Monday, March 20, 2006

Feds Cracking Down On Lawbreakers? Think Again.

No-Nonsense Enforcement? High Fines? Tell Me Another One.

As a father of three children, I would punish them for three reasons: As a punishment for the "crime," as a warning not to let it happen again, and as a lesson to the other kids. We all know what happens when you "spare the rod." It's no different in the corporate suites.

For the past five years, American citizens have been plagued by an administration in Washington that isn't crazy about punishing business-related crime. But there have been exceptions -- large, highly publicized for the really bad guys allegedly showing that the feds are cracking down on lawbreakers. But as soon as the spotlights are turned off, the fines are quietly negotiated to just a fraction of their original amounts.

An Associated Press investigation shows that there's actually not much behind the curtain:
When a gasoline spill and fiery explosion killed three young people in Washington state, officials announced a record penalty against a gas pipeline company: $3 million to send the message that such tragedies "must never happen again."

When nuclear labs around the country were found exposing workers to radiation and breaking other safety rules, assessments totaling $2.5 million were quickly ordered.

When coal firms' violations were blamed for deaths, injuries and risks to miners from Alabama to West Virginia, they were slapped with more than $1.3 million in penalties.

What happened next with these no-nonsense enforcement efforts? Not much. The pipeline tab was eventually reduced by 92 percent, the labs' assessments were waived as soon as they were issued, and the mine penalties largely went unpaid.
And (surprise, surprise), things have gotten much worse recently.
The amount of unpaid federal fines has risen sharply in the last decade. Individuals and corporations regularly avoid large, highly publicized penalties for wrongdoing - sometimes through negotiations, sometimes because companies go bankrupt, sometimes due to officials' failure to keep close track of who owes what under a decentralized collection system.
And getting of lightest is "white collar" crime (even if it results in the death of blue collar workers.) A report by the Government Accountability Office investigators found that just 7 percent of restitution is paid in white collar cases.

Like many agencies, OSHA has a forumula for reducing fines:
The Occupational Safety and Health Administration's written policy explains to inspectors that they can reduce penalties by as much as 95 percent, "depending upon the employer's `good faith,' (25 percent) `size of business,' (60 percent) and `history of previous violations.' (10 percent)"
What's the justification?
Officials explained that compliance is the agency's goal, and that the law allows penalties to be reduced when companies make amends. Violators who don't comply risk being referred to the Treasury Department, which can collect by seizing federal benefits.
Of course, as we saw recently, some agencies (like the Mine Safety and Health Administration), kind of neglect to send unpaid fines over to the Treasury Department. Computer problems. And stuff.

So why is all this a problem?
"Fines and orders to pay restitution are an important part of how we punish convicted criminals. When so little effort is made to collect that money, we allow convicted criminals to avoid punishment for their crimes, weaken our criminal justice system and ultimately deny justice to the victims of crimes," said Sen. Byron Dorgan, D-N.D., who has pressed for closer scrutiny for years.
Newly appointed OSHA director Ed Foulke told his Senate confirmation committee that he saw no need to amend the Occupational Safety and Health Act to make it easier to jail employers who kill. The current penalty structure is perfectly adequate to enforce the law. What we're left with -- in even the most serious cases -- is little chance of prison time and fines effectively reduced to pennies and what do we have left? The corporate equivalent of spoiled children-- with more tragic consquences.