Can You Name Ten Corporate Criminals?

Iowa Law Professor Mihailis Diamantis and Will Thomas of the Michigan Ross Business School recently asked readers:

Can you name ten corporate criminals? 

Bernie Madoff, Martha Stewart and Jeff Skilling don’t count – they are individuals, not businesses. 

How about just five? Three? 

“It’s surprising the task should be so difficult. Corporate crime inflicts upwards of 20 times more economic damage each year than all street crime,” they write. “Brand-name corporations find themselves on the wrong side of the law for everything from accounting fraud to homicide to narcotics dealing. Yet many people, including most law students and even some law professors, don’t even know that corporate criminal law exists.”

In a forthcoming paper titled Why Corporate Prosecutors Need Better Marketing Chops, Diamantis and Thomas argue that widespread ignorance about corporate crime and corporate criminals reflects a systemic problem for business law, as well as a missed opportunity.

“Corporate criminal enforcement needs a marketing makeover,” they write. “When prosecutors and agencies ignore basic marketing principles, they undermine the deterrent impact of the public, expressive act inherent in corporate criminal enforcement. These failures of communication undermine the most basic moral and preventive aspirations of corporate criminal law.”

“This is an unforced error that some creative thinking and attention to marketing basics could begin to remedy right now, without even requiring much additional expense.”

What should the government do?

“We think that by increasing the resources spent on marketing, the government can get significantly more bang for the buck than they are getting right now,” Thomas told Corporate Crime Reporter in an interview last month. “We’ve actually seen this sort of trend when it comes to governance and compliance.” 

“Corporate criminal law has in principle been concerned with issues like internal governance for decades, but it’s really only been in the past let’s say 12 years or so that the Justice Department itself has started investing resources into better understanding and better advising about compliance.” 

“We haven’t seen the same investment coming from the government when it comes to the marketing side of its own practice. Which means all of this time and effort spent on getting better at the work isn’t being matched by an ability to communicate those successes when they come to the public.”

“The public is harmed when it’s difficult to find out about these major organizations involved in serious instances of crime, fraud or corruption, both across the country but in specific jurisdictions.” 

“Those are some basic substantive proposals. We actually frame the conversation in terms of what marketing scholars refer to as the four Ps, the marketing mix –  categories of price, place, promotion and product.”

“We talk through each of those four Ps in ways the government can improve its practices. In addition to substantive suggestions, we also have methodological suggestions. Our big methodological suggestion is that there is a whole world of marketing, scholarship research and practice that, to date, has been barely tapped by both the government and by people in my position who spend a lot of time thinking about corporate criminal law.” 

“And that strikes us as a huge missed opportunity. I’m lucky enough to be in a business school where I’m surrounded by scholars of all different stripes, including a fantastic marketing department. And our experience as lawyers is that most of the marketing expertise in this area of law just comes from lawyers with no training who are doing their best to figure out how to communicate to the public.” 

“There are people whose careers, whose livelihoods, are based on doing this well and right now we think the government is doing a poor job of tapping that resource.”

You give the PG&E example.

“The four Ps are a simple, straightforward conceptual framework for thinking about marketing issues. It’s just a way to structure the kinds of considerations that would go into a successful marketing campaign.” 

“This is obviously aimed at the traditional kind of private business, but the lessons apply to government as well.” 

“To take the place example, the general thought about placing marketing is that place refers to the channels through which firms distribute their product or their services to consumers. So when it comes to something like corporate criminal sanctions or corporate criminal punishment, we want to step back to think about – how are the sanctions being delivered to the community? Where are these pieces of information coming from?” 

“When you think of criminal law, the first and most important channel we think of is the courtroom itself. Decades of TV drama has taught us that the bench can be a source of drama. And with respect to PG&E, we saw this happen a few years ago. PG&E plead guilty to 84 counts of manslaughter related to their causing the 2018 Camp Fire.” 

“The presiding judge required PG&E’s CEO to attend and participate in the plea colloquy – the acceptance of the plea. And specifically the judge required the CEO to admit the company’s guilt individually to each of the 84 charges of manslaughter, during which the court read out each victim’s name. This is an instance where the court is really taking seriously the communicative dimension of its work, rather than just going through a sort of bureaucratic processing of forms, which is something that’s happening in the background of the guilty plea.”

“The court is taking this solemn occasion to reflect on the loss of 84 lives and insist that the company take responsibility in each and every instance. We think this is just a model of empathy and decorum coming from a court and the kind of practice that other courts should look to and think about adopting under appropriate circumstances.”

In 1984, John Braithwaite and Brent Fisse wrote a book titled The Impact of Publicity on Corporate Offenders. 

We interviewed Braithwaite back then and my recollection is that they addressed the issue of adverse publicity sanctions, where the court would sanction the company by requiring it to take out ads in newspapers, for example, to admit to the public their guilt.

“The Sentencing Guidelines do explicitly allow for that sort of sanctions. In our article, we talk about that kind of approach. We are now working on a piece about reinvigorating that kind of sanction. In the late 1980s, there was a lot of attention to this idea of adverse publicity sanctions – how to define them, how to implement them. That effort led to the Sentencing Guidelines, which were adopted in 1992, creating an explicit power of the courts to impose this kind of sanction.”

“We point out that although the power is just on paper, it is very infrequently used. And when it is used, it tends to be in the kinds of circumstances you are describing.” 

“Companies are required to take out an ad in the local paper or post an advertisement or make an announcement. There is nothing wrong per se with those kinds of sanctions, but we think they’re frankly a little outdated and outmoded for where both corporate brands and information technology are at right now.” 

“So we’re writing a piece called Branding Criminal Corporations that’s focused on ways to update that kind of sanction for the 21st century, with closer attention to actual marketing principles.”

Your paper is about public relations. But the Justice Department has been heavily influenced by corporate power. How would you see this playing out? Would the Justice Department hire one of the major public relations firms? Or would they just up their game?

“On the ground, what does this look like? Certainly, you would need an upping of resources committed to this practice.” 

“As we spoke about earlier, there is a sanction in federal law that allows a court to force a company to make some kind of adverse publicity announcement. It also empowers the court to require the defendant corporation to pay for those. In the same way that we have corporate monitors, corporate governance experts, other outside third parties being brought into this process, we think that courts and prosecutors should be looking to outside advertising and marketing organizations to help them design the kinds of successful outward facing publicity they want. And they should recognize that it’s not the government’s responsibility to bear those costs. This would probably require some internal allocation of resources just to kick off the program. But in terms of overall costs, it could be done without great expense to the taxpayers by virtue of the fact part of the sanction is not just requiring the company to publicly admit wrongdoing, but to pay for the publicity.”

What’s an example of an adverse publicity sanction that you like and that could serve as a model?

“We have seen very few examples. This is an impoverished area of enforcement.” 

The thing that matters most to corporations is their reputations. That’s why they make sure they go to great lengths to not plead guilty and instead get their deferred and non prosecution agreements.

“Companies’ public reputation and images are the important thing. The brand equity of companies in the United States has skyrocketed in importance over the past 20 or 30 years. It has always been important, but it’s never been quite as important as it is right now.  A company’s brand or public reputation is so closely connected to the public or consumers. So if you look back on this literature about adverse publicity sanctions when it was first developed in the late 80s, a lot of the concern was – how will anybody ever find out about these events?”

“Papers aren’t going to cover most of these cases, a handful of big decisions will reach national or regional papers, but most of them will be confined to trade magazines that the average consumer won’t find. And that’s just not the media landscape we have now where a company’s brand is literally at the fingertips of consumers. So these sanctions have a real potential to be impactful and especially so, we think with sort of coverage of both millennials and Gen Z investors and employees who are significantly more sensitive to the reputations of the places that they work or invest in.” 

“We see this as a fine moment for the government to start taking seriously the impact that these kinds of sanctions can have beyond just the dollar amount, but really on the long term behavioral trends of conservative vision.”

[For the complete q/a format Interview with Will Thomas, see 34 Corporate Crime Reporer 43(12), October 24, 2022, print edition only.]

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