Robert Reich suggests creating a "national database of corporate crimes and settlements" to help regulators keep track of corporations that have a history of disregarding safety concerns. As long as the fines for individual violations is less than the profits realized in the course of business, there is no incentive for these corporations to clean up their act. To do that, the penalties need to be exceed the rewards and inflict some real pain on the corporation, owners, managers and shareholders. This is particularly important with serial offenders because the culture of the company does not change as a result of minor fines, just as the sociopathic nature of hard core criminals does not get cured by a three month stay in prision. – Ilene
Corporate Rotten Eggs
Courtesy of Robert Reich
There are rotten apples in every industry. Or perhaps I should say rotten eggs.
One especially rotten egg is Jack DeCoster, whose commercial egg agribusiness, which goes under the homey title “Wright County Egg,” headquartered in Galt, Iowa, sends eggs all over the country under many different brands. Those eggs have now laid low thousands of Americans with salmonella poisoning, and may well infect thousands more.
DeCoster is recalling 380 million eggs sold since mid-May. Another commercial egg company, also headquartered in Iowa, and in which DeCoster is a major investor, is recalling hundreds millions more.
It’s not clear how rotten eggs are recalled. They’re not like Toyotas. They’re already in our food supply.
But this is only the beginning of the story.
Thirteen years ago when I was Secretary of Labor, DeCoster agreed to pay a $2 million penalty (the most we could throw at him) for some of the most heinous workplace violations I’d seen. His workers had been forced to live in trailers infested with rats and handle manure and dead chickens with their bare hands. It was an agricultural sweatshop.
Several people in Maine told me the fine wouldn’t stop DeCoster. He’d just consider it a cost of doing business. Evidently they were right. DeCoster’s commercial egg business has a record that would make a repeat offender blush.
In 2003, DeCoster pleaded guilty to knowingly hiring undocumented immigrants (who don’t complain about unsafe working conditions, below-minimum-wage pay, and unsanitary facilities). DeCoster paid a record $2.1 million penalty for that one.
In the 1990s he was charged by Iowa authorities for violating state environmental laws governing the runoff of manure into rivers. He continued to violate environmental laws so often that the Iowa Supreme Court approved an order barring him from building more hog structures.
In 2002 the U.S. Equal Employment Opportunity Commission fined DeCoster’s operation $1.5 million for mistreating female workers. The charges included rape, sexual harassment, and other abuses.
Earlier this year, DeCoster paid another fine to settle state animal cruelty charges against his egg operations in Maine.
In other words, the current national salmonella outbreak is just the latest in a long series of DeCoster corporate crimes. He’s fostered a culture that disregards any law standing in the way of profits. Along the way, DeCoster has abused the environment, animals, his employees, and his customers.
Corporations that play fast and loose with one set of laws are likely to cut corners on others. Look at Massey Energy Company, which owned the mine where 27 miners were killed several months ago. Massey also had a long record of law breaking, and had racked up an even longer list of alleged violations and settlements. Or consider BP, whose malfeasance even before the Gulf spill, included workplace safety violations, deaths, and other environmental disasters.
When I was Secretary of Labor, Bridgestone-Firestone’s refused to install safety equipment resulted in the maiming or deaths of its workers in Oklahoma. A few years later, its faulty tires caused still more deaths.
Some CEOs are just bad citizens, and the corporations they head get the message that the public be damned.
Too often, though, one level or agency of government doesn’t know about corporate malfeasance turned up by another level or agency of government. This is especially true when violations are settled out of court, as is now common. Government doesn’t have nearly enough inspectors or lawyers to bring every rotten egg to trial.
A national database of corporate crimes and settlements would tip off federal, state, and local inspectors to rotten eggs like Jack DeCoster’s agribusiness, Massey Energy, BP, Bridgestone Firestone, and other serial corporate offenders. Scarce inspection resources could be targeted at them rather than at the good eggs. Consumers could benefit as well.
And the rot wouldn’t spill over to other companies now under competitive pressure to treat fines and penalties as the costs of doing business.
Before we can get rid of corporate rotten eggs we need to know about them.
