Yates and leaked to the New York Times, the department will now be pressing companies under investigation to identify the individuals involved in the misconduct, no matter how high they are in the firm’s organizational chart, and hand over evidence that may aid in the prosecution of those individuals.

Rejecting the all-too-frequent practice of treating business misconduct as an abstraction, Yates told The Times: “Corporations can only commit crimes through flesh-and-blood people.”

While it is likely, as The Times points out, that the memo is to some extent “an exercise in public messaging,” Yates does lay out some rigorous guidelines. For example, the provision of information on individuals is made a prerequisite for any company seeking “cooperation credit,” a kind of plea bargaining in which the firm gets lighter penalties for voluntarily disclosing relevant facts to prosecutors.

A company cannot, the memo says, pick and choose what facts to disclose, and those facts must relate to all individuals “involved in or responsible for the misconduct at issue, regardless of their position, status or seniority” (emphasis added). Depending on how strictly that phrase is interpreted, it could open the door to more charges against top-level executives.

Yates also orders criminal and civil attorneys at Justice to “focus on individuals from the inception of the investigation.” She rightly acknowledges the connection between the investigation of the company and the investigation of its executives. Focusing on individuals from the start, she writes, “will maximize the chances that the final resolution of an investigation uncovering the misconduct will include civil or criminal charges against not just the corporation but against culpable individuals as well.”

To prevent corporations from shielding their executives, the memo states that Department attorneys should preserve the ability to pursue individuals in those instances when it first reaches a resolution of charges against the company. Prosecutors may agree to immunity for executives in “extraordinary circumstances,” but these cases have to be approved by the relevant Assistant Attorney General or United States Attorney. It remains to be seen whether this provision gets abused.

It’s interesting that the Yates memo came to light right after United Airlines CEO Jeff Smisek was forced to resign amid a federal investigation of the Port Authority of New York and New Jersey that turned up evidence suggesting that United had maintained a money-losing flight from Newark Airport to Columbia, South Carolina to curry favor with then-Port Authority Chairman David Samson, who had a vacation home in the Palmetto State.

The circumstances in that case, which stemmed from Chris Christie’s George Washington Bridge scandal, may be unusual, but it was a pleasing change of pace to see the guy at the top being held responsible. Let’s hope that the Yates memo leads to more of the same amid heightened prosecution of both rogue corporations and the executives who run them.

Bringing Regulatory Fines Into the 21st Century

In spite of perennial business complaints about regulatory overreach, for decades large corporations were able to break the law knowing that the potential financial penalties would inflict little pain. Typical fines were the commercial equivalent of parking tickets.

In recent years, the Justice Department has forced Corporate America to pay a higher price for its sins. Major banks, in particular, now have to consent to ten or eleven-figure settlements, such as Bank of America’s $16.7 billion payout last year.

DOJ, however, handles a limited number of cases. The question is whether the federal regulatory agencies are following suit in bringing penalty levels into the 21st Century.

I’ve been looking at the enforcement data for those agencies as part of the preparation for the Violation Tracker my colleagues and I will introduce this fall. The numbers are a mixed bag.

One agency that has apparently recognized the importance of substantial penalties is the National Highway Traffic Safety Administration. In July it imposed a civil penalty of $105 million on Fiat Chrysler for failing to carry out a recall of 11 million defective vehicles in a complete and timely manner. The penalty, the highest in the agency’s history, followed a $70 million penalty against Honda earlier in the year. In 2000 Chrysler (then owned by Daimler) was fined only $400,000 for a deficient recall.

By contrast, the Nuclear Regulatory Commission is still applying laughably low penalty amounts. The list of “significant enforcement actions” on its website shows only about three dozen cases in which any penalty at all was imposed in the period since 2009, and only five of those involved amounts above $50,000.

The NRC list appears not to have been updated recently, but a look at recent press releases by the agency show that penalty amounts continue to be modest. In April of this year, the agency fined a subsidiary of Dominion Resources all of $17,500 for security violations at a facility in Wisconsin.

Despite a series of significant accidents, the Pipeline and Hazardous Materials Safety Administration is still lagging in its penalty amounts. Since 2010 it has collected fines of $1 million or more in only three cases, and it still imposes penalties below $10,000 in some instances.

The Occupational Safety and Health Administration, which has a much larger jurisdiction than these other agencies, seems to have one foot in the past and a couple of toes in the present when it comes to penalty levels. As the AFL-CIO’s Death on the Job report points out, the average penalty per inspection is only about $10,000.

In a limited number of high-profile cases, OSHA brings out the big guns. When BP failed to live up to the terms of a settlement stemming from a massive explosion in 2005 at its Texas City refinery (photo) that killed 15 workers, the agency proposed penalties of $87 million (though it settled for $50 million after the company appealed).

Financial penalties by themselves are not a panacea for ending the corporate crime wave, but they are certainly part of the solution. And the bigger the better.

Addendum: Upon re-reading this post I realized I should have mentioned that agencies vary in the amount of discretion they have in setting penalties. In some cases maximum fines are determined by law. My point is that regulators should make full use of the power they have to set penalties as high as possible in cases of egregious offenses.

Replacing Pinstripes with Prison Jumpsuits

Goodwin-1-e1440025102463-225x300 We’ve just been treated to the rare sight of a corporate executive pleading guilty to criminal charges stemming from actions that harmed the public. This outcome was particularly satisfying given that the case was one that symbolized much of what is wrong with U.S. business and regulatory practices.

The culprit is Gary Southern, who was at the center of an incident last year in West Virginia whose details, I wrote at the time, sounded a parody: the company responsible for a toxic chemical leak into the Elk River that contaminated the water supply of hundreds of thousands of people and sickened many turned out to be named Freedom Industries and had been cofounded by a two-time convicted felon.

That felon was Carl Lemley Kennedy II, who was apparently no longer active in the company by the time the spill occurred. The man who had taken over was Southern, who is now a felon as well thanks to his plea on charges of violating the federal Clean Water Act. Five other Freedom executives had earlier admitted guilt and negligence in connection with an accident that U.S. Attorney Booth Goodwin (photo) called “completely preventable.” Southern faces up to three years in prison.

Goodwin had rejected calls to focus on restitution to the community and insisted on seeking prison time for Southern et al. “Executives are used to writing checks,” he said. “It sends a stronger message if they have to trade their three-piece suits for a prison jumpsuit.”

A similar get-tough-on-business-crime attitude was recently displayed by Manhattan District Attorney Cyrus Vance, who brought manslaughter charges against two construction managers (and the companies they worked for) in connection with the death of a worker earlier this year in an accident that occurred after the managers had, Vance alleged, ignored repeated warnings from inspectors about unsafe conditions on the site.

Let’s hope Goodwin’s message also gets through to prosecutors bringing cases against companies with a much bigger footprint than that of Freedom Industries and the New York construction firms. For a long time, large corporations and their top executives seemed to be immune from criminal prosecutions, no matter how serious the offense.

The Justice Department has started to give in to the pressure and get some big companies to plead guilty to criminal offenses, as occurred in May in a case involving allegations against Citicorp, JPMorgan Chase and other large banks in connection with the manipulation of foreign exchange markets.

Now it’s time for prosecutors to take the next step and bring individual criminal charges against Fortune 500 top executives involved in serious misconduct.

There’s no guarantee that a criminal conviction will completely reform a wayward businessperson. The Wall Street Journal has a piece about an accounting executive who, after being convicted of embezzlement and banned for life from the accounting profession, altered his name slightly (changing Stephen to Steven and adopting a different middle name) and went on providing accounting services with bogus credentials. The SEC eventually caught on and is going after him in court.

Yet we need to see whether individual prosecutions of top executives works. One way or another, we’ve got a find a way to bring an end to the corporate crime wave.

Business Crime Simple and Complex

thumbonscale Much of the corporate misconduct of the past decade has involved complicated schemes involving the likes of mortgage-backed securities and credit default swaps. A recent announcement by the Consumer Financial Protection Bureau is a reminder that old-fashioned business thievery is still very much with us.

Citizens Bank will pay $18.5 million to settle CFPB allegations that it routinely pocketed the difference when customers mistakenly filled out deposit slips for amounts lower than the sums actually transferred. Taking advantage of the carelessness of others added up for the bank: $11 million of the payment by Citizens will consist of refunds, with the rest representing penalties imposed by the CFPB under its powers granted by the industry-vilified Dodd-Frank Act.

The under-crediting attributed to Citizens is the flip side of the overcharging that is surprisingly common among large retailers. Whole Foods is facing a shareholder lawsuit and sinking sales in the wake of allegations by the New York City Department of Consumer Affairs that its local stores were systematically and egregiously overcharging customers for pre-packaged foods. The agency found that: “89 percent of the packages tested did not meet the federal standard for the maximum amount that an individual package can deviate from the actual weight, which is set by the U.S. Department of Commerce. The overcharges ranged from $0.80 for a package of pecan panko to $14.84 for a package of coconut shrimp.” The company admitted it had made “mistakes.”

In February, Target paid $3.9 million to settle allegations by half a dozen district attorneys in California that prices charged at the register were higher than those posted in the aisles.

In April, Wal-Mart was hit with a proposed class action lawsuit alleging that the company overcharged customers at its vision centers by inflating insurance co-pay amounts.

Earlier this month, Genuine Parts agreed to pay $338,000 to settle allegations by the San Diego District Attorney that its several of its NAPA Auto Parts stores were overcharging customers.

Cases such as these belie the notion that “thumb on the scale” types of simple cheating are mainly to be found among small businesses. Large companies are apparently inclined to engage in both simple and complex misdeeds.

Citizens Bank symbolizes the link between the different types of misconduct. The company is a subsidiary of the Royal Bank of Scotland, which has been deeply involved in a variety of complex financial scandals.

Earlier this year, it pleaded guilty to criminal charges of conspiring to fix foreign currency rates, along with three other major banks. RBS was fined $395 million (and another $274 million by the Federal Reserve) and put on probation for three years. The SEC gave it a waiver from a rule that would have barred it from remaining in the securities business.

In 2013 RBS had to pay $153 million to settle charges that it misled investors in a 2007 offering of subprime residential mortgage-back securities. That same year, it paid $612 million to settle civil and criminal charges that it was involved in the manipulation of the LIBOR interest rate index.

Whether simple or complex, corporate wrongdoing needs to be prosecuted aggressively.

Toshiba’s Not-Quite-Spotless Track Record

Journalists have traditionally been taught to avoid superlatives and other sweeping statements. Yet the New York Times just made that rookie mistake and ended up publishing an erroneous description of the track record of Toshiba prior to the recently disclosed accounting scandal that has led to the resignation of the top executives of the Japanese electronics giant.

“Toshiba Quickly Loses a Spotless Reputation” was the headline of the print version of the flawed effort by the Times to put the revelations in context. This may be the first case of extensive accounting fraud at the company, but Toshiba’s track record is far from spotless.

For example, like numerous other Japanese manufacturers, Toshiba has been the subject of price-fixing allegations. In 2012 the company paid $21 million to settle a U.S. class action case involving LCD flat panel screens after a jury ruled against the company and awarded $87 million to the plaintiffs. In 2010 Toshiba was fined 17.6 million euros for its role in a case brought by the European Union charging ten producers of memory chips with anti-competitive behavior.

In 1999 Toshiba committed to spend up to $2.1 billion to settle a class-action lawsuit alleging that the company had sold millions of defective laptop computers in the United States. The following year it agreed to pay $33 million to settle claims that it sold substandard equipment to federal agencies.

Going back further, Toshiba was involved in a scandal in 1987 over allegations that one of its subsidiaries violated Western export controls by selling submarine sound-dampening equipment to the Soviet Union. The incident led to resignations of top executives and temporary restrictions on U.S. imports of certain Toshiba products.

The lesson that the Times failed to grasp is that corporate misconduct rarely emerges out of nowhere. In fact, the 300-page report on the accounting scandal prepared by outside lawyers and accountants (the English version of which as of this writing has not been made public) charges that improprieties such as the overstatement of profits had been going on for at least seven years. Given what came to light in the Olympus scandal of a few years back, it is possible that subsequent revelations will show that Toshiba was cooking the books for a much longer period.

One thing that can be said about Japanese corporate scandals is that they usually lead to rapid resignations of top executives. Toshiba is also replacing half the members on its board of directors. Such house cleaning does not always occur at U.S. corporations involved in misconduct cases.

We have examples such as JPMorgan Chase, which has had to pay out billions of dollars to settle a variety of lawsuits and regulatory actions, including a recent one involving manipulation of foreign exchange markets that required the bank to plead guilty to a criminal charge. Throughout this all, Jamie Dimon had remained in place as CEO and, unlike apologetic Japanese executives, has loudly denounced regulators and prosecutors. American business does not believe in shame.

Getting Tough with El Corpo

As part of my summer reading I’ve been taking another look at some of the key works of the past on corporate crime to consider their relevance for today.

One of the titles on my list is Russell Mokhiber’s Corporate Crime and Violence, which profiled three dozen of the most egregious cases of environmental, workplace hazard and defective product abuses that had occurred in the years leading up to the publication of the book in 1988. Among the culprits were Dow Chemical (Agent Orange), Occidental Petroleum (Love Canal), Johns Manville (asbestos), General Electric (PCBs) and Ford Motor (exploding Pintos).

Mokhiber, editor of the excellent newsletter Corporate Crime Reporter, also reviewed the debates on how to define and how to address corporate misconduct and presented his own “50-Point Law & Order Program to Curb Corporate Crime.”

What strikes me is how little has changed in the past 27 years. Now, as then, we are faced with a seemingly endless series of incidents in which large corporations have caused serious harm to communities, the environment, workers and consumers. BP has had to pay around $20 billion to settle the many charges and claims brought against it in connection with the Deepwater Horizon catastrophe in the Gulf of Mexico. An ignition switch defect that General Motors failed to correct has been linked to more than 100 deaths. Safety lapses by coal miner Massey Energy (now part of Alpha Natural Resources) allegedly led to a methane explosion that killed 29 workers.

One difference is that we now also have an epidemic of serious financial crimes by major banks. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo have each had to pay billions to settle allegations relating to the sale of toxic securities in the period leading up to the financial, foreclosure abuses and other issues. European banks such as Credit Suisse, HSBC and UBS have paid billions more to U.S. and European regulators to settle issues such as tax evasion, violations of economic sanctions and manipulation of the LIBOR interest rate index.

As in 1988, there is little consensus these days on what to do about corporate miscreants. Mokhiber focused on the debate between two camps. On the one side were those who wanted to exempt corporations from criminal charges (because these non-human persons supposedly could not exhibit criminal intent or have a criminal state of mind) and instead use exclusively civil cases to extract more burdensome financial penalties.

On the other side were those, including Mokhiber, who called for applying criminal law more aggressively, arguing, among other things, that the stigma of a criminal conviction would serve as a powerful deterrent against corporate misconduct.

While the debate was never resolved, a quarter of a century later the remedies proposed by both camps have come to pass. Civil penalties have risen to unprecedented levels. Billion-dollar settlements are now commonplace in cases involving large corporations, and in a few cases such as BP, Bank of America and JPMorgan Chase, the payouts have reached eleven figures.

At the same time, settlements in which major corporations plead guilty to criminal charges are becoming more common. Responding to public pressure, the Justice Department first extracted such pleas from subsidiaries of foreign banks UBS and Credit Suisse; this year it got Citigroup and JPMorgan Chase to do the same in a case involving manipulation of foreign exchange markets.

The sad reality is that the application of penalties that seemed so bold in the 1980s seem to be doing little to chasten big business.

Corporations have adjusted to the big penalties, which in some cases are not as large as they seem because they may be tax deductible. The payments are seen as a cost of doing business, and even at their unprecedented levels, the costs are usually well below the financial benefits the culprit companies enjoyed from the illicit activity.

Being convicted felons has not changed things much for banks such as Citigroup and JPMorgan Chase. There is no sign that this stigma has cost them many customers, and their ability to continue to operate in regulated areas has been assisted by special waivers given to them by agencies such as the SEC.

Like the escaped Mexican drug lord called El Chapo, large corporations – El Corpo, so to speak – have an extraordinary and frustrating ability to neutralize measures designed to punish them for their misdeeds. If we are ever going to get corporate crime under control, we’ll have to get a lot more creative. Let’s hope it doesn’t take another 27 years to figure it out.