Gently Regulating Corporate Election Involvement

A recent announcement by the Federal Election Commission that it was fining the National Enquirer’s parent company was unusual in two ways.

The first had to do with which parties were targeted by the FEC and which were not. The agency imposed a penalty of $187,500 against A360 Media LLC (formerly known as American Media Inc.) for making a payment to Karen McDougal in 2016 to suppress her story about having had an affair with Donald Trump.

Watchdog group Common Cause alleged that the payment – which was facilitated by Trump’s former personal lawyer Michael Cohen– amounted to an illegal in-kind contribution to Trump’s campaign by American Media. The FEC agreed, but it chose not to sanction the beneficiary of the payment. In other words, this was another example of how Trump manages to avoid personal consequences for misconduct for which he was ultimately responsible.

The FEC action was also out of the ordinary because it entailed a penalty directed at a company. It has become so rare for the FEC to bring cases against corporations themselves (as opposed to their political action committees), that I have not been including the agency among those federal regulators from whom I collect data for Violation Tracker.

Seeing the A360 decision, I decided it was time to add the FEC, but I didn’t know how many corporate cases could be found. I knew that the heyday of prosecuting corporations for election finance violations came in the 1970s as an outgrowth of the Watergate investigations. Those cases would have to be left out, since Violation Tracker coverage begins in 2000.

I also knew that there were likely to be few cases after January 2010, when the U.S. Supreme Court’s Citizens United decision wiped away most limitations on campaign spending by corporations as well as other entities. The ban on the direct use of corporate funds for campaign contributions remained in place.

The other factor has to do with the FEC itself, which often deadlocks along partisan lines and has difficulty imposing penalties against corporations or other entities and individuals.

As I dove into the case archives on the FEC website, I focused on what the agency calls Matters Under Review and ignored its administrative fines brought against PACs and campaign committees for matters such as late filing of reports.

I ultimately found a total of 31 cases in the period since January 2000 in which a corporate entity was fined $5,000 or more for an election violation. There were only four penalties above $100,000 – including one for $1 million – and the overall average was just $77,000.

Most of these cases involved allegations that the corporation improperly reimbursed employees for their individual donations to try to get around the ban on the use of corporate funds.

It is difficult to believe that fewer than three dozen corporations broke this rule and other remaining regulations during the past two decades. Instead, the low case count is another symptom of underregulation of corporate activities with regard to elections and much more.

Note: the new FEC entries will be added to Violation Tracker later this month as part of an overall update of the database.

The Obscure Companies Threatening the Planet

Hilcorp Energy, a privately held oil and gas producer based in Texas, shows up in Violation Tracker with only $2 million in regulatory penalties, compared to more than $1.5 billion for petroleum giant Exxon Mobil. Yet according to a detailed new report published by Ceres and the Clean Air Task Force, Hilcorp dwarfs Exxon when it comes to climate-ruining emissions of methane gas.

Hilcorp is one of a group of lesser-known energy producers which turn out to be responsible for a remarkable portion of greenhouse gas emissions. The findings of the Ceres report, which outed the companies using data from the EPA’s Greenhouse Gas Reporting Project, were surprising enough to merit a front-page article in the New York Times.

Among the other low-profile/high-emissions companies featured in the report are Terra Energy Partners, Flywheel Energy, Blackbeard Operating and Scout Energy. These firms have few or no listings in Violation Tracker.

One of the reasons these companies fly under the radar is that they are not publicly traded. Some are controlled by private equity firms, making their business even more opaque.

As the Times article points out, some of these producers have purchased operations from larger, publicly traded corporations subject to more scrutiny. For example, Hilcorp acquired gas wells in the San Juan Basin in northwestern New Mexico from ConocoPhillips, reducing that company’s carbon footprint while doing nothing to reduce the burden on the climate.

It is significant that the Ceres report is appearing in the wake of the showdown at Exxon Mobil, where institutional investors concerned about the risks associated with climate change have just succeeded in winning three seats on the corporation’s board of directors.

That is a vitally important development in the effort to bring about change at the company which is still the largest overall emitter of greenhouse gases. The Ceres findings point out the necessity for the climate movement to target not only the corporate giants but also the smaller players which are having an outsized impact.

One difficulty in changing the practices of both larger and smaller corporations is the fact that the U.S. environmental regulatory system does little to punish firms for their greenhouse gas emissions. A producer such as Hilcorp can get away with its massive methane emissions because it does not need to worry about activist institutional investors or the possibility of substantial penalties from the EPA.

The EPA has gone after automobile producers such as Hyundai for their greenhouse gas emissions, but the agency has faced strong legal obstacles in the effort to regulate emissions by power plants and energy producers.

Those obstacles need to be overcome, and corporations of all kinds need to face substantial monetary penalties for their contributions to the climate crisis.

Note: Apart from the Ceres report, good use of the EPA’s greenhouse gas data has been made by the Political Economy Research Institute’s Greenhouse 100 Polluters Index, which ranks parent companies by the total emissions of their subsidiaries. In that index, power plant owners such as Vistra Energy and Duke Energy are at the top. Exxon is number 11 and Hilcorp number 36.

Oil Giants Pressed for Changes Instead of Promises

A substantial number of large corporations would have us believe they are in the forefront of the efforts to address issues such as climate change, inequality and racial injustice. They brag about their commitment to corporate social responsibility and claim to be devoted to high-minded ESG (environmental, social and governance) principles in their operations.

There are two big reasons to be skeptical about this self-congratulatory stance. The first is that Big Business is often the cause of those problems, not the solution. The second is that the remedial measures companies claim to be taking often turn out to be illusory.

Two recent developments suggest that that corporations may be unable to go on running these cons. In an unprecedented ruling, a court in the Netherlands ordered petroleum giant Royal Dutch Shell to cut its carbon dioxide emissions sharply to align with the Paris agreement on climate change. This was said to be the first time a company faced a legal mandate of this kind. What made the decision even more significant is that Shell was held responsible not only for its own emissions but also those of its supply chain. This suit, brought by environmental groups, was a legal breakthrough for the climate movement.

Yet, the ruling was also consequential in that it challenges the notion that corporations should be allowed to make their own decisions on how to address environmental and social goals. And in that sense it rocks the foundations of ESG, which is built on the idea of voluntary measures. Companies have gotten a great deal of mileage out of making claims about what they have done or plan to do. Many of these statements cannot be verified, and there is no enforcement mechanism for holding corporations to their promises.  

Much of what goes by the name of corporate social responsibility is a method of warding off more stringent government regulation by claiming that the private sector can address the issues on its own.

Shell is a prime example of a company that says one thing and does another. On its website, the company claims that its commitment to sustainability dates back to 1997 and that it works “to embed this sustainability commitment into our strategy, our business processes and decision-making.”

Yet during this same quarter-century, Shell has been embroiled in an ongoing controversy over its practices in Nigeria. Environmental groups alleged that the company’s operations were responsible for a large number of pipeline ruptures, gas flaring and other forms of contamination that also contributed to greenhouse gas emissions. The Nigerian government responded to protests with a wave of repression, including the arrest and killing of prominent activist Ken Saro-Wiwa. Shell denied it was involved, but critics pointed to the role played by the company in supporting the military dictatorship.

A lawsuit brought by Friends of the Earth Netherlands and four Nigerian farmers was filed in a Dutch court, alleging that spills from Shell pipelines damaged the livelihood of the farmers. The case dragged on for years, but in early 2021 the Hague Court of Appeal finally issued a decision on the case, ruling that Shell had to pay compensation to the farmers and install equipment to prevent future pipeline leaks.

Shell is not the only oil major on the hot seat. After years of leading the corporate climate denial effort, Exxon Mobil claimed to be changing its stance. It may have abandoned the overt denialism, but it resisted taking significant steps to reduce its carbon footprint. Now, institutional investors have run out of patience.

Led by an upstart hedge fund called Engine No.1, investors succeeded in electing two members to the Exxon board against the wishes of CEO Darren Woods. Those directors vowed to use their position to press the company to move toward carbon neutrality.

The two will be a minority on the board, but their election will make it harder for Woods to ignore the calls for Exxon to do more to address the climate crisis.

The revolt within Exxon and Shell’s legal setbacks will not by themselves transform business, but they are indications that large corporations may find it increasingly difficult to rely on vague commitments and instead may have to take concrete, enforceable measures to address climate change and other urgent issues.  

The 200-Year-Old Corporate Criminal

Boston-based State Street Corporation traces its history back to 1792 and now manages more than $3 trillion in assets, yet it has always maintained a lower profile than the goliaths of Wall Street. Recently, the company was in the spotlight, though not in a good way.

The U.S. Attorney’s Office for Massachusetts announced that State Street would pay a $115 million criminal penalty to resolve charges that it engaged in a scheme to defraud a number of its clients by secretly overcharging for expenses related to the bank’s custody of client assets.

“State Street defrauded its own clients of hundreds of millions of dollars over decades in a most pedestrian way,” said Acting U.S. Attorney Nathaniel Mendell. “They tacked on hidden markups to routine charges for out-of-pocket expenses.”

What’s remarkable is this simple fraud went on, according to prosecutors, for 17 years. This suggests that a large number of company executives were in on the scheme. In effect, it became part of State Street’s standard operating procedure.

It is disappointing that, aside from the monetary penalty—which can be easily absorbed by a company of its size–State Street was let off with what amounted to a slap on the wrist. Like numerous large corporate violators before it, State Street was allowed to enter into a deferred prosecution agreement rather than being compelled to enter a guilty plea.

The DPA is all the more controversial because State Street did not have a pristine record prior to this case. As shown in Violation Tracker, it has paid more than $1 billion in penalties in previous cases dating over a decade. These included a 2010 case in which it had to pay $313 million to resolve allegations by the Securities and Exchange Commission and the Massachusetts Attorney General that it misled investors about their exposure to subprime investments while selectively disclosing more complete information to specific investors.

Later, in 2016, State Street paid $382 million to the resolve an SEC case alleging that it misled mutual funds and other custody clients by applying hidden markups to foreign currency exchange trades. Hidden markups seem to be a recurring theme for State Street.

Since 2010 the company has paid out another $400 million in cases brought by the SEC and state regulators as well as class action lawsuits involving its management of pensions and benefit plans.

Yet perhaps the most disturbing entry on the Violation Tracker list is a 2017 case in which State Street paid a $32 million penalty to the Justice Department to resolve charges that it engaged in a scheme to defraud a number of the bank’s clients by secretly applying commissions to billions of dollars of securities trades.

As in this year’s criminal case, State Street was allowed to wriggle out of those charges by signing a deferred prosecution agreement. That puts the company in the dubious group of corporations that, as a 2019 Public Citizen report showed, have been offered multiple DPAs or non-prosecution agreements.

The ability of a corporation to obtain multiple leniency agreements makes a mockery of DPAs and NPAs. These arrangements are justified as a way to encourage a wayward company to change it practices, yet the ability to obtain multiple get-out-of-jail-free agreements does nothing more than incentivize more misconduct.

SCOTUS Boosts Crooked Corporations

The U.S. Supreme Court has given a boost to crooked corporations in a ruling that restricts the powers of one of the federal government’s oldest regulatory agencies, the Federal Trade Commission, which has been operating since 1914. The Justices ruled unanimously that the FTC does not have the authority to go to court and win redress for unfair and deceptive business conduct. It must first go through a cumbersome administrative process.

Since the 1970s the FTC has been obtaining court injunctions against rogue companies and compelling them to provide monetary relief to consumers. In Violation Tracker we document nearly 500 cases brought by the agency since 2000, with total fines and payouts of more than $14 billion. More than a dozen of those cost companies more than $100 million.

Just the other day, the FTC announced it was sending more than $59 million collected on behalf of consumers who were victims of an allegedly deceptive scheme by Reckitt Benckiser Group and Indivior Inc. to thwart lower-priced generic competition with the branded drug Suboxone. Many of these enforcement actions may no longer be possible.

The high court ruling may prompt Congress to revise the law to allow the FTC to go back to using court injunctions. Yet for now the regulatory landscape is in flux. Corporations embroiled in disputes with the FTC, such as Facebook, are claiming that the agency lacks the authority to proceed. Facebook is still smarting from a previous FTC case from 2019 in which it paid a $5 billion penalty for privacy violations.

Given the similarities between the FTC Act and the law governing the Food and Drug Administration, there may be challenges to the FDA’s use of injunctions. The ruling is even being cited in disputes not involving federal agencies. A group of generic drug manufacturers being sued by state attorneys general for price-fixing is claiming that the ruling should also bar actions seeking injunctive relief under Section 16 of the Clayton Act.

On the other hand, there are indications that the FTC may choose to partner with state AGs on consumer protection actions in areas other than antitrust, relying on their power to seek relief from corporations over issues such as unlawful debt collection and privacy violations.

Legal observers also believe that the Consumer Financial Protection Bureau may help fill the gap created by SCOTUS, as least in financial sector cases, given that its authorizing legislation, the Dodd-Frank Act, explicitly allows it to sue for restitution and other relief without first going through lengthy administrative proceedings. It can also do so against a broader range of misconduct.  

Nonetheless, it is disappointing to see the FTC and possibly other agencies lose the ability to bring prompt action against corporate miscreants. Business misconduct shows no signs of abating, so regulators need as many tools as possible to end the abuses and force corporations to compensate those who have been adversely affected.

Ending Corporate Impunity

Corporate America’s embrace of voting rights, racial justice and other social causes is laudable, but it is also designed to make us forget how much the private sector profited from the retrograde policies of the Trump Administration. This was not just a matter of the business tax cuts.

Thanks to deregulation and weakened enforcement, big business was able to operate with a much higher level of impunity. The latest evidence of this comes in a new report from Public Citizen documenting the declining volume of prosecutions of corporate crime during the Trump years.

Using data from the U.S. Sentencing Commission, Public Citizen finds that the number of federal prosecutions of corporate criminals fell to a new low of just 94 in fiscal year 2020. This was a drop of 20 percent from the year before, a plunge of two-thirds from the peak of 296 in 2000, and the lowest on record since the Commission started releasing corporate prosecution statistics in 1996.

While adopting a lackluster approach to prosecutions, the Justice Department was more inclined to offer rogue corporations leniency agreements. Employing data from the Corporate Prosecution Registry, Public Citizen points out that DOJ substantially increased its use of deferred prosecution and non-prosecution agreements in FY2020.

Connecting the two trends, Public Citizen finds that the leniency agreements amounted to 32 percent of the total of all cases against corporations, a record amount.

The report dispels any suggestion that declining prosecutions and increasing leniency agreements are signs that Corporate America has become better at obeying the law: “On the contrary, they are signs that, despite Trump’s ‘law and order’ rhetoric and his administration’s brutal crackdowns on immigrants, racial justice protestors and low-level offenders, the administration went out of its way to avoid prosecuting corporate criminals. The result is the creation of an environment of corporate impunity.”

The Public Citizen report focuses on criminal cases, but there were similar trends in civil enforcement. For example, the data in Violation Tracker shows that the DOJ’s civil division, which handles matters such as False Claims Act cases against rogue federal contractors, announced only 44 corporate pleas and settlements in 2019, down from 137 announced by the Obama DOJ in 2015.

Fortunately, these findings are now mainly a matter of historical interest. The current question is how things will change under the Biden Administration. Since Merrick Garland has been attorney general for a short time, it is too soon to reach any clear conclusions.

It is widely expected that DOJ will be taking a more aggressive stance. One major law firm advised its clients that white collar enforcement activity will “substantially increase,” adding: “Not only will the government take a more aggressive posture, but the proliferation of whistleblower programs and the creation of new enforcement tools means that prosecutors will be armed with more information and resources than ever. Companies should remain vigilant as risks shift and consider taking steps to ensure they adapt their compliance programs and controls accordingly.”

When corporations are made to feel they need to be more careful, we humans can breathe a bit easier.

Exercising Enforcement

It is not surprising that Peloton Interactive Inc. thought it could refuse to tell the Consumer Product Safety Commission the identity of a child who was killed in an accident involving one of the company’s treadmills. And it was not surprising that Peloton was shocked when the CPSC unilaterally issued a press release urging owners of the Tread+ to stop using the machine in homes with small children or pets.

The reason is that the CPSC has long been one of the more toothless of the federal regulatory agencies. As shown in Violation Tracker, over the past decade it has brought only about 50 enforcement actions involving monetary penalties. During the Trump Administration, the agency almost faded away, bringing only seven actions. There were none at all during the final two years of Trump’s tenure.

Instead, the CPSC has relied on the willingness of manufacturers to reveal safety problems on their own and voluntarily recall defective products. Peloton did disclose the fatal accident on its website and to the CPSC, but by withholding key details it thwarted the agency’s ability to investigate the matter. It also softened the negative impact of the announcement by making the disingenuous claim that it was protecting the privacy of the family involved.

Peloton also applied more of its own spin in the announcement by suggesting it was enough for users to “make sure” that the space around the equipment is clear. By contrast, the CPSC press release, which the company denounced as “inaccurate and misleading,” noted that it was aware of 39 incidents involving the Tread+, including at least one that occurred while a parent was running on the treadmill. The agency said this indicated that the risks were not limited to situations in which a child has unsupervised access to the treadmills, which cost more than $4,000.

Issuing the release without the company’s consent was a remarkable step for the CPSC, given that a provision of the Consumer Product Safety Act known as Section 6(b) restricts the ability of the agency to reveal company-specific information.

The agency is also limited in its ability to impose mandatory recalls. To do so, the CPSC would need a court order, meaning that a recalcitrant manufacturer could tie up the matter in protracted litigation, all while continuing to sell the dangerous product.

All of this is to say that the less than dazzling enforcement record of the CPSC is to some extent the result of structural impediments. Past attempts to remove those restrictions were not successful, but the Peloton dispute has prompted a renewal of those efforts. U.S. Senator Richard Blumenthal (D-CT) and U.S. Representatives Jan Schakowsky (D-IL) and Bobby L. Rush (D-IL) recently introduced legislation that would repeal Section 6(b).

Corporate lobbyists have worked so hard to promote the idea of over-regulation that many people will be surprised to hear the extent to which an agency such as the CPSC is prevented from taking strong action. The Peloton case is a reminder that the real problem is often not too much regulation but too little.

Public Money and Public Health

When a company is the subject of front-page stories about serious misconduct, the firm would normally have a track record of regulatory infractions documented in Violation Tracker. Yet Emergent BioSolutions, which has had to throw out millions of doses of Covid-19 vaccine because of serious production flaws, does not have a single entry in the database.

This is not because Emergent has had a perfect track record until the present. On the contrary, investigations by the New York Times, the Washington Post and the Associated Press have reported that probes by two federal agencies and by Johnson & Johnson, which contracted with Emergent to manufacture the vaccine, had found serious deficiencies, especially with regard to its efforts to prevent contamination.

If you read those articles carefully, you will see that the findings come from unpublished documents obtained through Freedom of Information Act requests or that were leaked to reporters. In other words, the public was unaware of the deficiencies being found by inspectors from the Food and Drug Administration and J&J auditors. There were no public enforcement actions against the company that would have shown up in the regulatory data collected for Violation Tracker. There are also no substantive references to regulatory issues in the publicly traded company’s 10-K filing.

I also searched the Nexis news archive for articles or press releases about Emergent. Prior to the recent revelations, almost all the coverage about the company focused on the numerous government contracts it has received. Two decades ago, it was the nation’s sole producer of the anthrax vaccine, as a result of which it received many millions of dollars in federal contracts. It also received funding to work on drugs for Ebola and Zika prior to getting on the Covid-19 gravy train.

Among the agencies providing this backing has been the Biomedical Advanced Research and Development Authority, an office within the Department of Health and Human Services. BARDA was apparently aware of shortcomings at Emergent but did little about them. The Times investigation found that in dealing with the company the agency “acted more as a partner than a policeman.”

Along with the federal largesse, Emergent has received millions of dollars in state economic development incentives. In 2004, Maryland provided up to $10 million in assistance for the facility that was producing the anthrax vaccine. The state provided a $2 million loan when Emergent built a new headquarters in 2013, with Montgomery County and the city of Gaithersburg kicking in another $1 million. More public money was provided to the company’s Baltimore operations, where the Covid-19 work has been performed pursuant to an estimated $1.5 billion in manufacturing contracts.

While the production problems were kept quiet, Emergent was able to pretend that all was well at the company. Its CEO Robert Kramer’s total compensation jumped to $5.6 million last year. The company’s stock price at one point last summer soared to $135.

Now all that is over. The stock price is at less than half that level. The company is facing multiple investigations whose results are likely to be made public. Kramer should not expect a big boost in pay.

It is unclear how much Emergent’s practices have set back the country’s campaign to defeat the coronavirus. Yet it seems clear this was an egregious case of a corporation living high on public money without paying adequate attention to public health.

The Infrastructure of Workplace Protection

Republicans are having limited success turning the public against the Biden Administration’s $2 trillion infrastructure plan by claiming the proposal is too wide-ranging. A new NPR poll shows solid support not only for the provisions relating to roads and bridges but also for spending on modernizing the electric grid, achieving universal broadband coverage and even expanding long-term healthcare.  

Given the sweeping scope of the proposal, it is not possible for pollsters to ask about every component. I suspect there would also be high numbers for a portion of the plan that has received little attention. That is the provision that would strengthen the capacity of federal departments responsible for enforcing workplace protections.

Biden is proposing that $10 billion be spent to beef up agencies such as the Occupational Safety and Health Administration, the Equal Employment Opportunity Commission and the Wage and Hour Division. The plan states: “President Biden is calling on Congress to provide the federal government with the tools it needs to ensure employers are providing workers with good jobs – including jobs with fair and equal pay, safe and healthy workplaces, and workplaces free from racial, gender, and other forms of discrimination and harassment.”

It makes sense to push for improvements in job quality at the same time the country is striving to bring the quantity of jobs back to the levels seen before the arrival of Covid-19. Workplace abuses predated the pandemic, in some ways got worse during the past year—especially with regard to job safety in industries such as meatpacking—and will be with us long after the health crisis abates.

Congress has perennially failed to fund these agencies adequately, leaving them with insufficient numbers of inspectors and investigators. For example, the most recent edition of the AFL-CIO’s Death on the Job report notes that the number of workplace safety inspectors declined steadily during the Trump years both at the federal and state levels. These staffing shortages create a form of de factor deregulation as many workplace abuses go undetected and unprosecuted.

Biden’s plan also briefly addresses another problem with workplace enforcement: artificially low penalty structures, especially at OSHA. The Administration calls for increasing these penalties but does not provide specifics.

The penalty situation at OSHA is not as bad as it used to be. Changes made during the Obama Administration, including 2015 legislation that extended inflation adjustments to workplace safety fines, helped raise penalty rates. The maximum for a serious violation is now $13,653 and the maximum for a willful or repeated violation is $136,532.

These maximum amounts do not tell the full story. As Death on the Job points out, the average penalty for a serious violation in fiscal year 2019 was only $3,717. The average for willful violations was $59,373 and for repeat violations it was $14,109. Even in cases involving fatalities, the median penalty was just $9,282.

The cumulative effect of low OSHA penalties can be seen in the data in Violation Tracker, which only includes fines of $5,000 or more. OSHA accounts for 37 percent of the cases in the database but less than 1 percent of the total penalty dollars. Numbers such as these cause too many employers to conclude that their bottom line is best served by skimping on workplace safety and paying the meager fines that may or may not be imposed by OSHA.

The Biden infrastructure plan could begin to change that.

The Violation Tracker Origin Story

The article and dazzling infographics on Violation Tracker just published by Fortune are not only great publicity for the database. They also provide an opportunity to recall how the idea for a resource on corporate misconduct came about in the first place.

As the Fortune piece mentions, the origin story dates back to 1980, when I was a young researcher on the staff of that same magazine. Yet there is more to be said about what occurred behind the scenes during that project and its aftermath.

Back then, Irwin Ross, a contributor to the magazine, had seen a news article about small-business corruption in Chicago and thought it would be interesting to explore similar behavior among large companies. His assumption—and that of Fortune’s editors—was that illegality was rare in big business.

After being assigned to the project, I set out to disprove that premise by gathering as many cases as I could involving our sample universe of just over 1,000 companies that had appeared on the Fortune 500 and related lists at any point during the previous ten years. The editors decided to limit the scope of the research to five categories: bribery, criminal fraud, illegal political contributions, tax evasion, and criminal antitrust violations.

To the dismay of the editors, I found that quite a few of the corporations – 117 to be precise – had been the subject of a successful federal prosecution during the specified time period. Among these was Fortune’s then-parent, Time Inc., whose subsidiary Eastex Packaging had pleaded no contest to a price-fixing charge.  

After much hand-wringing, Fortune’s editors decided to publish the list of the cases, along with an article by Ross, in the December 1, 1980 issue with the headline “How Lawless Are Big Companies?” and the subhead “A look at the record since 1970 shows that a surprising number of them have been involved in blatant illegalities.” The story was featured on the cover with a photograph depicting an executive being fingerprinted by a U.S. Marshal.

As one might expect, the companies included in the list were quite displeased. To their credit, Fortune’s editors did not retract or disown the article, but they did agree to give one of the corporations an opportunity to respond.

The December 29, 1980 issue contained a piece by William Lurie, general counsel of International Paper, headlined “How Justice Loads the Scales Against Big Corporations.” Calling my list “simplistic and misleading,” he tried to explain why IP had felt compelled to plead nolo contendere to price fixing charges. His argument was essentially that it was simply too risky for a company to fight such charges in court, given that a guilty verdict would open the door to crushing damages in a follow-on civil suit.

This was not exactly a profession of innocence. In fact, as the Fortune article noted and Lurie acknowledged, no contest is tantamount to a guilty plea. Lurie’s argument, like nolo itself, served as a way for corporations to save face after being labeled corporate criminals. His piece also took the pressure off Fortune editors for diverging from what was then their unvarying defense of corporate behavior.

For me, the experience created a life-long fascination with documenting corporate misconduct. I later learned that this kind of research had begun much earlier, especially through the work of the sociologist Edwin Sutherland. When his book White Collar Crime was published in 1949, the company names were removed. It was only in 1983 that an unexpurgated version was published by Yale University Press.

Following in the tradition of Sutherland’s book and other work such as the Project On Government Oversight’s Federal Contractor Misconduct Database, Violation Tracker is designed to show that lawlessness among large corporations is a problem that persists.

Note: drop me a line at pmattera@goodjobsfirst.org if you can’t get behind the Fortune paywall and want to see the whole story.