John Hasnas is a professor of ethics and law at Georgetown University’s McDonough School of Business and is the author of the book, Trapped: When Acting Ethically is Against the Law (Cato 2006), which is an adaptation of Professor Hasnas’ article Ethics and the Problem of White Collar Crime. This previous post discussed one of Professor Hasnas’ articles on the perverse effect that implementation of the Department of Justice’s Thompson Memo has had on companies serving up their employees as sacrificial lambs to avoid an Arthur Andersen-like meltdown.
Following on that article, Professor Hasnas authored this WSJ ($) op-ed over the weekend on the real problem that underlies such policies as those implemented under the Thompson Memo:
DOJ policy is merely a symptom of the underlying disease: the untenable standard of corporate criminal liability embodied in federal law. Attempting to reform DOJ policy without changing the law is a bit like treating a lung-cancer patient’s cough. It won’t hurt, but it won’t help that much either.
When should corporations be subject to criminal punishment? Perhaps never. These entities cannot be imprisoned, only fined; and the fines are paid by the corporations’ shareholders. The defining characteristic of the modern publicly traded corporation is the separation of ownership and control: Shareholders do not control the actions of corporate employees. Thus, imposing criminal punishment on a corporation, rather than on the employees who committed the offense, punishes shareholders who are innocent of wrongdoing.
