Legal fictions

The historic legal fiction that corporations are entities that are distinct from the parties running them might work and make sense for some purposes — but when it comes to criminal responsibility for criminal misconduct by corporate officials, it is bad public policy.

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I think of this point as I read about Halliburton’s admitting that it destroyed BP oil spill evidence, and that it's paying a $200,000 fine and enduring a three-year probation for these crimes. The Washington Post, Slate and others have reported that Halliburton executives destroyed the results of internal tests affecting its level of responsibility for the disastrous Gulf of Mexico oil spill. They were not prosecuted. What were their salaries? Bonuses? In understated language, media revealed that the corporate fine was “unlikely to make a noticeable mark in its balance sheet,” though its admissions should have an effect on its responsibilities in pending civil suits pertaining to the same events.

This corporate-personal shell game — which is not at all limited to Halliburton, as recent mortgage, stock and banking scandals have proved — means that rich corporations can buy their way out of criminal responsibility in most cases. But a kid who robs a 7-Eleven of a few hundred dollars and is caught is likely to go to prison and see his life ruined. My now-deceased father used to lament that if a small debtor owed a small amount to a banker or creditor, he’d be hammered, while a tycoon who owed zillions usually could work out some settlement. Better to owe a lot, he’d posit, than a little.

The same thought applies to criminal responsibility. If we are ever to deter serious, far-flung criminal behavior by corporations, the guilty officials ought to face criminal prosecution. If not a sure deterrent of serious corporate crimes, it would be an example of democratic justice.