Later On

A blog written for those whose interests more or less match mine.

GM—and the DoJ—duck responsibility

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David Uhlmann writes in the NY Times:

With tough talk that its actions belie, the Justice Department announced last week that it was bringing criminal charges against General Motors for “concealing a potentially deadly safety defect” from regulators and “misleading consumers regarding the safety” of G.M. vehicles, which caused or contributed to at least 124 deaths in accidents when airbags failed to deploy.

As part of a deferred prosecution agreement resolving the charges, G.M. admitted that it knew as early as 2004 that many of its vehicles contained defective ignition switches — and that the company had concluded by 2012 that the defective switches could cause airbags to fail. Yet G.M. did not recall the 2.6 million affected vehicles until nearly two years later and instead hid the fatal safety defects to increase sales.

To make amends, the company agreed to forfeit $900 million to the government and to retain an outside monitor who would oversee its safety programs to help prevent future violations.

This outcome sounds impressive, except for two alarming shortcomings: All charges against G.M. will be dropped if it complies with the deferred prosecution agreement, and no company officials have been charged with crimes based on G.M.’s deadly concealment scheme.

The Justice Department’s willingness to dismiss all charges against the company underscores how badly the federal government has lost its way in the prosecution of corporate crime.

In a case in which more than 100 people have died, it is inexcusable that G.M. will not be required to plead guilty to any criminal charges for misleading safety regulators and the American public. The United States attorney for the Southern District of New York, Preet Bharara, insisted that G.M. deserved credit for its “fairly extraordinary” cooperation, which no doubt is true. But lower fines and perhaps reduced charges are the right way to credit cooperation, not the dismissal of all charges when corporate deception claimed so many lives.

Moreover, the failure to bring criminal charges against individual G.M. officials, just one week after the United States deputy attorney general, Sally Q. Yates, announced the Justice Department’s new policies to crack down on corporate crime, shows how hollow it is for the department to claim that it is increasing its focus on individual accountability.

Holding individuals responsible is not a new policy. Prosecutors always seek to charge individuals in corporate crimes but they don’t always succeed because of labyrinthine corporate hierarchies and the diffusion of responsibility within corporations, which may have frustrated prosecutors in the G.M. case.

The best way to combat corporate crime is to bring criminal charges against corporations and culpable individuals within those companies — and to insist that defendants plead guilty or go to trial. Charging and convicting corporations addresses the flawed corporate cultures and misplaced priorities that encourage criminal behavior; holding individuals accountable is the best way to deter future wrongdoing and promote law-abiding behavior.

Instead, in case after case over the last decade, the Justice Department has treated the worst corporate criminals like first-time drug offenders, agreeing to dismiss or not bring charges if the companies clean up their acts. G.M. is just the latest example. . .

Continue reading.

Written by LeisureGuy

19 September 2015 at 3:41 pm

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