Steven Brill on Corporate Liberals and Corporate Crime

There is a pivotal corporate crime scene in Steven Brill’s new book – Tailspin: The People and Forces Behind America’s Fifty Year Fall – and Those Fighting to Reverse It (Knopf, 2018).

Brill is sitting in a conference room with federal prosecutors in Philadelphia trying to understand why no executive was charged with Johnson & Johnson’s criminal off label marketing of the antipsychotic drug Risperdal to children and the elderly. The prosecutors had secured a misdemeanor plea from a subsidiary and collected a $2.2 billion fine.

Brill wanted to know – why wasn’t the key Johnson & Johnson executive – the current CEO, Alex Gorsky – charged?

“Why instead was Johnson & Johnson allowed, like other drug companies, to pay a fine and have the corporation – actually only its subsidiary – plead guilty to one crime, a misdemeanor associated with its marketing to the elderly?” Brill asked.

In the conference room, “prosecutors who had worked on the case seemed surprised by the question,” Brill writes.

“As we sat in their conference room in Philadelphia, they looked at me blankly, as if I didn’t understand that getting the $2.2 billion fine and the misdemeanor guilty plea was a big victory, squeezed out over months of tense negotiations,” Brill says. “One of the lawyers involved later said that prosecuting Gorsky had been mentioned casually by the prosecutors at the start of the negotiations, but that it was never brought up again as the talks continued, and that no one on either side had considered it a serious possibility.”

Are you saying that the reason is the fundamentally corrupt nature of the system – where you have the prosecutors swinging through the revolving door to the big corporate firms?

“I don’t think it’s corruption like that,” Brill told Corporate Crime Reporter in an interview last week. “It’s more a state of mind. Take the Johnson & Johnson case. Eric Holder has a press conference and says – we are getting a $2.2 billion fine. What these people did was despicable. They put the children and the elderly at risk for their lives. And that’s the end of it. Everybody feels good. The government gets a big fine. Johnson & Johnson could care less about that fine. It’s a fraction of their earnings. The stock doesn’t even take a hit the first day. And nobody is held personally responsible. That dynamic happens over and over again.”

“Look at the press release involving JP Morgan and the Foreign Corrupt Practices Act in China. You read that entire press release and the statement of facts behind the press release. Not a single person is named.”

“There is a scene in the Johnson & Johnson piece. I’m sitting in a conference room at the U.S. Attorney’s office in Philadelphia asking them about the case. And I say – what about Alex Gorsky? And they looked at me like I was a Martian. What does Alex Gorsky have to do with this? We have this big fine. We have this corporate integrity agreement. And I said – he and others are the people who did this. And the prosecutors actually didn’t seem to understand the question.”

“And you report that Judge Rakoff says that when he was a prosecutor, they would actually treat corporate crimes like street crimes, like mob crimes – go after the individuals, start at the bottom, flip witnesses, move up the corporate ladder. Indicting the corporation wasn’t in the equation. It was indicting the responsible executives. Now that has been flipped.”

You say state of mind. But isn’t it more insidious? When you were in that room at the U.S. Attorney’s office in Philadelphia, you were facing prosecutors who were looking at their career choices. Isn’t it true that to upend the apple cart, to start criminally prosecuting executives at Johnson & Johnson, would adversely affect their career paths?

“Call me naive. You are reading too much venality into it. They have gotten into this rhythm of – this is the way the game is played. It’s not like the prosecutor woke up that morning and said – if I don’t hold Alex Gorsky responsible I’m going to get a much better job.”

“What he could be thinking is – if I try to hold Alex Gorsky responsible, I’m never going to see a settlement. The people in Washington are going to be pissed off at me. There is going to be a long trial. They are going to have the best lawyers in the world. And we may lose everything. I think they are wrong, but that is what they may be thinking.”

In your book, you seem to be looking at what we call corporate liberals. They are generally liberal lawyers who went to liberal Ivy League law schools and come out to work for the corporate state in one way or another – either corporate law firms or for a stint as a prosecutor then to return to the law firm.

“In part, yes,” Brill says. “The best example goes back a ways. The law firm Paul Weiss working for JP Stephens. And Munger Tolles, a classic example of the relatively new firm with people from Yale, Harvard and Stanford law schools. They wrote the legal briefs that argue that Wells Fargo should be able to rely on a compulsory arbitration clause for all of those people whose customers were screwed by having the phony accounts set up for them.”

Those are two examples, but it’s pretty much the norm. The graduates of the top liberal law firms go to work for big firms that represent corporations and corporate criminals.

“Yes. In fact, Ralph Nader sent me a study done about six months ago of Harvard Law School alumni that said the same thing.”

You do raise exceptions in your book. One you raise is Dennis Kelleher of Better Markets.

“He got out of Harvard Law School, but also served in the Air Force and worked for Ted Kennedy. He then went to Skadden Arps, then left Skadden Arps and went in the opposite direction. He set up the Better Markets organization, which is a non profit that lobbies against the corporate lobbyists.”

Your book focuses on what you call moats – liberal elites representing corporations who try and protect themselves and their self-interests, but at the same time undermining the common good. One area that you know better than most are these corporate lawyer moats. But why are there so few exceptions – like Dennis Kelleher?

“There are lots of exceptions. And there is also the model of people going in and out of corporate law firms and working in public service. I wouldn’t say it’s exactly a binary thing. But the main reason is that people tend to do things for incentives. And one of the major incentives in our world is money.”
What is the way out of it?

“More people ought to be thinking about a balance in their lives between their personal achievement and the common good. That’s why I have in my book so many examples of people and organizations who are defying the stereotypes. Max Stier runs the Partnership for Public Service. He went to Stanford Law School. He then went to Williams & Connolly. Then he decided he wanted to do public service. And so far, he hasn’t looked back.”

You have a section in your book on the corporate crime moat and you ask why we are unable to hold corporate executives accountable for their crimes.

“Corporations and CEOs have hit the trifecta. First, they established that they were too big to fail so the country has to bail them out. Then they established that they were too big to jail, because if you took their license to operate away, the economy would also crash. And finally, they established the last leg. The CEOs who run them can’t be held responsible because the corporations are too big to manage. Any CEO can always say — you cannot prove beyond a reasonable doubt that this was going on in my company. My company is all around the world. I have hundreds of thousands employees. How are you going to prove that I knew it?”

“That is the story of what happened after the crash. No CEO of any respectable company was held responsible. And even the CEOs of less respectable companies were not held personally responsible. Look at the CEO of Countrywide.

He paid a bit of a fine. But it might have been a fraction of the money he made.”

“The whole idea of the book is what we have lost at the top is any sense of responsibility for the common good and any mechanism of accountability for those who hurt the common good.”

[For the complete q/a format Interview with Steven Brill, see 32 Corporate Crime Reporter 25(13), June 18, 2018, print edition only.]

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