Robert Reich Claims the Justice Department is Letting BP off the Hook
Section: Spin News
The left has always been fond of unfairly criticizing its own. Here’s a classic example from Liberal pundit and Berkeley Professor Robert Reich. Professor Reich published several articles on Saturday night 1, 2 claiming the Justice Department under President Obama has acted inappropriately. He argues that BP as a corporation and rank-and-file BP employees are not the criminals. Rather, BP executives should be prosecuted. He’s complaining about a settlement The Impartial Review News has reported on. Details of the settlement can be found here and the video above is from the press conference.
Professor Reich wrote
“Likewise, the people responsible for BP’s deaths and oil spill weren’t BP’s rank-and-file employees”
He also said the BP executives are
“the ones who should be punished. Failure to punish them simply invites more of the same kind of criminal negligence by executives more interested in lining their pockets than protecting their workers and the environment.”
What the Justice Department said
“In addition to the resolution of charges against BP, Robert M. Kaluza, 62, of Henderson, Nev., and Donald J. Vidrine, 65, of Lafayette, La., the highest-ranking supervisors onboard the Deepwater Horizon on April 20, 2010, are alleged to have engaged in negligent and grossly negligent conduct in a 23-count indictment charging violations of the federal involuntary manslaughter and seaman’s manslaughter statutes and the Clean Water Act. David I. Rainey, 58, of Houston, a former executive who served as a Deputy Incident Commander and BP’s second-highest ranking representative at Unified Command during the spill response, is charged with obstruction of Congress and making false statements to law enforcement officials. A grand jury in the Eastern District of Louisiana returned the indictments against Kaluza, Vidrine and Rainey, which were unsealed today.”
“Kaluza and Vidrine each are charged with 11 felony counts of seaman’s manslaughter, 11 felony counts of involuntary manslaughter and one violation of the Clean Water Act. If convicted, Kaluza and Vidrine each face a maximum potential penalty of 10 years in prison on each seaman’s manslaughter count, up to eight years in prison on each involuntary manslaughter count, and up to a year in prison on the Clean Water Act count. "
“Rainey is charged with one count of obstruction of Congress, and one count of making false statements to law enforcement officials. If convicted, Rainey faces a maximum potential penalty of five years in prison on each count.”
These “rank-and-file employees” included top level supervisors and a VP executive who clearly endangered the lives of others and/or attempted to reduce the legal liability of the company by claiming that BP was only dumping 5,000 barrels of oil into the gulf each day when it was more like 60,000 barrels per day.
The truth is both the soldiers who carry out illegal orders and the generals who give them should be held accountable for their war crimes. The same should be true for rank-and-file employees and CEOs. There is a good chance that the individuals charged by the Justice Department did commit the terrible crimes they are accused of and Professor Reich’s claim that these people are not the real criminals is inaccurate. They knowingly endangered lives and/or gave false information to top level individuals involved in clean-up efforts.
Professor Reich also asserts that the CEOs are off the hook. However, the Justice Department said
“The guilty plea agreement and charges announced today are part of the ongoing criminal investigation by the Deepwater Horizon Task Force into matters related to the April 2010 Gulf oil spill.”
In other words, Professor Reich’s claim that this is the end of prosecutions may not be the case. In fact, the settlement requires closer monitoring of BP which may reveal additional evidence that could lead to the prosecution of higher-ups. After criminal prosecutions, it is not uncommon for there to be civil prosecutions.
Professor Reich wrote
“Punishing corporations as a whole almost always ends up harming innocent people – especially employees who lose their jobs because the corporation has to trim costs, and retirees whose savings shrink because their shares in the corporation lose value.”
Professor Reich is making a Republican, not a progressive argument.
What Attorney General Eric Holder said was that
“The $4 billion in penalties and fines is the single largest criminal resolution in the history of the United States and constitutes a major achievement toward fulfilling a promise that the Justice Department made nearly two years ago to respond to the consequences of this epic environmental disaster and seek justice on behalf of its victims,”
“We specifically structured this resolution to ensure that more than half of the proceeds directly benefit the Gulf Coast region so that residents can continue to recover and rebuild.”
“The criminal resolution is structured such that more than half of the proceeds will directly benefit the Gulf region. Pursuant to an order presented to the Court, approximately $2.4 billion of the $4.0 billion criminal recovery is dedicated to acquiring, restoring, preserving and conserving – in consultation with appropriate state and other resource managers – the marine and coastal environments, ecosystems and bird and wildlife habitat in the Gulf of Mexico and bordering states harmed by the Deepwater Horizon oil spill. This portion of the criminal recovery will also be directed to significant barrier island restoration and/or river diversion off the coast of Louisiana to further benefit and improve coastal wetlands affected by the oil spill. An additional $350 million will be used to fund improved oil spill prevention and response efforts in the Gulf through research, development, education and training.”
When corporations profit from their employees misdeeds, the corporations need to pay. The reasons for that are
1. It penalizes the corporation for allowing employee misdeeds that increase company profits.
2. Companies should be responsible for ill-gotten gains as well as creating governance and cultures that allow employees to steal on the behalf of companies.
3. The money the corporation got rightfully belongs in the hands of Gulf Coast victims many of whom are small business persons that create more jobs that monolithic companies such as BP. That is, small business create most new jobs. Large businesses don’t.
Although not suggested by Professor Reich, the law could be changed so that before taking the profits out of the company it could come out of the CEO or others pay if specific individuals are proven to be involved and the company didn’t profit from what transpired. However, that’s not the way the law is written or enforced by the courts so it’s not appropriate to blame the Justice Department for this problem.
In any case, Professor Reich goes on to refute his own argument that these fines will hurt BP employees.
“The Department’s $4 billion criminal settlement with BP isn’t big enough to affect the oil giant anyway. BP’s market capitalization is $128 billion. Yesterday, BP’s stock price closed at $40.30 a share, up 0.35 percent from the day before the settlement was announced. "
BP has already paid $20 billion, faces future charges and the $4 billion was probably already figured into the stock price before today’s announcement.
Professor Reich’s article also claims
“But it defies logic to make BP itself the criminal. Corporations aren’t people. They can’t know right from wrong. They’re incapable of criminal intent. They have no brains. They’re legal fictions — pieces of paper filed away in a vault in some bank.”
As already noted, corporations should be held accountable for their ill-gotten gains but of course he’s correct in pointing out that corporate upper management should also be held accountable for creating cultures of profit over the law and lack of employee supervision that allows such things to happen so Professor Reich’s claims are on the mark. However, in the previous paragraph he suggests this problem is caused by the Justice Department.
The Justice Department has to follow the law as interpreted and as written. Therefore, the blame for this problem primarily is with the Republican majority Supreme Court decisions which are not referenced in his articles. For example, the Supreme Court has said that health insurance companies are not responsible for poor care if they pressure physicians to work to quickly and/or spend less time with their patients or require physicians to take too many patients at the same time. After medical record rates were discovered to be very high in the U.S., the insurance industry has responded with calls for lower payments in malpractice statements.
Professor Reich also references the Citizens United decision in his two articles as an example of how these interpretations provide shields for CEOs to do what they want without the criminal liability that should come from encouraging subordinates to subvert the law or to buy elections. As a former labor secretary, it would have been nice if Professor Reich pointed out that executives avoid prosecution for violations of labor laws using similar shields.
As Professor Reich correctly notes, letting CEOs off the hook simply encourages more bad behavior. In the BP case, the evidence against BP executives has not been fully revealed. All we know is that some knew about Mr. Ranier’s activities. In such cases, it’s difficult to know what BP executives did or did not know which is why subordinates often receive the harsher penalties. Professor Reich pointed out that under the Bush Administration justice department most Enron executives escaped hard penalties. We can hope as the Justice Department investigation proceeds that others who knew and did nothing are held accountable.
Congress could change these problems by writing tougher laws for CEOs which spell out what they must know and what responsibility they have. In addition, congress could use their oversight responsibilities over Federal judges and others to ensure that justice is delivered in these cases. That is not the role of the Justice Department.
Appeal to Authority
An appeal to authority is a an illogical argument where a person trusts an argument because the source is an authority. An issue that Occupy Wall Street has brought to the attention of the world is that people should not accept media statements as accurate. People need to verify information is accurate for themselves.
by Todd Miller
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