Month: January 2025

Attacking DEI, Enabling Discrimination

The early days of Trump 2.0 have been marked by a preoccupation with rooting out every last trace of DEI policies. Many programs are being abolished, and diversity officials are being terminated. The administration even tried to bring all federal grants and loans to a halt in order to make absolutely sure nothing was going out the door that promoted what the Office of Management and Budget called “Marxist equity.” Newly minted Defense Secretary Pete Hegseth seems to regard DEI as a bigger threat than ISIS.

What was originally a response by the Right to the supposed excesses of wokeness is now starting to resemble a new Red Scare, complete with calls for federal employees to inform on colleagues who try to conceal DEI activities.

The harmful effects of this extend beyond the career prospects of diversity bureaucrats. One example can be found at a federal agency called the Office of Federal Contract Compliance Programs. The mission of the OFCCP is to ensure that employers doing business with the federal government comply with laws and regulations regarding workplace discrimination. Given that the feds pay out some $750 billion a year to an estimated three million contractors, the OFCCP is responsible for preventing unfair treatment of a large portion of the workforce.

OFCCP’s ability to do its job has been hampered by a Trump executive order that rescinds legal authority the agency has had since 1965 to investigate discrimination and promote affirmative action (the old name for DEI). The thrust of Trump’s order is to bar the agency from pursuing the DEI portion of its mission, but it is unclear whether it will still be able to hold contractors accountable for discriminating against groups of workers based on gender, race, national origin, or sexual orientation. Instead, the order commands the OFCCP to focus on eradicating DEI, which is depicted as the real discrimination.

Trump’s action seems to put an end to decades of enforcement activity in which the OFCCP pressured companies to change their hiring, promotion, and pay practices. In Violation Tracker we document more than 500 OFCCP cases dating back to 2000.  Among the largest settlements are the following:

In 2017 Qualcomm paid $19.5 million to resolve allegations that it paid female engineers less than their male counterparts.

In 2019 Goldman Sachs paid just under $10 million to settle allegations it engaged in pay discrimination against Black, Hispanic, Asian, and female employees.

About 40 other companies have paid settlements of $1 million or more. Food distributors Sysco and US Foods have been involved in the largest number of cases, with nine each. Scores of Fortune 500 corporations are among those penalized by the OFCCP.

Now the Trump Administration has in effect pardoned these companies for their mistreatment of workers. This is a significant retreat from the principle that taxpayer dollars should not go to the bad actors of the business world—and it is another sign that, despite the populist trappings, MAGA policy ends up serving the interests of corporations.

The Inaugural Rogues Gallery

A news photograph on the inaugural ceremony that ran on the front page of the Wall Street Journal showed Elon Musk right behind Trump and his family members as Chief Justice Roberts administered the oath of office. It came awfully close to the recent New York cover cartoon depicting Musk putting his hand on the bible along with Trump’s.

Other photos revealed that Musk was not the only corporate figure given a prominent position in the limited confines of the Capitol Rotunda. Prime spots went to a line-up of tech moguls, including Mark Zuckerberg of Meta Platforms, Sundar Pichai of Alphabet/Google, Tim Cook of Apple, and Jeff Bezos of Amazon.com. A presidency that purports to be about economic populism began by seeming to signal that corporate CEOs and billionaires will have an outsized role.

What makes the deference shown to those business figures all the more unseemly is that they head companies with checkered regulatory compliance records. Here are some of their transgressions, as documented in Violation Tracker.

Meta Platforms has racked up more than $7 billion in penalties since 2000. The bulk of that comes from a $5 billion penalty imposed on Facebook in 2019 by the Federal Trade Commission for deceiving users about their ability to control the privacy of their personal information. Last year, Meta had to pay more than $1 billion to settle allegations by the Texas Attorney General that it captured personal biometric data without authorization.

Alphabet, parent of Google, has amassed $2.7 billion in penalties largely from antitrust, privacy, and other consumer protection cases. Its biggest payout was a $700 million settlement in 2023 with state attorneys general to resolve allegations of monopolistic practices in its app store. The year before, it paid out $391 million to state AGs to settle a case alleging it misled users about the collection and use of their personal data.

Apple has accumulated $1.4 billion in penalties, mainly from cases involving anti-competitive practices and consumer protection violations. For example, in 2020 it paid $113 million to settle a case brought by over 30 state attorneys general in connection with its decision to throttle the performance of iPhones to avoid addressing a problem with battery performance. In 2014 it paid $32 million to resolve FTC allegations it unfairly charged consumers for in-app purchases incurred by children without their parents’ consent.

Amazon has managed to avoid any ten-figure penalties, but it has been penalized much more often than the other tech giants, with 173 entries in Violation Tracker. The largest portion of these involve workplace safety, given the high level of ergonomic injuries in the company’s distribution centers. Recently, OSHA pressed Amazon to sign a corporate-wide agreement to try to improve conditions.

Tesla, SpaceX, and other businesses owned by Musk have accumulated “only” about $100 million in penalties but they are involved in numerous current regulatory controversies, including some related to their extensive contracts with the federal government.

It is also worth noting that all these companies have been involved in regulatory offenses outside the United States and may be hoping that the Trump Administration can pressure the European Union, for instance to ease up on the oversight.

As shown in Violation Tracker Global, Apple has paid out more than $18 billion in penalties to foreign countries since 2010, including a case last year in which it was ordered by the European Commission to repay 13 billion euros to Ireland to make up for illegal tax breaks. Earlier last year, the Commission fined Apple 1.8 billion euros for abusing its dominant position in the market for the distribution of music streaming apps to iPhone and iPad users through its App Store.

Alphabet has paid out 7 billion euros to the Commission for anti-competitive practices and 965 million euros to French authorities for improper shifting of profits to evade taxes. Meta has paid over 2 billion euros in a series of cases brought by the Irish Data Protection Commission for privacy violations. Amazon was fined 746 million euros by the data protection agency in Luxembourg.

In short, the companies given a place of honor at Trump’s inauguration are serial regulatory violators that have apparently decided that cozying up to the new Administration may pay off at home and abroad.

The Two Faces of Pam Bondi

The Senate Judiciary Committee’s hearing on Pam Bondi’s nomination to be Attorney General was filled with talk of weaponization of the Justice Department. Republicans put that label on everything they dislike about the DOJ’s behavior during the Biden Administration, while Democrats used it to warn about what will happen if Donald Trump carries through with his vow to get the Department to exact revenge on his perceived enemies.

Nothing was said about the ways in which the DOJ has been substantially disarmed over the past eight years and will probably be further weakened in the next four. That is with regard to the prosecution of corporations, which are increasingly being treated with leniency rather than the iron fist commonly proposed for other types of offenders.

Bondi spoke repeatedly during the hearing about her intention to crack down on drug dealers, terrorists, human traffickers, and immigration violators. There were some oblique references to business malfeasance. She responded positively to comments on the False Claim Act offered by Sen. Grassley, who reminded us of his leading role in the 1986 updating of the Civil War-era law to enhance the role of whistleblowers. It was unclear, however, whether Bondi was signaling her interest in cases against major federal contractors or just ones targeting smaller fish such as individual healthcare providers.

Bondi also agreed with comments by Sen. Klobuchar about the importance of antitrust. Here it was unclear whether this indicated support for aggressive action against corporate concentration of all kinds or just cases against the Big Tech companies the Right likes to vilify. Bondi was evasive when asked about upholding legislation requiring Big Pharma to negotiate with the federal government on prescription drug prices.

While she sparred on several issues with Adam Schiff, the new Senator from California, she seemed to agree with him on the importance of preventing price-gouging in the wake of the disastrous fires in Los Angeles. Schiff, however, had referred to abusive practices by oil companies, while Bondi seemed to focus on gouging by local businesses.

The ambiguities in Bondi’s comments can also be found in her record as Attorney General of Florida from 2011 to 2018. On the one hand, Bondi’s tenure was tainted by accusations that she backed away from investigating misconduct by the for-profit Trump University because of a $25,000 contribution to a political action committee supporting her re-election campaign by a Trump family foundation.

Bondi initiated relatively few cases against large corporations, yet she was heavily involved in multistate rightwing legal initiatives to undermine the Affordable Care Act, to undo a ban on some semi-automatic weapons enacted by Connecticut in the wake of the Sandy Hook massacre, and to block a plan by the EPA and six states to improve water quality in the Chesapeake Bay by restricting pollution runoff by factory farms.

On the other hand, Bondi participated in numerous more enlightened multistate attorneys general lawsuits. These included major cases against BP for the Deepwater Horizon disaster in the Gulf of Mexico, against big banks for mortgage abuses during 2000s, against Wells Fargo related to the bogus accounts scandal, and against General Motors for selling vehicles with defective ignition switches.

There seem to be two sides to Pam Bondi. She was a rightwing partisan during and after her time as Florida AG and she may have allowed those beliefs to stand in the way of prosecuting allies such as Donald Trump. Yet she also was reasonably serious about carrying out the responsibilities of an AG to serve as a consumer champion and was willing to confront at least some powerful corporate interests.

If, as seems likely, Bondi is confirmed, she will serve in an administration headed by a man who has little regard for norms such as the independence of the DOJ and will probably be inclined to discourage investigations of companies which support him and encourage prosecutions of those he dislikes.

Which Pam Bondi will occupy the AG’s office: the partisan loyalist who carries out Trump’s illegitimate wishes or the upright law enforcement officer?

Will the Biden DOJ End With a Whimper?

Unless something dramatic happens in the next week or so, it appears that the Biden Justice Department’s prosecution of corporate misconduct will come to an end not with a bang but with a whimper.

This is in stark contrast to what happened the last time the DOJ prepared to turn over the reins to a Trump Administration expected to be less than relentless in going after corporate miscreants. In the period between the 2016 election and Trump’s inauguration, the Obama DOJ resolved a flurry of high-profile cases in which major corporations paid more than $30 billion in fines and settlements.

These included four ten-figure settlements: Deutsche Bank’s $7.2 billion toxic securities case; Credit Suisse’s $5.3 billion case in the same category; Volkswagen’s $4.3 billion case relating to emissions fraud; and Takata’s $1 billion case relating to defective airbag inflators. There were also nine-figure cases involving corporations such as Moody’s, Western Union, Shire Pharmaceuticals, and Rolls-Royce.

The Biden DOJ has bagged one significant trophy recently: in December it got the consulting firm McKinsey to agree to pay $650 million to resolve criminal and civil allegations relating to its role in assisting the disgraced company Purdue Pharma in the improper marketing of Oxycontin, which fueled the opioid epidemic. As is common in major cases of this kind, McKinsey was allowed to avoid the full impact of the criminal charges by being offered a deferred prosecution agreement.

Another major consulting company, Booz Allen, recently settled a False Claims Act case involving a contract with the Defense Department, but the penalty amount was only $15.9 million. Otherwise, the resolutions announced since the election have been run-of-the-mill cases brought against lower-profile companies.

I should point out that the Biden DOJ did achieve a couple of major wins in the period leading up to the election. In October, TD Bank paid $1.9 billion and pled guilty to charges relating to anti-money-laundering deficiencies and Raytheon paid $950 million to resolve allegations of contracting abuses and foreign bribery.

My focus here, however, is what the DOJ decides what to do once it has attained lame duck status. Faced with the prospect of turning over their cases to an overly corporate-friendly administration, prosecutors should do their best to achieve strong settlements.

In theory, career prosecutors should be able to pursue cases aggressively, regardless of the ideological orientation of the administration. Yet DOJ leadership can set policies that control how those prosecutors operate.

What complicates the current situation is that even before the election results became known, the Biden DOJ was not, apart from a few cases such as those cited above, taking a particularly aggressive posture toward corporate crime. The department put undue emphasis on offering leniency deals to encourage companies to self-report misconduct. This approach falls apart when the misconduct is not the work of a rogue employee but is instead inherent in the company’s operations and even encouraged by those at the top.

It remains unclear whether the Trump DOJ will continue on the leniency path and perhaps even offer sweetheart deals to companies that have curried favor with MAGA World–the way Meta Platforms has just done by announcing it will end its fact-checking program.

Trump’s choice to run the DOJ, Pam Bondi, does not have a strong track record in prosecuting corporate misconduct. In the eight years she was attorney general of Florida, there were only a handful of successful cases brought against large companies. She spent a lot more time as a leader of the effort by Republican AGs to overturn the Affordable Care Act.

As a fierce MAGA loyalist, she is likely to focus more on prosecuting Trump’s perceived enemies and less on rogue corporations.

Note: A new resource from Public Citizen called the Corporate Enforcement Tracker documents more than 200 pending cases and reported investigations against corporations. Since most, if not all, of these cases are unlikely to be resolved in the next ten days, their fate will be determined by the Trump DOJ.