Mihailis Diamantis on Branding Corporate Criminals

Corporate punishment has a branding problem. Criminal sanctions should call out wrongdoing and condemn wrongdoers. Unfortunately, corporate punishment falls far short of these communicative ambitions. 

Mihailis Diamantis
University of Iowa
College of Law

For punishment to convey its intended message, society must be able to hear it. And one way for society to hear it is to brand the corporation as a criminal.

That’s the take of Iowa Law Professor Mihailis Diamantis and Michigan Business Professor Will Thomas in a new article titled Branding Corporate Criminals.

“When courts convict individuals, everyone understands that the conviction places a mark of enduring stigma: felon, thief, murderer and fraudster,” they write. “The state reinforces this impression by reserving its harshest and most degrading treatment for individual criminals, caging them and possibly killing them.” 

“Corporate punishment, by contrast, is a fleeting affair diluted by civil and administrative alternatives, PR spin, and a frenetic media environment. In today’s criminal justice system, it can be hard even to identify after the fact who the corporate criminals are. Unsurprisingly, corporations view criminal charges as inconvenient economic uncertainties and criminal fines as mere costs of doing business. Public perceptions have largely followed suit.”

They propose that corporate criminal law “disrupt this perverse dynamic by adopting a new sanction that would brand corporate criminals.” 

While the brand sanction could take many forms – different visual marks of varying size – Diamantis and Thomas propose “at a minimum, appending a criminal designation to corporate felons’ legal name and mandating its appearance on products and communications.” 

“This corporate criminal brand would stand as a 21st century corporate reimagining of its medieval corporal punishment namesake. Lawmakers rightly rejected physical brands on individual criminals long ago. The criminal justice landscape is different for corporations, who feel no pain and have no dignity.” 

“Unlike monetary fines, corporate criminal branding would unambiguously signal a corporation’s criminal status to outside observers. By forcibly integrating corporations’ criminal identity into their public image, criminal law might finally have a way to recognize victims and to strike at what corporations value most.”

One of the brands the authors propose for corporate felons is the letter F in a circle. And that would be carried on all of the corporation’s products. That of course would not be possible to negotiate as part of a deferred prosecution agreement, the point of which is to avoid being labeled a felon.

“For deferred prosecution agreements, it might be something else, like G for acceptance of guilt,” Diamantis told Corporate Crime Reporter in an interview last month. “These agreements are pretty devoid of any stigmatizing, condemnatory or evocative language that could express society’s rejection of what the corporation did.” 

“There are various types of interventions the prosecutor could make. You are right, felon is not the right term for a corporation that has not been convicted of a felony. But the idea is that the corporation itself will bear the stigma of what it has done.” 

“As for the brand itself, if a corporation is a felon, we propose the circle F, which can be a small superscript to the corporation’s trade name and on consumer packaging. And that’s a relatively minor intervention. It’s not that visible. But there can be a range of levels of intervention.”

“Deferred prosecution agreements play an important role in allowing corporations to avoid conviction and the legal collateral consequences of conviction.  

But that doesn’t mean that there can’t be some recognition by the corporation and some expression by the corporation of the unacceptability of what the corporation has done.”

There is a legal literature on adverse publicity sanctions going back forty years now. 

In 1984, John Braithwaite and Brent Fisse wrote a book titled The Impact of Publicity on Corporate Offenders. But it seems like the practice of corporate adverse publicity never took hold in the United States.

“The adverse publicity sanction was right there in the first draft of the Organizational Sentencing Guidelines,” Diamantis said. “It has been available to judges. They could require corporations, as a sanction or as a term of probation, to publicize the fact of their misconduct. That never really took off in this country. Our story is about why it is that the tools that judges thought they had available to them for an adverse publicity sanction weren’t that effective. And the primary tool was the corporation would have to take out an ad in a newspaper and alert the newspaper’s audience about what it had done. And that was it. It was a momentary injection in a bland medium.”

“Will and I envision creative approaches that prosecutors and judges might take where the fact of wrongdoing is conveyed in a more visible and intuitive sense and even visceral expression of condemnation on consumer packaging. And the details of the wrongdoing could be available to interested consumers. They can maybe scan a QR code which would take them to a page with a fuller description of the wrongdoing, maybe more along the lines of the newspaper ad you might have seen thirty or forty years ago.”

The idea of branding evokes negative reactions because the original brands treated human beings like animals – you would take the hot iron and burn the brand into the criminal’s flesh. 

“Will and I went back and forth about whether or not to reference this history in the paper. In the middle ages, branding sought to achieve publicity and stigma. And those are the goals we are trying to achieve with respect to corporations. Medieval branding and colonial branding in the United States was an abomination. There was no way to do it without offending the physical and dignity interests that every human being has. The reason we used the reference to branding is because it’s a hook to get people to think.”

“Branding in the historical sense was and is anathema. But the thing that made branding anathema in history is not applicable to the corporate context. Corporations don’t have the dignity interests that individuals have. Corporations don’t experience the pain and suffering of the physical brand that was being used against individuals.” 

“And after a term of probation has expired, a corporate brand can be erased. And that was just not true of the medieval and colonial brands. But by getting people to think about the medieval brands, we are hoping to stimulate the thought about what the medieval brand was trying to do, why it was an abomination and why the corporate brand would be different.”

Let’s say a company is convicted of a Foreign Corrupt Practices Act (FCPA) violation. Would a judge currently have the authority to put a bribery brand on the corporation?

“Our view is yes. Judges are authorized to leverage publicity sanctions. To the extent that there are any barriers, we definitely see it as within a judge’s authority to impose it as a term of probation. A brand would be responsive to and reasonably related to the underlying offense.”

“And it’s not only judges we are talking about. Prosecutors can do it also through the deferred prosecution agreement, which is a negotiated agreement with prosecutors. And prosecutors have leverage to get these branding requirements into deferred prosecution agreements.”

Have you come across any examples of major corporations being branded in the way you are proposing?

“We are not aware of any. On some stock exchanges, there are letters appended to a corporation’s ticker symbol for certain violations of the exchanges rules. That’s the closest example we came across.”

What makes you think that branding will work to deter future corporate crime?

“We have had comments and criticisms from other scholars pushing back in both directions – wondering whether it could work at all and wondering whether it would work too well.”

What do you mean by – work too well?

“If you overly stigmatize a corporation, could you drive away its creditors, employees and customers? That’s not what we want to do. We want branding to be a recognition of the significance of corporate crime. We want it to be a validation of the victims of corporate crime. And we want it to be a stimulus to reform. Killing the corporation doesn’t serve any of these interests.” 

“That’s what we mean by working too well. On the other side, not working enough means that – you put a brand on a corporate product and nobody cares. It doesn’t influence anyone’s behavior, whether inside or outside the corporation.” 

“We see both dangers. But there is a wide area in between. And marketing professionals can bring their insight and expertise to designing these sanctions to avoid either pole and tailor the brand to fit the appropriate space in the middle.”

“Some might seek to avoid doing business with the corporation. And we’re hoping corporations will take that into account in the future and would defer future wrongdoing. That’s one impact branding can have.” 

“We are also hoping that corporate stakeholders will, whether internally or externally, push the corporation to do better. By using branding, we recruit them as change agents within the corporation.”

“We draw on some work from Sameul Buell about the blaming function of corporate criminal law and the sympathetic identity that corporate executives and managers have with the moral and social  standing of the business entity they manage. If managers see themselves as being implicated in that expressive message, they will be motivated to steer their corporation on a better path.”

Judges and prosecutors have the authority to impose adverse publicity sanctions. But they have chosen not to use it. Why not?

“People aren’t thinking creatively enough about the possibilities that corporate sanctions can be. We have got ourselves into a rut in the last few decades in thinking about corporate punishment in purely classical economic terms.”

“In classical economic terms, there are two variables – the chance of detection and the size of the sanction. And that’s how you deter corporate behavior. And we see the result.”

“Will and I both have philosophy backgrounds and we are both educated in criminal theory. We bring to the table a broader view about the purposes and possibilities of a criminal justice system. Why haven’t judges done it? Because they have narrowed their perspective on what corporate criminal justice is and can be.”

“The traditional view is – you can put human beings in jail. But you can’t put corporations in jail.”

“But just because you can’t put a corporation in jail doesn’t mean that there aren’t other ways to incapacitate corporations, to restrict their behavior. We have examples about how corporate behavior has been restricted in the past. People don’t think of it as a form of incapacitation. Once you conceptualize restrictions on business as a form of incapacitation, you start thinking about other ways you might incapacitate corporations.”

“And in talking about stigmatizing corporations, we are reaching for some of the same goals. We are not the first to say that shaming sanctions might have a role to play in corporate criminal justice. But we are bringing a broader suite of tools to the table to understand what a corporate shaming sanction can look like. It doesn’t have to just be a newspaper ad. It can be something more akin to the more familiar shaming sanctions from criminal justice history.”

[For the complete q/a format Interview with Mihailis Diamantis, see 37 Corporate Crime Reporter 15(12), April 10, 2023, print edition only.]

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