Unbusinessy




Cartoon: judge sentences CEO to be decapitated

Corporate Fines Punish the Wrong People - I Have a Better Idea

By Jeffrey Baumgartner

What happens when companies are naughty? Usually, they get slapped with big fines. Take Volkswagen. As you probably know, someone (or, more likely, some group) in the company modified their cars' diesel engine software to pollute less when undergoing government tests for pollution than when actually driving on the road. This was fine and dandy and boosted the company's green credentials, at least until America's Environmental Protection Agency (EPA) discovered Volkswagen's little trick. Since that unfortunate discovery, Volkswagen has been hit with fines damages and other assorted naughty bills totaling more than US$15 million. On one hand, that is fair. Pollution, global warming and children dying from respiratory problems are all a result of polluting cars. Lying about how much you pollute does not help this problems. On the other hand, the fine punishes the wrong people and, at least so far, the right people (ie, those actually responsible) have yet to be punished.

A few years ago, a BP oil rig off the coast of New Orleans spilled some 4.9 million barrels of oil onto the New Orleans coast owing to engineering carelessness. The result was extensive damage to wildlife, reduced quality of living and a huge drop in tourism; after all, who wants to sunbath on an oily beach? A the company was fined four billion dollars. Again, this is fair. BP was naughty. But the naughty people were not punished while others who had nothing to do with the oil spill did feel the consequences.

Where Does the Fine Money Come From?

Consider Volkswagen's fine and other costs. Where is that money going to come from? Over the long term, future customers, of course. Over the short term, well, a big fine may mean closing down a factory or two and laying off people to cut costs. But, the people laid off are factory workers who put the cars together, not the engineers who rigged the cars' software. Moreover, a factory closure does not affect only the employees. It affects businesses supplying the factory as well as local shops, restaurants and services catering to factory workers and their families.

A note here: Volkswagen's plans to cut the workforce by five percent has not been attributed to the fines, nor have any closures or lay-offs been attributed to the fines. Nevertheless, if Volkswagen feels a need to cut costs, having to pay 15 billion may well be a factor.

Senior Executive Pay Cut

"Hey!" I hear someone shouting, "Shouldn't senior executives take a pay cut?" Sure, that would be noble act. But even if top executives are being paid millions, that is only a tiny percentage of the total costs of the company's transgression.

Their fines and other costs may easily top US$20 billion. Where does that money come from? Selling fucking cars, of course. So that means that anyone who buys a Volkswagen in the future will be contributing towards paying off the fine.

The same is true of Chevron. The cost of any fine is ultimately borne by the customer. Cost cutting is borne by workers at the bottom rungs of the ladder and workers in supplier companies.

Indeed, senior corporate people who are naughty seldom suffer for their actions. At worst, they get fired and must survive on massive severance packages. More likely, they are merely scolded by self-righteous politicians, apologise and get back to work.

Sure, there are exceptions. Six people at Volkswagen have been indicted and so there may be criminal charges. But, no one at BP has been convicted of any crime.

Let's Not Even Mention the Banking Crisis... Nah, Let's Mention It

Following the 2008 banking crisis that fucked up the global economy, banks were fined billions of dollars, but no one was convicted of any crime. So, again, customers and lowly workers suffered the consequences of management irresponsibility, greed and naughtiness as did, in this case, gazillions of financially challenged people with mortgages they suddenly could no longer support and whose houses we quickly becoming far less valuable than the amount still due on the loan, making it impossible to sell the house in order to get out of trouble.

That corporate C-level people can make decisions that threaten the health and safety of their communities, the environment and their customers, and not suffer any consequences is not right, especially as their customers and their bottom-of-the-ladder employees do pay for those consequences.

I have a Suggestion

I have a suggestion. Bring back the guillotine. When corporate executives are found guilty of committing serious crimes, sentence them to a public execution to be aired on prime-time television.

Surely, the very threat of losing her head would discourage a corporate executive from being naughty.

What do you think?

 

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