>"Limited liability" would be a thing of the past, under a bold new
>initiative to punish shareholders and managers for corporate crimes by
>imprisonment or, in lesser cases, the confiscation of shares.
>"Corporations want to be human," said Governor and likely Presidential
>candidate George W. Bush yesterday at Yale University's law school, "and
>we owe it to them to help them."
>>Bush described the corporate urge to become human as "compassionate
>avarice," and said that it was "not entirely about getting richer."
>"One would have to be very cynical indeed to think that corporations, when
> they won protection as 'persons' under the 'Freed Slave' Amendment, were
>thinking only of their own wealth," Bush said. He was referring to the
>14th Amendment, which had been designed to protect the rights of freed
>slaves, and which was used {HYPERLINK
>"http://www.ratical.com/corporations/TCoBeij.html"}in 1886 to establish
>corporations as "natural persons" under the law.
>"Corporations clearly just want to join our fine species, and an epic
>enterprise like that is not to be taken lightly." Bush said that corporate
>"limited liability," whereby shareholders are not
>responsible for crimes committed in their name, prevents corporations
>from being responsible. The only way to change that, Bush said, is to
>start punishing shareholders in corporations that commit crimes. (See end
>section for specific examples of the punishments Bush is proposing.)
>"We've got to get tough on crimes committed by corporations, just like
>we've tried with teenage kids. 'Tough on crime' policies don't work with
>humans, but corporations are much more rational, much more cause-and-
>effect-driven. They can be intimidated into behaving correctly."
>Good for markets?
>While some experts dispute whether corporations can ever actually have a
>conscience or become human, Bush said he has "experienced a consensus"
>that punishing corporations for the crimes they commit will at the very
>least have a positive effect on the market.
>"Everyone agrees that government regulation makes markets sluggish," said
>Bush. "Government regulation has been necessary because it's the only
>controls we have. But if each shareholder and manager is personally
>responsible for corporate crimes--including safety errors and all the way
>down to lies about quality--then you've automatically got market controls
>of the process. And not only will government regulation be unnecessary,
>but you'll also eliminate the need for several layers of management,
>further increasing profit margins."
>>Bush easily dismissed concerns that personal liability for corporate
>crimes might discourage individual investors from taking a risk. "People
>love to gamble," he said, "and this will make it all very real."
>For those who do not thrive on such risks, Bush suggested that the mutual
>fund industry would easily adapt to manage complex decision-making
>processes, just as it has in the past. "The prime mechanism of regulation
>will be shareholder judgement, delegated or not. If investment in one
>company is likely to land you in jail, you'll invest in another instead.
>Mutual fund companies will find it an exciting challenge to obtain and
>keep investor confidence, and this challenge will reinvigorate the
>industry, and in fact the whole concept of investment."
>Appropriate punishments
>When Bush spoke about proper punishment regimens for corporate crimes, he
>tellingly began with what is not punishment.
>"Fines are not punishment, they do not build character," Bush said.
>"What's a ten-million-dollar fine to a giant corporation? Fines seldom if
>ever affect the pocketbooks of shareholders or managers, those who make
>the decisions or power the machine. But hitting pockets and people
>directly is a totally different thing."
>>"We must remove the burden for controlling corporations from big
>government and regulation--such as fines--and place it squarely on the
>judiciary," Bush said.
>Bush outlined his unique two-tiered punishment program, which would punish
>corporations for legal infractions according to their severity. Bush
>explained that there would be two "suites" of punishment, for levels of
>crime roughly corresponding to misdemeanors and felonies. In one
>"suite"--for "misdemeanors" like bilking taxpayers of seven-figure dollar
>amounts, overcharging consumers, attempting monopolies, and contributing
>to simple human troubles like asthma and brief bouts of
>homelessness--punishment would take the form of short- or long-term share
>confiscation. Dividends of confiscated shares would pay for remedial
>actions, where possible, as well as public-good programs like the
>education of human prisoners.
>"My own brother was a player in the Savings and Loan scandal," Bush said,
>"but he's prepared to face the consequences. Remedies for serious problems
>re never easy, especially when they hit at the root."
>The second punishment "suite," for "felonies"--causing major diseases,
>committing homicide, contributing to national disasters in the U.S. or
>abroad, large-scale bilking of taxpayers, etc.--would involve direct
>punishment of the managers and shareholders in question.
>The Governor used Union Carbide's 1984 Bhopal massacre, in which thousands
>of villagers were killed by lethal gas, as an example of a crime
> that would be classified as a "felony." Others included the German
>industry forced-labor cases, the Mattel sweatshop fires, etc. (While
>retroactive prosecutions based on new laws are usually not permissible,
>these crimes might be, based on the pending Pinochet case, as well as the
>>Nuremberg cases of 1945.)
>In the Union Carbide example, the Governor took out a pocket calculator
>and tallied up figures. Each death would cost the company a "negligent
>>homicide" charge, for approximately twenty years of incarceration each.
>Twenty years multiplied by 2000 equals 40,000 years in prison, with
>aggravating factors such as a lack of remorse or compassion tripling the
>total.
>his penalty would be divided among Union Carbide executives--including
>middle management, and including those who were not with Union Carbide at
>the time, but now are. Also affected would be shareholders, each of whom
>>could expect to spend from a few weeks to several years in prison,
>depending on the size of their investment. (This would apply even to those
>who had invested via "mutual funds," without knowing the precise
>direction of their investments.)
>A minimum penalty could be set by a judge--so that an investor with even a
> fraction of a share would be liable for that minimum, say two weeks in
>jail. A maximum penalty could be set as well.
>>Although Bush addressed with ease most questions concerning the punishment
>programs, he admitted that several major problems remain to be solved.
>The death penalty, for example, while often merited in corporate crime
>cases, had no obvious application--"We're can't talk about 'little deaths'
>here," said Bush, making an obscure bilingual pun better left
>untranslated.
>Also, the issue of global markets poses. "These changes and penalties will
> have to be agreed on by a global governing body like the WTO, not only
>here at home in Texas and America. Otherwise they may create a better
>market here, but the changes will be irrelevant in the bigger picture. And
> influencing such a powerful and state-independent body like the WTO is an
> involved process."
>Despite these problems, Bush and his team remain confident that their
>corporate-punishment program will greatly improve the human landscape. "We
>>feel certain that in this case as in all other free-market cases, the
>search for the right combination will do nothing but benefit consumers."