New Search Engine Identifies the Biggest Corporate Violators

by Greg LeRoy and Philip Mattera

Volkswagen cheats on emissions testing. General Motors fails to disclose a deadly ignition switch problem and is fined $900 million. JPMorgan Chase and three other large banks plead guilty to criminal charges of manipulating foreign exchange markets. ConAgra is penalized $11 million for distributing contaminated peanut butter. A Johnson & Johnson subsidiary is hit with a $20 million criminal fine for selling contaminated children's medications. BP pays more than $20 billion to resolve civil and criminal cases stemming from the 2010 Deepwater Horizon disaster in the Gulf of Mexico.

Call it a corporate crime wave; there seems to be no end of big business transgressions. Companies have come to regard rising penalties as nothing more than a cost of doing business. They pay the fines and settlements, then resume business as usual.

But unlike with street crimes, there is no FBI database for corporate wrongdoing, no unified data source combining information from the various regulatory agencies and the Justice Department. It has thus been difficult to determine which companies and industries have the worst track records.

Enter Violation Tracker, from Good Jobs First's Corporate Research Project -- the first search engine on corporate wrongdoing. Our initial version of the free database brings together about 100,000 cases with penalties of $5,000 or more initiated since 2010 by the Environmental Protection Agency, the Occupational Safety and Health Administration and 11 other federal agencies dealing with the environment and a wide range of health and safety issues. It also includes settlements and verdicts in cases, both civil and criminal, referred by those agencies to the Justice Department. Additional violation categories -- wage and hour, financial, false claims, price-fixing, bribery, etc. -- will be added in the future.

Using a proprietary system of parent-subsidiary matching developed by Good Jobs First for our Subsidy Tracker database, Violation Tracker links the companies named by regulators to their ultimate corporate parents. Users can see not only individual records but also aggregate penalty totals for more than 1,600 parents.

Also available at violationtracker.org is a report entitled BP and Its Brethren, which analyzes what the information in Violation Tracker shows about the biggest environmental and safety violators.

We find that eight large corporations and their subsidiaries have each been penalized more than $1 billion for environmental and/or health and safety cases brought by federal regulatory agencies since 2010. A total of 40 parent companies have paid $100 million or more in such penalties. The list is topped by BP, whose $25 billion total, mostly from Deepwater Horizon, far exceeds that of any other company.

BP's $25 billion puts oil at the top of the ranking of industries by total penalties. The pharmaceutical industry is second, due to a series of major cases against companies such as GlaxoSmithKline involving the promotion of medications for "off label" uses not approved as safe by the Food and Drug Administration. Utilities rank third, due to cases involving power plant emissions. In fourth place is the auto industry, thanks mainly to a $1.2 billion penalty paid by Toyota and the $900 million GM fine, both related to safety issues.

Other findings:

• Large corporations are responsible for the vast majority of the penalties. Companies on the Fortune 500 and the non-U.S. portion of the Fortune Global 500 together account for 81 percent of Violation Tracker's total penalty universe.

• Foreign companies operating in the United States represent a large share of the violations. In fact, given that BP is one of those foreign parents, the penalty total for that group is larger than for U.S.-based firms: $34 billion vs. $21 billion. Even without BP, foreign parents account for $9 billion in penalties.

• There are substantial overlaps between the companies penalized by the different agencies, especially between EPA and OSHA. Some companies are on more than one agency's top-ten list of most-penalized firms. BP shows up on three: EPA, OSHA, the Pipeline and Hazardous Materials Safety Administration as well as the list of largest multi-agency cases handled by the Justice Department.

• A comparison of the 100 parents with the most penalties in Violation Tracker to the 100 most-subsidized in Subsidy Tracker finds 16 overlaps, mainly automakers such as Toyota and General Motors.

• Along with actual foreign companies, the most penalized parents include some companies that have "inverted" (reincorporated or merged abroad) and thus claim to be foreign to dodge U.S. taxes. The tax runaway with the largest penalty total is Transocean, which leased the ill-fated Deepwater Horizon drilling rig to BP and which was fined a total of $1.4 billion in connection with the accident.

• Leading federal contractors are also among the most-penalized companies. Of the 100 largest contractors in FY2014, ten are also among the biggest penalty parents in Violation Tracker, including: four pharmaceutical producers (GlaxoSmithKline, Merck, Pfizer and Sanofi); two oil giants (Royal Dutch Shell and Exxon Mobil) and three military contractors (Honeywell, General Electric and Boeing). Conglomerate Berkshire Hathaway is also on the list.

The fact that so many of the companies in Violation Tracker are repeat offenders highlights the need to find more effective ways to deter corporate recidivists.

Greg LeRoy is the executive director and Philip Mattera the research director of Good Jobs First.