Corporate Criminal Law Doesn’t Exist

Corporate criminal law does not exist.

And it never has.

Mihailis Diamantis
Iowa Law School

That is the conclusion of two emerging young stars of white collar crime academia – Professor Mihailis Diamantis of Iowa Law School and Will Thomas of Michigan Ross School of Business in a new article titled – But We Have No White Collar Law!

“For more than a century, pearl-lock abolitionists have denounced the conceptual puzzles and perceived injustices of corporate criminal liability,” write Diamantis and Thomas.

“Meanwhile, avid corporate criminal law advocates have hailed a system that they believe can bring justice to victims and effective penalties for corporate evildoers.”

“The abolitionists won a long time ago, more by cunning than by reason. Arguing that the United States should abolish corporate criminal law, abolitionists have staged a debate that assumes that corporate criminal law does indeed exist. It doesn’t and never has. The biggest trick the abolitionist ever pulled was to convince everyone to think differently and then get their opponents to argue for the status quo. “

“The criminal justice system has four defining characteristics – it uses a uniquely sophisticated process to target the worst offenders with the harshest sentences and deepest moral condemnation in society.”

“The United States’ alleged corporate criminal justice system lacks all four of these characteristics. The biggest corporate criminals routinely bypass all criminal proceedings and conviction by cutting down attorney deals, selling pathetic fines and empty promises of reform on government press releases commending their cooperation. The real question is not whether the United States should keep corporate criminal law, but what it takes for the United States to have a corporate criminal justice system in the first place. “

Will Thomas
Michigan Ross School of Business

Diamantis and Thomas use the Boeing state criminal investigation as an example.

“The Justice Department’s recent decision to investigate Boeing will serve as a running example of the kind of theatrical pageantry some people today call ‘corporate criminal law,'” they write. “In 2018-19, faulty autopilot systems in Boeing 737 Max aircraft crashed two passenger flights in Indonesia and Ethiopia, killing all 346 people on board.”

“While Boeing initially tried to blame the pilots, the black boxes on the aircraft showed that autopilot systems that responded to defective optical sensors caused both aircraft to dive and prevent manual override. The investigation revealed that the 737 Max was a rush job. Developers save on security protocols. Managers ignored warnings. Executives were “placing undue pressure” on the Federal Aviation Administration to give the flight system an early green light. Sales teams kept customers in the dark about the overhauls and defied airlines’ demands to train their pilots. Many Boeing people made mistakes, but corporate-level vices were a driving force: a carefree attitude towards safety, closed lines of communication to express concerns, and a corporate culture that viewed profit as the sole guiding principle. These were deeply ingrained corporate flaws that couldn’t emerge overnight. It may come as no surprise, then, that the Justice Department investigation was not Boeing’s first federal investigation into insufficient attention to safety. Less than three years before the first crash, the FAA closed a Boeing investigation into safety concerns. As part of the deal, Boeing had promised to improve its security protocols. It clearly pulled the wool over the eyes of the authorities. “

“Massive loss of life. Criminal record. Clear company-wide disruption. Boeing’s case is as bad as it gets. Here, if at all, one would expect corporate criminal law, with all its silver bells, gold decorations, and ivory buttons, to come into its own. Yet the authorities’ flimsy approach to Boeing’s misconduct was cut out of the ordinary and, as such, lacked any trappings of criminal enforcement. “

Diamantis and Thomas argue that the crux of the problem is “that the interests of prosecutors and corporations often coincide”.

“Both want to avoid a lawsuit. This is a well-known feature of criminal law in general. For many types of crime, prosecutors and suspects do not appreciate the cost and uncertainty of legal proceedings. In addition, both of them endeavor, particularly in the area of ​​white-collar crime, to avoid the economic and political consequences of a company conviction. . . .They resolve the vast majority of charges through negotiated deals and effectively circumvent the process – 98% in 2020. “

And why no stigma when it comes to white-collar crime?

“That corporate punishment is flimsy of the kind of stigma associated with general punishment indicates a broader phenomenon: corporate criminal law is simply not conventionally stigmatizing like general criminal law,” the authors write. “We don’t tend to call corporations killers when they kill; Thieves when they steal – arsonists, sex traffickers, or any of the other stigmatic epithets that surround criminal law. Perhaps the criminal law would be better for this without these conventional trappings of stigma and condemnation, if it is at all possible to abolish them. Regardless, those ingrained trappings of criminal law that we find here remain strangely invisible when it comes to corporate criminals. “

Diamantis and Thomas will present their paper next week at a symposium in the Georgetown Law Center entitled “Imagining a World Without Corporate Criminal Law Symposium”.