Editorial

Cops on the Corporate Crime Beat

A defining feature of corporate power is the ability of corporations to influence heavily the laws and rules that govern what they can and cannot do.

An even cruder display of their power is that the existing legal restraints on their operations are so poorly enforced. In the United States, this circumstance predates the Bush administration, but things have certainly got a lot worse under the Bush regime.

There are fewer corporate cops on the beat, and the cops are making fewer arrests, giving out fewer tickets, and consorting with the crooks. Meanwhile, the criminals are working to eliminate citizen arrests.

Or, stated more plainly: The number of agents to enforce rules governing corporate conduct have plummeted across a broad range of agencies; agencies are bringing far fewer enforcement actions; tough enforcement programs have been replaced by government-industry cooperative initiatives, and real criminal prosecutions have been replaced by no-prosecution deals; and corporations are aiming to restrict the few remaining effective enforcement tools, including state attorneys general prosecutions and victim lawsuits against corporate wrongdoers.

In recent years, there has been a significant decline in the number of inspectors to ensure companies do not sell contaminated meat, hawk dangerous drugs or poison the environment.

The number of Food and Drug Administration food inspectors rose after 9/11, but has fallen 12 percent from a 2003 peak. The FDA's budget for inspecting overseas pharmaceutical plants fell 25 percent between 2002 and 2007. The number of U.S. Department of Agriculture inspectors has plummeted from 12,000 in 1978 to 7,600. The Environmental Protection Agency (EPA) regional enforcement workforce fell 5 percent from 1997 to 2006. The Washington Post reports that the EPA now employs 172 investigators in its Criminal Investigation Division, below the minimum of 200 agents required by the 1990 Pollution Prosecution Act, signed by President George H.W. Bush. Federal Occupational Safety and Health Administration (OSHA) staff totaled 2,405 in 1975, according to the AFL-CIO; there were 2,208 federal OSHA staff in 2006, even though the number of workplaces has more than doubled and the number of covered workers has almost doubled. The Consumer Product Safety Commission has fewer than 400 employees, less than half the number it had in 1980.

Fewer enforcement agents - along with a lax attitude to enforcement - means less inspection and enforcement. FDA food safety inspections dropped 47 percent between 2003 and 2006, according to the Associated Press. The FDA stopped 157 illegal drug ads in 1998, but only 20 in 2007, according to Public Citizen. EPA civil lawsuit against polluters are down 70 percent, comparing the 2002-2006 period with a four-year period in the late 1990s, according to a Washington Post analysis. The Transactional Records Access Clearinghouse (TRAC) reports that the fiscal year 2007 audit rate for the largest corporations in the United States has plunged to its lowest level in the last 20 years, less than half of what it was in fiscal year 1988. And, TRAC says, the Internal Revenue Service audits big companies less thoroughly than they used to. The Federal Reserve took one, two, three! formal actions against subprime lenders from 2002 to 2007. An analysis by the Bloomberg news service found that the Office of Comptroller of the Currency, which has authority over almost 1,800 banks, took three consumer-protection enforcement actions from 2004 to 2006.

Across the board, and to a considerable extent dating back before the Bush II administration, regulatory agencies have abandoned an enforcement culture for a collaborative one. They have relied on partnerships with industry and voluntary initiatives. On the occasion when government enforcers do aim to criminally prosecute a company, they commonly abandon the effort in exchange for "no prosecution" or "deferred prosecution" agreements - effectively pledges by the defendant company not to violate the law again.

The end result of so much softness on corporate crime and wrongdoing is a more dangerous marketplace, sicker people and a more polluted world.

The high-profile disasters of the last year - the tainted meat, the contaminated spinach, the lead toys, the subprime crisis, the poisoned drugs, the mine disasters - are creating a political climate in which it is possible to imagine restoring sufficient staffing and an enforcement culture at the regulatory agencies.

But it will not come easily. Even as Big Business cringes under the spotlight for its myriad abuses, the Chamber of Commerce and allies are aiming to defang the most effective enforcement tools of the day. They want to prevent state attorneys general from suing corporations for financial shenanigans, claiming only the feds should have such authority. And they want to further limit the ability of victims of corporate wrongdoing to get redress in a court of law, notably by saying that FDA approval of a drug should block consumers from suing over its safety.

The time has come to revisit again what corporations are permitted to do. Ensuring they follow the existing rules that the people impose is a necessary precondition to a meaningful debate over the scope of lawful activity for Big Business. If the rules are not enforced, they are not worth much.