Much has been said recently of the question of corporate criminal liability. Senator Elizabeth Warren has introduced a bill, the Corporate Executive Accountability Act, which would encourage the incarceration of corporate criminal defendants, stating,
“Too often, prosecutors don’t even try to hold top executives criminally accountable. . . . This culture of complicity warps the incentives for corporate leaders. . . . Even when in-house lawyers flag conduct that skirts the law, there’s little reason for executives to listen. The executives know that, at worst, the company will get hit with a fine — and the money will come out of their shareholders’ pockets, not their own”
This language implies that there may be a higher element of moral culpability for corporate executives for two reasons. First, those attempting to subvert “white-collar” laws are already in an extremely privileged position compared to many currently incarcerated individuals. Executives likely have similarly strong prospects for financial success had they restricted their conduct to legitimate business. Second, their moral digression has a broader and longer lasting effect; in some cases, the corporate malfeasance leads directly to significant economic collapse. The title of Senator Warren’s prior bill on the subject, the Ending Too Big To Jail Act, invokes the most recent example of this effect: the 2008 financial crisis.
This approach may be sound, but has also received criticism from some progressive lawyers for its basis in criminalization and prosecution, as well as its broad scope and therefore its reliance on prosecutorial discretion. As Professors Carissa Byrne Hessick and Benjamin Levin write,
“Warren’s decision to use criminal law to bring about change is part of a broader pathology present on both the right and the left in this country: the assumption that the best way to solve a social problem is to pass a new criminal statute. The past half-century provides plenty of evidence that this approach is a recipe for disaster. As criminal codes have expanded, prison populations have ballooned, and prosecutorial and police discretion have led to a massive, racialized underclass of individuals with criminal records. Anyone who is committed to criminal justice reform should reject this approach.”
However, there is another way to more deftly use criminal law to discourage white-collar crime without contributing to incarceration. Corporations can be charged with crimes and are often fined or required though Deferred Prosecution Agreements (DPAs) and Non-Prosecution Agreements (NPAs) to set up internal compliance procedures. These tools could be used to incorporate into these agreements, into sentences, or into other judgments, a clause requiring the temporary incapacitation of the corporation’s ability to lobby.
As Senator Warren and others have frequently pointed out, a significant reason why there must be these post-hoc punitive measures is a concern that regulators are too friendly with the businesses they regulate. One significant potential reason for this is the ability of these corporations to conduct electioneering and lobbying activity designed to influence elected officials and regulators.
If corporations commit crimes, the first right they should lose is their “free speech” right to fund any lobbying activities, in addition to any other potential DPA or NPA compliance requirements. While many progressives express deep concern with the practice, at present, criminal sanctions can temporarily or permanently take away civil and political rights of incarcerated individuals. For example, 48 states do not allow individuals convicted of felonies to vote while serving their sentence, and 12 states sometimes withhold the right permanently. As well, other states including Texas permanently bar individuals convicted of certain crimes from running for state office. The way people and corporations interact in the political system is different – people, who may have more limited financial capacity, can vote or run for office to advance their ideas. Corporations, who may have significant financial resources but do not have the right to vote, must influence the process through financial contributions towards electioneering activities. Based on the precedent by which convicted people are treated, corporations, who are not people and whose primary political rights are through their electioneering and lobbying power, should lose their ability to continue to ingratiate themselves with regulators.
Of course, there is a risk that adopting this idea seems to tacitly endorse the practice of taking away the political rights of individuals who are incarcerated. To the contrary, however, unlike the practice that concerns Hessick and Levin, there are consistent ways to distinguish between this practice and that of jailing corporate executives. First, the sanction here does not apply to a person – merely a corporation. As many commentators have noted, there may be many just reasons to oppose elements of incarcerating people – needless isolation, dehumanization, and many other concerns. However, many human factors associated with incarceration do not apply to non-living, non-human, corporate entities.
Second, one may express skepticism as to whether corporate money in elections constitutes free speech in the first place. See, e.g., Citizens United v. FEC, 558 U.S. 310, 428 (Stevens, J, dissenting) (“The Framers thus took it as a given that corporations could be comprehensively regulated in the service of the public welfare. Unlike our colleagues, they had little trouble distinguishing corporations from human beings, and when they constitutionalized the right to free speech in the First Amendment, it was the free speech of individual Americans that they had in mind.”).
Third, even if one follows the majority opinion in Citizens United, the existing corruption of the corporation is a compelling enough interest to prompt regulation. Citizens United recognized the finding of Buckley v. Valeo, 424 U.S. 1, 67 (1976), that preventing corruption or the appearance of corruption as a compelling interest which can regulate speech. However, the Citizens United court found that corporate limits on outside spending were not sufficiently narrowly tailored to the goal of preventing corruption. 558 U.S. at 360–62. However, in the case of a corporation that has already admitted or been adjudicated criminally liable, preventing the corporation’s ability to influence legislators who may be directly investigating or overseeing regulators responsible for regulating it is beyond mere “generic favoritism or influence theory . . . unbounded and susceptible to no limiting principle,” id. at 359, but rather is bounded as it is limited to the corrupt corporation itself.
This prospect is fundamentally rooted in the goal of incapacitating large corporate entities from subverting regulation through their primary tools. The ability to incapacitate corporations is not unique. As William Robert Thomas has argued, incapacitation “both can and should serve as a justification for punishing criminal corporations.” Specifically disallowing a group that has subverted regulation from attempting to change the law is beyond a mere expressive measure, but speaks directly to incapacitating the wrongdoing entity.
In short, if there is a problem with corporate power undermining regulation and fomenting corruption, lawmakers should consider temporary incapacitation of the corporation’s political spending or lobbying activities. This practical tool addresses a corporation’s ability to skirt rules and regulations through artful use of their financial resources.