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If Corporations are People, Why isn’t BP in Prison?

J. Mijin Cha

A federal judge recently approved the BP settlement over the Deep Horizon disaster so BP will pay $4 billion in criminal penalties—a slap on the wrist—and plead guilty to manslaughter. Yet if corporation are people, as the Supreme Court ruled, why isn’t BP going to prison? Any other person convicted of manslaughter would go to prison, so why shouldn’t BP, or its corporate executives, suffer the same fate?

Apart from the ruling on speech protections in Citizens United, corporations also have some due process rights, right to trial by jury in a criminal case, are protected against double jeopardy, and cannot be subjected to unlawful searches and seizures. Yet, even though they have the right to a trial by jury, if they are found guilty of criminal activity, they do not go to prison. You could argue that a corporation is not a living entity so it can’t go to prison, which is true, but they are all headed by living entities. If a CEO gets to benefit when a corporation does well, she should also be held responsible when it engages in criminal activity.

As we’ve pointed out, even though the fine handed out to BP is a record, it is a fraction of just one year’s revenue. At this small level, penalties are meaningless and do little to discourage further criminal behavior. Wall Street firms were fined a total of $2.2 billion by the SEC for all of their misconduct that caused the last Great Recession. Total Wall Street bonuses over the same time period as the financial crisis topped $679 billion, over 300 times the amount as the SEC fines. Fines are not just meaningless, they are at such a small level they are an insult to the people impacted by the criminal behavior.

It is ironic that corporations have some constitutional rights given that when the Constitution was ratified, only 21 corporations existed, the vast majority of which were quasi-public institutions that met a specific and narrowly defined public need. At that time, corporations allowed states to attract capital for public purposes, like building bridges and canals. The states tightly controlled corporations and revised or revoked their charters at will. Indeed, throughout the 19th and early 20th centuries, states revoked or modified corporate charters whenever the legislature determined the corporation was not acting in the public interest.

This history provides the logic for a movement to allow federal prosecutors to revoke corporate charters as punishment for criminal activity. The argument is that for corporations that continually commit crimes, they should no longer be given the right to exist: revoking the charter is the corporate equivalent of the death penalty. For corporations that refuse to change their behavior and continually expose the public to great financial or physical risk, they should no longer be allowed to operate, let alone operate and post record profits.

Take BP, for example. Since 2005, the company has been responsible for an explosion at an oil refinery in Texas that killed 15 people and injured hundreds more, a 200,000 gallon oil spill from a badly corroded and improperly maintained pipeline in Alaska with another spill just five months later in the same area and yet another spill in the Alaska tundra just three years later, pleaded guilty to illegal market practices, and caused one of the greatest environmental disaster with the Deep Horizon explosion. If it was a person, BP would be labeled a repeat offender with no hope of rehabilitation and sentenced to life in prison or the death penalty, depending on the state.

If corporations are people, then they should be punished like people. Otherwise, we create a parallel justice system that protects corporate interests while ignoring any malfeasance--the implications of which are bad for our economy and bad for our democracy.