As I pointed out in the earlier post about PG&E, the corporate structure shields corporate executives from personal responsibility and effectively allows the corporation to pay large sums of money as recompense or as fines, even for felonious conduct that, if attributed to an individual, could well result in prison time. In the San Bruno pipeline explosion of 2010 that killed eight people, injured 58 others, and destroyed 38 homes, PG&E was found guilty of six felony counts of violating pipeline standards, and not a single individual was held responsible. Damages and fines exceeded $2 billion, but Peter Darbee, the chairman and chief executive of PG&E Corp., the utility’s parent holding company at the time, retired a year later with a golden handshake of some $35 million. Christopher P. Johns, who was president of Pacific Gas & Electric Co., the utility subsidiary, in 2010, retired as its vice chairman in December 2015 with a pension package of $17.8 million.
BP [formerly British Petroleum] has literally pages of environmental and safety violations, including the Deepwater Horizon explosion that killed 11 people and injured 16 others, not to mention totally fouling most of the Gulf of Mexico with crude oil. While the company pleaded guilty to 11 counts of felony manslaughter, two misdemeanors, one felony count of lying to Congress, and agreed to pay more than $4.5 billion in fines and penalties, not a single not a single individual was held responsible. Before that, in 2005 the BP Texas city refinery explosion killed 15 people and injured 180 others, and was followed two years later by toxic chemical releases that injured another 143… and again no one was held personally responsible.
The three largest creators of toxic waste Superfund sites are Honeywell, Chevron, and General Electric. General Electric so polluted the Housatonic River in Massachusetts and Hudson River (some 200 miles worth) that both were classified as Superfund toxic waste sites, and despite lawsuits and EPA action, GE still hasn’t completed the clean-up, more than 30 years later. Honeywell (through its subsidiary, Allied Chemical) dumped mercury into Lake Onondaga for over sixty years, and has so far spent over half a billion in remediation. Chevron has acknowledged that it’s a “responsible party” at 180 Superfund sites, and it has over 20 multimillion dollar fines for environmental violations.
In addition to the issue of no executive being personally responsible for criminal environmental violations and felonies, there’s another large problem with the corporate liability structure. That’s the fact that none of the money paid in fines, damages, and remediation comes out of the pockets of corporate executives. It comes out of corporate revenues, and that means that the executives are not only shielded from criminal charges, but they’ve passed off the costs to others.
While some form of limited corporate liability is likely necessary, letting the CEOs and other executives off scot-free is one of the principal reasons why corporations try to pay their way out of trouble with what amount to shareholder funds… and why ethics mean so little to them. They really don’t answer to anyone.