CORPORATE CRIME REPORTER
Bowman Says It’s Either Regulation or Criminal Prosecution, Take Your
22 Corporate Crime Reporter 36(12), September 22, 2008
Big business has been working for years to undermine civil regulation.
Into the void has stepped the Department of Justice.
Now, big business is crying foul.
No more criminal prosecution, they say.
Well, you can’t have it both ways.
With regulation crippled, business wrongdoing is shooting up.
And criminal prosecutors are just doing their job.
So, get used to it.
That in a nutshell is the take of Frank Bowman, a Professor at the University of Missouri College of Law.
“There is very little indication that free market mechanisms are an adequate deterrent or response to serious corporate misbehavior,” Bowman told Corporate Crime Reporter last week. “And that is particularly true in an environment in which regulation has been de-emphasized, to put it as kindly as possible. You have an environment in which particular federal regulatory agencies have been largely defanged in a whole variety of areas. And private regulatory mechanisms have been weakened. And in that setting you are going to see more corporate misbehavior. And there is a lack of any other available institution to respond to it. I’d like to see a re-invigorated regulatory environment in which public and private regulatory mechanisms are strengthened to try to prevent bad behavior before it happens or to deal with it when it happens at an earlier stage of its development.”
“And that’s likely to be more effective in preventing problems. And it tends to diminish the need for criminal prosecution.
But if you are going to insist that regulation should be continually weakened, the only remaining response to bad corporate behavior is the Justice Department.”
“If you are a business person, you have to ask yourself whether on balance you would prefer an environment in which there is a modest and sensible increase in the strength and vigor of regulation or a completely or nearly unregulated environment in which the penalty for major screw ups is twenty years in the joint.”
While emphasizing the real need for criminal prosecution of corporations and their executives, Bowman is also critical of overly harsh sentencing guidelines for individual white collar criminals.
“Under the Sentencing Guidelines, an individual who is a CEO or other high corporate official who is convicted of an offense that involves some violation of the securities laws and causes a loss of $2 million, that is probably enough to call for a life sentence,” Bowman says. “Two million dollars. Securities fraud crime. Corporate officer. You add up all of the various parts of the guidelines that apply, you are talking about a life sentence. That is ridiculous. The sentence levels called for by the guidelines are so high that at least at the top end of the scale, judges don’t even pay attention to them anymore.”
Excessive sentencing aside, business crimes must be prosecuted, Bowman said.
“In the society in which we live, corporations, business organizations, exercise immense power, economically and politically,” Bowman said. “With that power comes a lot of responsibility to exercise the power not merely in pursuit of profit, but in ways that are consistent with the broader public interest. If people abuse that power, they should be punished.
“Given the power of these institutions, the power that they exercise in the market, the power they exercise in the political classes, there really is only one institution than can takes these guys on when they’ve gone off the reservation,” Bowman said. “And that is the Department of Justice. It is important for the democracy that there be an institution that is capable of taking on very large business interests and of assigning blame, even criminal blame, to people who abuse the immense power that they are given as the heads of these large corporations. And when they prosecute these crimes, and when it can be proven, and when a jury accepts that it is so, I have no difficulty saying that such people should be punished, they should be punished severely. But on the other hand, there has to be a moderating influence here too. You can’t let mob hysteria take over. There has to be some measured judgment as to the amount of punishment that should be inflicted. But punishment yes. Criminal punishment yes. And an active Justice Department, absolutely.”
[For a complete transcript of the Interview with Frank Bowman, see 22 Corporate Crime Reporter 36(12), September 22, 2008, print edition only.]
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