THE BLOG
03/24/2014 09:08 am ET Updated May 24, 2014

Do Corporate Fines Punish Anyone?

In an earlier post, I was surprised to find myself paraphrasing the NRA -- saying that "Corporations Don't Commit Crimes -- People Commit Crimes." So that brings me to the fine imposed upon Toyota. Others have already pointed out that the amount of the fine sounds huge, but it is really a gnat compared to the overall profits of Toyota. G.M. seems to be headed down the same road and probably somewhere down that road it will settle as well. But to me the amount of the fine is almost irrelevant.

In both instances many people were killed and injured; lives were ended or ruined. The evidence seems to suggest that in both instances the companies were aware of the danger, but were more interested in profit than people. In my humble opinion, corporate fines for criminal conduct are a farce. Shareholders who are not guilty of the wrongdoing and many of whom did not even own the company's stock at the time of the criminal activity, in effect, pay the fine. The executives who committed, directed or concealed the criminal conduct go unpunished. I doubt that they even receive a reduction in compensation. The fines certainly do not seem to be working as a deterrent.

What is admitted in the Toyota case and is charged in the G.M. case is that both companies knew for an extended period of time that defects in their automobiles were killing and injuring people, and they concealed it. They continued to sell a product knowing that it was dangerous and defective, and deaths and injury resulted. The guy who sells drugs on a street corner for 20 bucks gets indicted and goes to prison; the corporate executive who robs or kills people writes a check (and it's not even his own money!)

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