Corporations and National Security

Most of the cases handled by the Justice Department’s National Security Division involve individuals accused of providing support to foreign terrorist organizations, or more recently, domestic far-right extremists linked to groups such as the Proud Boys.

Yet the division has another mission: prosecuting corporations which violate international economic sanctions or which fail to prevent sensitive technology from being transferred to unfriendly foreign countries. It is beefing up this work, especially the latter part.

The division just appointed its first Chief Counsel for Corporate Enforcement and Deputy Counsel for Corporate Enforcement. In making the announcement, Assistant Attorney General Matthew Olsen suggested that a tougher stance is being taken: “We have watched with concern as investigations of corporate misconduct increasingly reveal violations of laws that protect the United States. Enforcing the laws that deny our adversaries the benefits of America’s innovation economy and protect technologies that will define the future is core to the National Security Division’s mission.” Olsen is in effect saying that some corporations are national security risks—or perhaps more accurately, national economic security risks.

These appointments are consistent with the announcement earlier this year that the National Security Division was joining with the Commerce Department’s Bureau of Industry and Security (BIS) and other agencies to form the Disruptive Technology Task Force. Its mission is “to target illicit actors, strengthen supply chains and protect critical technological assets from being acquired or used by nation-state adversaries.”

Until now, the division’s corporate prosecutions have been limited. In Violation Tracker we document 17 cases that have been brought against companies over the past decade. Most of these are foreign-based companies. For example, in in 2017 a penalty of $430 million was imposed on the Chinese telecommunications company ZTE for illegally shipping U.S.-origin technology items to Iran.

BIS, which brings civil rather than criminal actions, has a much bigger caseload. Violation Tracker documents over 600 export control cases brought by the agency since 2000.  It has also gone after foreign companies such as ZTE but its case list includes numerous domestic companies, including Boeing, General Electric and Northrop Grumman. Earlier this year, it penalized Seagate Technology LLC $300 million for illegal sales of computer disk drives to China’s Huawei Technologies. (Seagate’s parent is technically incorporated in Ireland for tax reasons, but its operational headquarters are in California and it is effectively an American company.)

A focus on domestic companies is also seen in the caseload of another federal export control agency: the State Department Directorate of Defense Trade Controls. Violation Tracker shows there have been around four dozen cases brought against companies by DDTC since 2000, nearly all of them U.S.-based. RTX Corporation (formerly Raytheon Technologies) and its subsidiaries account for the largest share of the penalties.

Given the willingness of U.S.-based transnationals to share technology with customers in countries such as China over the past few decades, the DOJ’s new focus on economic security may be too late to undo much of the damage. Yet if prosecutors are going to address the problem nonetheless, they should follow the lead of other agencies and go after domestic as well as foreign culprits.

Corporate Miscreants Foreign and Domestic

The Biden Administration appears to be really serious about economic sanctions–and not only those against Russia. The Justice Department and Treasury just imposed more than $600 million in penalties on British American Tobacco for violating prohibitions on doing business with North Korea. 

Aside from the unusually harsh approach toward a product, tobacco, which does not have any obvious national security implications, the case is significant because it continues the administration’s seeming preoccupation with going after large corporations based outside the United States. 

If we look at the largest fines and settlements –say, those above $200 million– announced since Biden took office and documented in Violation Tracker, most of them involve foreign companies. Aside from BAT, these include Germany’s Allianz, Denmark’s Danske Bank, Switzerland’s Glencore and ABB, Holland’s Stellantis, Sweden’s Ericsson, India’s Sun Pharmaceuticals and the United Kingdom’s Barclays. 

These cases certainly have their merits, but it is surprising that there have been so few comparable actions announced against domestic corporations. Corporate crime and misconduct are not exclusively or even primarily an issue with companies based abroad. 

After Biden was elected there was an assumption that the lax enforcement practices seen during the Trump years would disappear. A major crackdown has yet to materialize. Instead, the Justice Department has focused on finding ways to incentivize companies to cooperate with investigations.  

There is no explicit policy to this effect, but it appears that prosecutors are going easier on domestic corporate targets while acting tougher with foreign ones. One gets the impression that business oversight is being used in a way to give domestic companies a competitive advantage. 

This would be in keeping with the Biden Administration’s efforts to promote domestic manufacturing through legislation such as the CHIPS Act and Buy American policies. Yet there is a difference between industrial policy and regulatory policy. 

Although those on the Right complain when they think government is picking winners and losers, that actually goes on all the time when tax policy is written or major procurement contracts are awarded. The legal system is another matter. 

Every company, wherever it is headquartered, deserves equal treatment under the law. At the same time, the public deserves to be protected against misdeeds committed by domestic and foreign business entities.  

Given that U.S.-based companies are likely to do more of their business in this country, any policy of regulating them more lightly would be especially problematic. Some of the offenses charged against foreign corporations– such as bribery committed abroad– mean a lot less to U.S. residents than serious environmental, financial or workplace transgressions that may be committed by domestic firms. 

None of this should be taken as a call for retreating from enforcement actions against foreign companies. Nonetheless, it would be satisfying to see the Biden Administration bring more major cases against homegrown corporate miscreants.  

Corporations and the Ukraine Crisis

After the invasion of Ukraine brought sanctions against the Russian economy, the parent company of Japanese apparel retailer Uniqlo insisted it would continue to operate its 50 stores in the country. CEO Tadashi Yanai stated: “Clothing is a necessity of life. The people of Russia have the same right to live as we do.” A few days later, Uniqlo did an about-face, announcing it would suspend its Russian operations and contribute $10 million to the United Nations refugee agency.

Uniqlo is one of many corporations that have bowed to pressure to stop doing business in Russia. Oil majors BP, Shell and ExxonMobil are giving up multi-billion-dollar investments in the country. McDonald’s is temporarily closing hundreds of fast-food restaurants. Big accounting firms such as KPMG and PwC are abandoning the country, as are large law firms such as Cleary Gottlieb. Mastercard and Visa are no longer supporting credit cards issued by Russian banks.

A compilation by Jeffrey Sonnenfeld and others at the Yale School of Management lists more than 300 Western firms that have announced curtailments of their Russian operations. The number is up from several dozen when Sonnenfeld first published the list on February 28. There are still some holdouts. Sonnenfeld lists about three dozen mostly U.S.-based corporations that are still doing business in the country.

The magnitude and the speed of the corporate exodus from Russia has been remarkable. In some cases, the companies have little choice in the matter, given the financial and energy sanctions adopted by Western governments. Yet for the most part, the moves have been reactions to widespread repugnance in the U.S. and Europe over Putin’s attack on Ukraine and the reports of atrocities committed by his troops.

Some corporations saw the direction of public sentiment right away and moved quickly. Others, like Uniqlo, needed more prodding. McDonald’s, for instance, made its announcement after facing calls on social media for a boycott.

Overall, the departures illustrate how, under certain circumstances, large and powerful corporations can be compelled to do the right thing, even when it will cause disruption and have negative financial impacts. In the past, companies have often rebuffed calls for divestment by citing legal complications. In the current situation, many are acting first and will resolve those complications later.

For now, our concern has to focus on the fate of Ukraine, but the success in getting corporations to change their stance on Russia should inform subsequent efforts. We are seeing that aggressive government action plus an unwavering public outcry can get large companies to do things they previously would not consider.

It is not easy to generate the same degree of urgency now felt over Ukraine, where millions of people are facing an immediate threat, when it comes to issues such as climate change, which much of the corporate world is still treating as something that can be addressed over many years.

Yet we have to try, and now we know that corporate resistance is often a lot more fragile than we expect.

Credit Suisse and the Oligarchs

Russian banks are among the targets of Western sanctions in response to the invasion of Ukraine, but a financial institution in the middle of Europe is also part of the problem. According to recent press reports, Switzerland’s Credit Suisse is calling for the destruction of certain documents that could involve Russian oligarchs—a move that could impede efforts to locate and perhaps seize their assets.

The Financial Times is reporting that the bank is asking hedge funds and other investors to “destroy and permanently erase” documents relating to securitized loans backed by “jets, yachts, real estate and/or financial assets.” Credit Suisse had created these financial instruments to offload risks associated with its lending to the ultra-rich. When the Financial Times previously reported on these instruments, it described a presentation to potential investors mentioning that the bank had experienced defaults on yacht and aircraft loans to oligarchs related to U.S. sanctions.

It appears that Credit Suisse is concerned that the documents relating to the loans could be leaked. The bank has good reason to worry about unauthorized disclosures. It was recently the subject of a massive release of internal documents, dubbed Suisse Secrets, revealing its extensive dealings with individuals said to be involved in drug trafficking, money laundering and other corrupt practices.

Credit Suisse has a long history of ethically questionable behavior, extending back at least to the Second World War, during which it and other major Swiss banks allegedly profited by receiving deposits of funds that had been looted by the Nazis. In 1998 the banks agreed to pay a total of $1.25 billion in restitution.

After merging with investment bank First Boston in the 1970s, Credit Suisse became a significant player in U.S. financial markets and got into frequent trouble with regulators. Over the past two decades, it is racked up more than $10 billion in fines and settlements, as shown in Violation Tracker. This rap sheet includes a $5 billion settlement in 2017 concerning the sale of toxic securities and a $1.8 billion criminal penalty in 2014 for helping U.S. taxpayers file false returns.

Credit Suisse has also had previous problems relating to sanctions. In 2009 it had to pay $536 million to the U.S. Justice Department and the New York County District Attorney’s Office to settle allegations that it violated the International Emergency Economic Powers Act by engaging in prohibited transactions with Iran, Sudan and other countries sanctioned in programs administered by the Department of the Treasury’s Office of Foreign Assets Control.

The bank has also been implicated in bribery cases, paying $99 million last year to the Securities and Exchange Commission for fraudulently misleading investors and violating the Foreign Corrupt Practices Act in a scheme involving two bond offerings and a syndicated loan that raised funds on behalf of state-owned entities in Mozambique. The bank was also penalized nearly £300 million by the UK’s Financial Conduct Authority for the Mozambique matter.

Returning to the current situation, Credit Suisse is insisting that it has not been destroying any documents in its own possession while not denying it asked investors to do so. The bank may not have broken any laws in making this request, but it is a highly questionable action amid the current situation. Unfortunately, it is very much in keeping with Credit Suisse’s extensive track record of going out of it way to protect the disreputable clients with whom it likes to do business.

The 2019 Corporate Rap Sheet

While the news has lately focused on political high crimes and misdemeanors, 2019 has also seen plenty of corporate crimes and violations. Continuing the pattern of the past few years, diligent prosecutors and career agency officials have pursued their mission to combat business misconduct even as the Trump Administration tries to erode the regulatory system. The following is a selection of significant cases resolved during the year.

Online Privacy Violations: Facebook agreed to pay $5 billion and to modify its corporate governance to resolve a Federal Trade Commission case alleging that the company violated a 2012 FTC order by deceiving users about their ability to control the privacy of their personal information.

Opioid Marketing Abuses: The British company Reckitt Benckiser agreed to pay more than $1.3 billion to resolve criminal and civil allegations that it engaged in an illicit scheme to increase prescriptions for an opioid addiction treatment called Suboxone.

Wildfire Complicity: Pacific Gas & Electric reached a $1 billion settlement with a group of localities in California to resolve a lawsuit concerning the company’s responsibility for damage caused by major wildfires in 2015, 2017 and 2018. PG&E later agreed to a related $1.7 billion settlement with state regulators.

International Economic Sanctions: Britain’s Standard Chartered Bank agreed to pay a total of more than $900 million in settlements with the U.S. Justice Department, the Treasury Department, the Federal Reserve, the New York Department of Financial Services and the Manhattan District Attorney’s Office concerning alleged violations of economic sanctions in its dealing with Iranian entities.

Emissions Cheating: Fiat Chrysler agreed to pay a civil penalty of $305 million and spend around $200 million more on recalls and repairs to resolve allegations that it installed software on more than 100,000 vehicles to facilitate cheating on emissions control testing.

Foreign Bribery: Walmart agreed to pay $137 million to the Justice Department and $144 million to the Securities and Exchange Commission to resolve alleged violations of the Foreign Corrupt Practices Act in Brazil, China, India and Mexico.

False Claims Act Violations: Walgreens agreed to pay the federal government and the states $269 million to resolve allegations that it improperly billed Medicare, Medicaid, and other federal healthcare programs for hundreds of thousands of insulin pens it knowingly dispensed to program beneficiaries who did not need them.

Price-fixing: StarKist Co. was sentenced to pay a criminal fine of $100 million, the statutory maximum, for its role in a conspiracy to fix prices for canned tuna sold in the United States.  StarKist was also sentenced to a 13-month term of probation.

Employment Discrimination: Google’s parent company Alphabet agreed to pay $11 million to settle a class action lawsuit alleging that it engaged in age discrimination in its hiring process.

Investor Protection Violation: State Street Bank and Trust Company agreed to pay over $88 million to the SEC to settle allegations of overcharging mutual funds and other registered investment company clients for expenses related to the firm’s custody of client assets.

Illegal Kickbacks: Mallinckrodt agreed to pay $15 million to resolve claims that Questcor Pharmaceuticals, which it acquired, paid illegal kickbacks to doctors, in the form of lavish dinners and entertainment, to induce them to write prescriptions for the company’s drug H.P. Acthar Gel.

Worker Misclassification: Uber Technologies agreed to pay $20 million to settle a lawsuit alleging that it misclassified drivers as independent contractors to avoid complying with labor protection standards.

Accounting Fraud: KPMG agreed to pay $50 million to the SEC to settle allegations of altering past audit work after receiving stolen information about inspections of the firm that would be conducted by the Public Company Accounting Oversight Board.  The SEC also found that numerous KPMG audit professionals cheated on internal training exams by improperly sharing answers and manipulating test results.

Trade Violations: A subsidiary of Univar Inc. agreed to pay the United States $62 million to settle allegations that it violated customs regulations when it imported saccharin that was manufactured in China and transshipped through Taiwan to evade a 329 percent antidumping duty.

Consumer Protection Violation: As part of the settlement of allegations that it engaged in unfair and deceptive practices in connection with a 2017 data breach, Equifax agreed to provide $425 million in consumer relief and pay a $100 million civil penalty to the Consumer Financial Protection Bureau. It also paid $175 million to the states.

Ocean Dumping: Princess Cruise Lines and its parent Carnival Cruises were ordered to pay a $20 million criminal penalty after admitting to violating the terms of their probation in connection with a previous case relating to illegal ocean dumping of oil-contaminated waste.

Additional details on these cases can be found in Violation Tracker, which now contains 397,000 civil and criminal cases with total penalties of $604 billion.

Note: I have just completed a thorough update of the Dirt Diggers Digest Guide to Strategic Corporate Research. I’ve added dozens of new sources (and fixed many outdated links) in all four of the guide’s parts: Key Sources of Company Information; Exploring A Company’s Essential Relationships; Analyzing A Company’s Accountability Record; and Industry-Specific Sources.

Corporations and Economic Sanctions

Large corporations like to claim rights, such as freedom of speech and even freedom of religion, originally intended to apply to individuals. Yet they don’t like it when they are accused of crimes customarily brought against human persons.

That is the situation facing the Swiss cement company LafargeHolcim, whose French operation just escaped prosecution for crimes against humanity but is still facing serious terrorism-related allegations.

The case stems from actions taken by Lafarge half a dozen years ago in Syria, where in an effort to continue doing business in the war-torn country it made substantial payments to jihadi groups such as ISIS.

In 2017 the Paris Public Prosecutor opened an investigation of the company for financing terrorism, and the following year Lafarge and several executives were indicted for complicity in crimes against humanity and other offenses. The most serious allegation was just dismissed by an appeals court, but two NGOs that brought the original complaint – Sherpa and the European Center for Constitutional and Human Rights – are seeking to have the charge reinstated. Whether or not that happens, Lafarge will still face charges of financing terrorism and violating a trade embargo.

In the United States there have been numerous cases accusing large corporations of violating economic sanctions imposed on countries such as Iran, North Korea and Cuba. We have more than 400 such entries in Violation Tracker with total penalties of more than $16 billion. These were mostly brought by the U.S. Justice Department or Treasury’s Office of Foreign Assets Control.

Our next Violation Tracker update will include another two dozen such cases brought by the Manhattan District Attorney and the New York State Department of Financial Services that will add billions more to the penalty total.

The largest of these cases involved the French bank BNP Paribas, which in 2015 was penalized more than $8 billion after being convicted of conspiring to violate the International Emergency Economic Powers Act and the Trading with the Enemy Act by processing billions of dollars of transactions through the U.S. financial system on behalf of Sudanese, Iranian and Cuban entities subject to U.S. economic sanctions.

BNP was sentenced to a five-year term of probation and ordered to forfeit $8.8 billion to the United States and pay a $140 million fine.  This was the first time a financial institution had been convicted and sentenced for violations of U.S. economic sanctions, and the total financial penalty was the largest ever imposed in a criminal case.

One difference between the U.S. cases and the French one involving Lafarge is that individual executives at large corporations are usually not targeted by American authorities. This allows the companies to buy their way out of the legal jeopardy, and no one ends up behind bars.

That’s also true, of course, for other kinds of business misconduct and is one of the key reasons the corporate crime wave never seems to end.

A Limited Corporate Crackdown

The Trump Administration has, for the most part, allowed large corporations to get away with all kinds of misconduct. It has weakened enforcement, limited the use of heavy penalties and searched for ways to dismantle regulations.

Yet there is one corporation that Trump has been attacking recently with special fervor: the Chinese telecommunications equipment giant Huawei.  A Washington Post front-page story article in mid-May was headlined: U.S. Hits Huawei with ‘death penalty,’ a reference to its placement (now delayed) on a list of companies that U.S. firms cannot do business with.

As with many of Trump’s hardball actions, the penalties against Huawei are actually collateral damage resulting from a different skirmish. The president is less concerned with the company’s practices than he is with putting pressure on China to make concessions in a trade dispute that is turning out to be a lot more difficult for the United States to win than Trump had promised.

The pretext for the actions against Huawei is that the company is a national security threat, which is the same general allegation that the U.S. had made against another Chinese telecommunications corporation, ZTE. That company was able to escape the blacklist last year after it paid a $1 billion fine, replaced its management and made other internal changes.

However the Huawei confrontation turns out, it is fascinating to see the harm that the federal government can inflict on a corporation, especially a large one, when it wants to get tough.

The use of the Entity List, compiled by the Commerce Department’s Bureau of Industry and Security, is a particular threat for a company like Huawei, which is heavily dependent on both hardware (chips from companies such as Qualcomm) and software (Google’s Android operating system) from the United States. The pressure on Huawei intensified when two British firms announced that they will abide by the U.S. restrictions. There are bound to be more international ramifications that threaten Huawei’s survival.

Imagine if the United States had applied similarly draconian measures against other foreign corporations accused of misconduct. More than half of the entries on the Violation Tracker list of the companies with the highest cumulative penalties are foreign-based. These include five banks along with BP and Volkswagen.

The U.S. Justice Department and other federal agencies have been willing to levy substantial fines against these companies, yet all of them are still doing business in the United States. These include some that have faced allegations similar to those made against Huawei. For example, the French bank BNP Paribas was accused of violating international sanctions and penalized nearly $9 billion but was not put on the Entity List.

Volkswagen may not have been involved in sanctions and national security controversies, but its environmental conduct has been quite egregious. If the federal government were serious about punishing foreign corporate bad actors, it should bring to their cases the same zeal being shown with regard to Huawei.

For that matter, a more aggressive approach toward rogue domestic companies would also be in order.

Trump’s Commerce Nominee Also Has Suspicious Russian Ties

While the spotlight is on Michael Flynn’s discussions with Russia about sanctions, little attention is being paid to the Russian connections of Trump’s Commerce Secretary nominee Wilbur Ross, who if confirmed would oversee an agency involved with enforcing those sanctions.

The 79-year-old Ross, who was an advisor to Trump’s presidential campaign, is best known as a vulture capitalist who made a fortune restructuring troubled steel, coal and textile companies and then selling them off. Yet he continues to have associations with a wide range of companies. Among those is the Bank of Cyprus, where Ross has served as vice chairman of the board of directors since leading a financial rescue of the institution in 2014.

According to reporting in late 2016 by McClatchy and Mother Jones, the Cypriot bank has close ties to wealthy Russian businessmen linked to Vladimir Putin. One of those is Viktor Vekselberg, whose Renova Group became the second largest shareholder in the bank. One of Renova’s executives, Maksim Goldman, was named to the bank’s board of directors and is now a vice chairman alongside Ross.

McClatchy also pointed out that the Bank of Cyprus was mentioned thousands of times in the Panama Papers in connection with the offshore activities of Putin’s cronies. And then there’s the fact that the chair of the bank Ross helped to install is Josef Ackermann, the retired chief executive of Deutsche Bank, which last month agreed to pay $425 million to resolve allegations by the New York State Department of Financial Services that it helped Russian clients engage in what amounted to money laundering through an international mirror-trading scheme.

What makes all of this more significant is that among the agencies Ross would oversee as Commerce Secretary is the Bureau of Industry and Security (BIS), which along with the Treasury Department’s Office of Foreign Assets Control, administers the sanctions against Russia imposed by the Obama Administration and which, for the moment, are still in effect.

The BIS portion of those sanctions includes restrictions on the ability of U.S. companies to export certain military and energy products to Russian parties whose names are on what is known as the Entity List. The latest Russian additions to the list were made in the final weeks of the Obama Administration in the wake of new sanctions imposed in response to Russian interference in the U.S. presidential election.

In his confirmation hearing last month, Ross was not interrogated about his views on Russian sanctions or how he might adjust the role of BIS. And Ross has defused much of the opposition to his nomination by vowing to divest from most (though not all) of his holdings.

Yet in light of the ongoing controversy over the Russian links of other figures in Trump’s campaign and his administration, Ross’s ties to the Putin network deserve a lot more scrutiny (as do his China connections).

Note: The Bureau of Industry and Security and the Office of Foreign Assets Control, along with the State Department’s Directorate of Defense Trade Controls, are among the agencies whose cases will be included in an update of Violation Tracker that will be posted next week.

The 2015 Corporate Rap Sheet

gotojailThe ongoing corporate crime wave showed no signs of abating in 2015. BP paid a record $20 billion to settle the remaining civil charges relating to the Deepwater Horizon disaster (on top of the $4 billion in previous criminal penalties), and Volkswagen is facing perhaps even greater liability in connection with its scheme to evade emission standards.

Other automakers and suppliers were hit with large penalties for safety violations, including a $900 million fine (and deferred criminal prosecution) for General Motors, a record civil penalty of $200 million for Japanese airbag maker Takata, penalties of $105 million and $70 million for Fiat Chrysler, and $70 million for Honda.

Major banks continued to pay large penalties to resolve a variety of legal entanglements. Five banks (Citigroup, JPMorgan Chase, Barclays, Royal Bank of Scotland and UBS) had to pay a total of $2.5 billion to the Justice Department and $1.8 billion to the Federal Reserve in connection with charges that they conspired to manipulate foreign exchange markets. The DOJ case was unusual in that the banks had to enter guilty pleas, but it is unclear that this hampered their ability to conduct business as usual.

Anadarko Petroleum agreed to pay more than $5 billion to resolve charges relating to toxic dumping by Kerr-McGee, which was acquired by Anadarko in 2006. In another major environmental case, fertilizer company Mosaic agreed to resolve hazardous waste allegations at eight facilities by creating a $630 million trust fund and spending $170 million on mitigation projects.

These examples and the additional ones below were assembled with the help of Violation Tracker, the new database of corporate misconduct my colleagues and I at the Corporate Research Project of Good Jobs First introduced this year. The database currently covers environmental, health and safety cases from 13 federal agencies, but we will be adding other violation categories in 2016.

Deceptive financial practices. The Consumer Financial Protection Bureau fined Citibank $700 million for the deceptive marketing of credit card add-on products.

Cheating depositors. Citizens Bank was fined $18.5 million by the CFPB for pocketing the difference when customers mistakenly filled out deposit slips for amounts lower than the sums actually transferred.

Overcharging customers. An investigation by officials in New York City found that pre-packaged products at Whole Foods had mislabeled weights, resulting in grossly inflated unit prices.

Food contamination. In a rare financial penalty in a food safety case, a subsidiary of ConAgra was fined $11.2 million for distributing salmonella-tainted peanut butter.

Adulterated medication. Johnson & Johnson subsidiary McNeill-PPC entered a guilty plea and paid $25 million in fines and forfeiture in connection with charges that it sold adulterated children’s over-the-counter medications.

Illegal marketing. Sanofi subsidiary Genzyme Corporation entered into a deferred prosecution agreement and paid a penalty of $32.6 million in connection with charges that it promoted its Seprafilm devices for uses not approved as safe by the Food and Drug Administration.

Failure to report safety defects. Among the companies hit this year with civil penalties by the Consumer Product Safety Commission for failing to promptly report safety hazards were: General Electric ($3.5 million fine), Office Depot ($3.4 million) and LG Electronics ($1.8 million).

Workplace hazards. Tuna producer Bumble Bee agreed to pay $6 million to settle state charges that it willfully violated worker safety rules in connection with the death of an employee who was trapped in an industrial oven at the company’s plant in Southern California.

Sanctions violations. Deutsche Bank was fined $258 million for violations in connection with transactions on behalf of countries (such as Iran and Syria) and entities subject to U.S. economic sanctions.

Air pollution. Glass manufacturer Guardian Industries settled Clean Air Act violations brought by the EPA by agreeing to spend $70 million on new emission controls.

Ocean dumping. An Italian company called Carbofin was hit with a $2.75 million criminal fine for falsifying its records to hide the fact that it was using a device known as a “magic hose” to dispose of sludge, waste oil and oil-contaminated bilge water directly into the sea rather than using required pollution prevention equipment.

Climate denial. The New York Attorney General is investigating whether Exxon Mobil deliberately deceived shareholders and the public about the risks of climate change.

False claims. Millennium Health agreed to pay $256 million to resolve allegations that it billed Medicare, Medicaid and other federal health programs for unnecessary tests.

Illegal lobbying. Lockheed Martin paid $4.7 million to settle charges that it illegally used government money to lobby federal officials for an extension of its contract to run the Sandia nuclear weapons lab.

Price-fixing. German auto parts maker Robert Bosch was fined $57.8 million after pleading guilty to Justice Department charges of conspiring to fix prices and rig bids for spark plugs, oxygen sensors and starter motors sold to automakers in the United States and elsewhere.

Foreign bribery. Goodyear Tire & Rubber paid $16 million to resolve Securities and Exchange Commission allegations that company subsidiaries paid bribes to obtain sales in Kenya and Angola.

Wage theft. Oilfield services company Halliburton paid $18 million to resolve Labor Department allegations that it improperly categorized more than 1,000 workers to deny them overtime pay.

The 2014 Corporate Rap Sheet

gotojailThe bull market in corporate crime surged in 2014 as large corporations continued to pay hefty fines and settlements that seem to do little to deter misbehavior in the suites. Payouts in excess of $1 billion have become commonplace and some even reach into eleven figures, as seen in the $16.65 billion settlement Bank of America reached with the Justice Department to resolve federal and state claims relating to the practices of its Merrill Lynch and Countrywide units in the run-up to the financial meltdown.

This came in the same year in which BofA reached a $9.3 billion settlement with the Federal Housing Finance Agency concerning the sale of deficient mortgage-backed securities to Fannie Mae and Freddie Mac and in which the Consumer Financial Protection Bureau ordered the bank to pay $727 million to compensate consumers harmed by deceptive marketing of credit card add-on products.

The BofA cases helped boost the total penalties paid by U.S. and European banks during the year to nearly $65 billion, a 40 percent increase over the previous year, according to a tally by the Boston Consulting Group reported by the Wall Street Journal.

Among the other big banking cases were the following:

  • France’s BNP Paribas pleaded guilty to criminal charges and paid an $8.9 billion penalty to U.S. authorities in connection with charges that it violated financial sanctions against countries such as Sudan and Iran.
  • Citigroup paid $7 billion to settle federal charges relating to the packaging and sale of toxic mortgage-backed securities.
  • U.S. and European regulators fined five banks — JP Morgan Chase, Citigroup, HSBC, Royal Bank of Scotland and UBS — a total of more than $4 billion after accusing them of conspiring to manipulate the foreign currency market.
  • Credit Suisse pleaded guilty to one criminal count of conspiring to aid tax evasion by U.S. customers and paid a penalty of $2.6 billion.
  • JPMorgan Chase paid $1.7 billion to victims of the Ponzi scheme perpetuated by Bernard Madoff to settle civil and criminal charges that it failed to alert authorities about large numbers of suspicious transactions made by Madoff while it was his banker.

Banks were not the only large corporations that found themselves in legal trouble during the year. The auto industry faced a never-ending storm of controversy over its safety practices. Toyota was hit with a $1.2 billion criminal penalty by U.S. authorities for concealing defects from customers and regulators. The National Highway Traffic Safety Administration fined General Motors $35 million (the maximum allowable) for failing to promptly report an ignition switch defect that has been linked to numerous deaths. Hyundai and its subsidiary Kia paid $300 million to settle allegations that they misstated the greenhouse gas emissions of their vehicles.

Toxic dumping. Anadarko Petroleum paid $5.1 billion to resolve federal charges that had been brought in connection with the clean-up of thousands of toxic waste sites around the country resulting from decades of questionable practices by Kerr-McGee, now a subsidiary of Anadarko.

Pipeline safety. The California Public Utilities Commission proposed that $1.4 billion in penalties and fined be imposed on Pacific Gas & Electric in connection with allegations that the company violated federal and state pipeline safety rules before a 2010 natural gas explosion that killed eight people.

Contractor fraud. Supreme Group BV had to pay $288 million in criminal fines and a $146 million civil settlement in connection with allegations that it grossly overcharged the federal government while supplying food and bottled water to U.S. personnel in Afghanistan.

Bribery. The French industrial group Alstom consented to pay $772 million to settle U.S. government charges that it bribed officials in Indonesia and other countries to win power contracts. Earlier in the year, Alcoa paid $384 million to resolve federal charges that it used a middleman to bribe members of Bahrain’s royal family and other officials to win lucrative contracts from the Bahraini government.

Price-fixing. Japan’s Bridgestone Corporation pleaded guilty to charges that it conspired to fix prices of anti-vibration rubber auto parts and had to pay a criminal fine of $425 million.

Defrauding consumers. AT&T Mobility had to pay $105 million to settle allegations by the Federal Trade Commission and the Federal Communications Commission that it unlawfully billed customers for services without their prior knowledge or consent.

The list goes on. Whether the economy is strong or weak, many corporative executives cannot resist the temptation to break the law in the pursuit of profit.

Note: For fuller dossiers on some of the companies listed here, see my Corporate Rap Sheets.