Friday, June 18, 2010

A Corporate Criminal Code?

Corporations have never been as powerful globally as they are today.

With the introduction of the WTO and various free trade regimes governments relinquished sovereign powers, notably access to their markets, tariffs and free movement of capital, essential to globalization. It's been all gravy for the rentier class, the investment sector, but others have paid for that and, in some cases, paid dearly.

We expect governments to act within certain moral strictures but corporations operate devoid of morality save for obligations imposed on them or public relations gestures. Corporations at times act with heinous disregard for those they harm but only because we have tolerated that.

We have only to look at the Deepwater Horizon debacle to see the problem. Those needing more should read The Food Bubble, How Wall Street Starved Millions and Got Away With It in this month's Harper's magazine. These are but two examples, there are many, many others.

The corporate veil has created an impunity for directing minds to act in ways harmful to people and entire societies. Even if the company is found criminally liable it too often is resolved by way of a fine. Except in cases of outright fraud (Enron), top management rarely is at risk of imprisonment.

Isn't it time to push back? What if we prohibited corporations from committing acts that harm others? Harm to the person, harm to that person's ability to sustain himself and his/her family, that sort of thing. Not all harm of course, only harm that was reasonably foreseeable, harm that would be apparent to a reasonable person knowledgeable of the facts. Perhaps couple that with an obligation on management to take reasonable measures to keep themselves informed of the activities of their coporate entities sufficient to discern what might be expected to cause prohibited harm. When those standards (reasonableness and foreseeability) were not met, slam them up in accordance with the harm inflicted.

I think the interjection of an element of possible personal, criminal liability into corporate decision making would invite management to look beyond potential profitability and consider reasonably foreseeable harmful effects. After all, you can't do as you please. Our laws expect you to bear in mind whether your actions can reasonably be foreseen to inflict harm. It's why our law assumes, without direct proof, that you intend the reasonably foreseeable consequences of your actions. Why should the directing minds of harmful corporate actions be placed above the same law that governs you?

Let me be clear about one thing - this is going to get far worse, far more destructive if we don't push back hard on this. When Goldman Sachs operates the largest carbon trading desk in the cap and trade market that alone is ample reason to act. The market cannot be allowed to game food as a commodity when that means undermining the food security of millions and potential starvation. It can't and we can't allow it. There's too much at stake to allow 18th century capitalism to run unchecked in today's world.

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