Even huge fines do little to change corporate criminals
By Phil Mattera for the Dirt
Diggers Digest
In the normal course of events, an $8 billion penalty and a guilty plea would represent a landmark event in the history of corporate crime enforcement. The newly announced resolution of charges against Purdue Pharma is, however, a disappointment and a missed opportunity to mete out appropriate punishment to one of the most egregious rogue companies this country has ever seen.
Let’s start with the monetary
penalty. The $8 billion amount ranks 11th among all the fines
and settlements collected in Violation Tracker. It is
surpassed by penalties paid by companies such as BP, Volkswagen, Bank of
America and JPMorgan Chase.
As bad as the environmental and
financial conduct of those corporations may have been, it is likely that Purdue
Pharma has caused much greater harm. It bears a significant amount of
responsibility for the hundreds of thousands of people who have died from
overdoses after becoming addicted to opioids the company recklessly promoted.
There is also the issue of the
economic costs to society. The Society of Actuaries has estimated those costs to be as high as
$214 billion a year. Looked at in comparison to the human and economic costs,
the $8 billion penalty seems woefully inadequate—all the more so because it is
unclear how much of that amount the bankrupt company will actually pay.
It is good that the Justice Department extracted a guilty plea from Purdue rather than its frequent practice of allowing large companies to sign deferred prosecution or non-prosecution agreements. Yet this is a case which called out for individual as well as corporate criminal charges. DOJ got the Sackler Family, which controls Purdue, to pay out $225 million—yet that is a pittance in relation to the billions the family has taken from the company.
One unusual feature of the case
resolution is the provision that will require Purdue to emerge from bankruptcy
as a benefit company supposedly dedicated to serving the public rather than
maximizing profits. It remains to be seen how that would work, but it is
already troubling that the creation of the trust would allow Purdue to reduce
its criminal penalty substantially.
The good news is that the DOJ
settlement is not the end of the story. The statement that the Sackler family
has not been released from potential federal criminal liability is not expected
to mean much, especially under a Trump Administration.
The possibility of more aggressive
action can be found at the state level. Numerous state attorneys general have
sharply criticized the deal and have vowed to pursue their own cases. “I am not
done with Purdue and the Sacklers,” warned Massachusetts AG Maura Healey.
Let’s hope that state prosecutors do
their job, because their federal counterparts have failed to adequately crack
down on the worst corporate violators and the individuals behind them.