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Criminals by any other name.


Take a moment and listen to the victims of corporate crime in America:

"Some of these executives from the chemical companies belong in jail. We have veterans and children who have spent years trying to cope with catastrophic disabilities without help. Now that we know who is responsible, we want help for the veterans, and we want the people who sold them out to go to prison for it.'

--Michael Ryan, Vietnam veteran, whose daughter Kerry was born with severe disabling birth deformities. Kerry was conceived after her father returned from Vietnam, where he spent much of his time stationed in jungle areas that had been sprayed by a chemical known as Agent Orange.

"We must reserve the right to litigate against the asbestos companies and/or the government. They have been guilty of mass reckless homicide, and if this type of terminology seems harsh, may I remind you, that mesethelioma (an asbestos-related disease) is a harsh cancerous disease which is terminal.'

--Constance Ruggieri, asbestos victim, testifying before Congress against legislation that would limit the lights of asbestos victims to sue asbestos companies for damages.

"I think the top people who did this ought to be put in jail. They have killed women because they would not come out in the open and say their product wasn't safe.'

--Susan Herman, victim of the Dalkon Shield interuterine device (IUD).

The executives responsible for the recent corporate catastrophes popularly known as Agent Orange, asbestos, and the Dalkon Shield are not in jail and will not go to jail. With the exception of informed victims, few of us describe these cases in the language of crime, even though in each case there is a wealth of evidence that victims were put at unacceptably high levels of risk of severe injury and death and that corporate executives knew of the risks, yet failed to take appropriate preventive action. Even Morton Mintz, the award-winning Washington Post investigative reporter and author of At Any Cost: Corporate Greed, Women, and the Dalkon Shield,* a powerful indictment of the A.H. Robins pharmaceutical company, does not use the word "crime' in telling the sordid tale of the Dalkon Shield.

* At Any Cost: Corporate Greed, Women, and the Dalkon Shield. Morton Mintz. Pantheon, $17.95.

To the journalists and lawyers of our world, the trappings of crime do not apply unless there is a conviction. To some victims, however, the words "crime,' "criminal,' and "jail' are eminently applicable. Maybe lawyers and journalists don't use these words because they fear lawsuits, and maybe victims use them because they have less to lose. But perhaps there is something more: It could be that the experience of being victimized strips away the layers of corporate created by million-dollar Madison Avenue advertising, giving victims a more accurate picture of the interests our criminal law protects and those that it should be protecting.

"Crime is a sociopolitical artifact, not a natural phenomenon,' Herbert L. Packer wrote in The Limits of the Criminal Sanction. "We can have as much or as little crime as we please, depending on what we choose to count as criminal.' As a society, we have chosen to have very little corporate "crime,' in Professor Packer's sense of the word, and by so choosing we have insulated the corporation from the effective sanctions and stigma of crime. While criminal sanctions exist as an option for many federal law enforcers, they usually choose less opprobrious, less effective, and more easily won civil sanctions. Consent decrees, recalls, and civil fines are the types of weapons realistically available to those authorized to crack down on illegal corporate behavior. Euphemistically known as "regulators,' the cops who investigate corporate crime face some of the most powerful lawbreakers in society without effective access to meaningful sanctions.

"Regulating crime

At the turn of the century, as corporations became increasingly wealthy and powerful, legislatures moved to protect the public from injuries resulting from corporate excesses. In 1890, Congress passed the Sherman Antitrust Act, which forbade monopolizing or attempting to monopolize trade. The act was designed to bust the corporate monopoly makers who were threatening the competitive economic system. Violation of the act was a criminal offense, punishable by a fine not exceeding $5,000 or by imprisonment of up to a year, or both.

The Sherman Act and a host of subsequent laws aimed at controlling corporate wrongdoing were, however, different in one crucial respect from the criminal laws which governed non-corporate citizenry. In what Edwin Sutherland, America's first corporate criminologist, called a "radical departure' from the historical development of criminal law, legislatures gave prosecutors of corporate crime the option of seeking a civil injunction to enforce a law carrying criminal sanctions. No such option was given to local prosecutors responsible for enforcing the laws governing murder, burglary, or robbery.

Rather than charge the corporation with a criminal violation, then prosecute the case in open court before a jury, prosecutors chose in the overwhelming number of cases to seek to enjoin the corporation in civil court from further violations of the law. This civil injunction against crime, chosen primarily because the criminal sanctions are so weak and comparable civil sanctions can be obtained without meeting higher standards of proof required in the criminal realm, has become the routine choice of federal "regulators.'

In the relatively rare cases where the federal cops decide to go the criminal route, they rarely demonstrate a will to prosecute vigorously. Most recently, the Reagan Justice Department, under pressure from public interest groups and journalists, entered the criminal ring against two very large pharmaceutical companies, and in both cases, pulled its punches.

On August 21, 1985, the Eli Lilly drug company pleaded guilty to misdemeanor counts of failing to notify the U.S. government of numerous deaths and injuries among overseas users of Oraflex, an arthritis drug. Without knowledge of these overseas deaths, the U.S. Food and Drug Administration (FDA) had approved Oraflex for use in the U.S. FDA records reveal that 49 Oraflex- related deaths and 916 Oraflex-related non-fatal injuries have occurred in the U.S. Lilly was fined $25,000; William H. Shedden, a former Lilly executive who pleaded no contest to the charges, was fined $15,000.

The Justice Department's prosecution of Lilly came more than two years after the FDA recommended that three Lilly executives be prosecuted, but senior department officials overruled the attorneys. The Justice Department had sufficient evidence to prove felonies, which require proof of intent to violate the law and carry penalties of up to three years in prison and a $10,000 fine per count, but chose to charge misdemeanors, which do not require proof of intent and carry a sanction of one year in jail and a $1,000 fine per count. Such evidence was produced by two Justice attorneys in an 18-page memo titled "Factual Basis for the Pleas' that was attached to the plea agreements. The document provides numerous instances showing Lilly executives knew of deaths and other adverse reactions to Oraflex and had the opportunity to report to the FDA but failed to.

On December 13, 1984, SmithKline Beckman Corporation pleaded guilty, and three SmithKline executives pleaded no contest, to charges of failing to report to the FDA adverse side effects of the company's high blood pressure drug, Selacryn. Selacryn has been linked to 36 deaths and more than 500 cases of liver and kidney damage.

As in the Lilly case, the Justice Department charged misdemeanors when it should have charged felonies. In fact, when the FDA recommended in 1984 that the Justice Department bring criminal charges against SmithKline and certain officers, it specifically urged that it bring felony charges, not misdemeanors. "The Justice Department has let down the American people,' Senator Howard Metzenbaum said. "Even though 36 people died due to corporate irresponsibility, the department let SmithKline off the hook.'

When corporations are convicted, the punishment rarely fits the crime. Historically, fines against criminal companies have been so small as to be laughable. While Eli Lilly was fined $25,000 after being convicted in the Oraflex case, Wallace Richard Stewart of Kentucky was sentenced in July 1983 to ten years in prison for stealing a pizza. When General Electric was convicted of price fixing in the early 1960s, the company was fined $437,000, a fine a former federal prosecutor compared to "a three dollar ticket for overtime parking for a man with a $15,000 income.' In New York in 1983, a $50 theft drew a life-time prison term.

Ignoring warning signals

As Morton Mintz points out in At Any Cost, efforts in Congress to remedy the situation by passing strong corporate crime legislation have received little public attention and have gone nowhere. The business lobby has managed to keep tough criminal sanctions off the books. But if purse-snatching thugs managed to convince legislatures to exclude purse-snatching from the criminal code, we would still want to heap as much opprobrium on the act as possible.

Few books will make you as angry about corporate criminality as At Any Cost. Mintz narrates one of the sorriest sagas in recent corporate history. Between 1971 and 1975, Robins, best known for Robitussin cough syrup and Chap Stick lip protector, marketed more than four million Dalkon Shield IUDs in 80 countries. The company made false claims of efficacy and safety. In the U.S., more than two million women were fitted with the inadequately tested Shield by doctors who believed the misleading claims, and thousands suffered serious damage, including pelvic infection, sterility, miscarriage, and death. Mintz documents how "Robins--knowingly and willfully--put corporate greed before human welfare, suppressed scientific studies that would ascertain safety and effectiveness, concealed hazards from consumers, the medical profession, and government, assigned a lower value to foreign lives than to American lives, behaved ruthlessly toward victims who sued, and hired outside experts who would give accommodating testimony.'

The warning signals flashing at Robins headquarters were enough to blind the most nearsighted freight train conductor. But Robins executives kept the Dalkon Shield locomotive moving ahead at full speed until thousands of women were injured and many were killed. In February 1971, six weeks after Robins began selling the Shield, a doctor wrote to the company: "I have just inserted my tenth Dalkon Shield and have found the procedure to be the most traumatic manipulation ever perpetrated upon womanhood . . .. I have ordered all shields out of my office and will do the same in all clinics with which I am affiliated.' One woman ob-gyn, upon seeing the crab-shaped Shield, refused to use it. "When the Dalkon Shield appeared on the scene, we rejected its use on my say-so. Why? Well, it's a gruesome-looking little device that I would not allow to be installed in myself, that's why.'

While the Shield itself was an unattractive device, it was the string attached to it that is believed to be the culprit causing death or injury to thousands of users. IUDs work on the theory that a foreign device implanted in the germ-free uterus acts as a contraceptive. A string attached to the Dalkon Shield extends out of the uterus, through the cervix, into the vagina where bacteria are present. The problem with the Dalkon Shield string was that bacteria in the vagina would not only rest on the string but would move into it, and then move (or "wick') inside the string up into the germ-free uterus, causing pelvic infection.

Mintz shows that Robins executives were "repeatedly warned of the string's wicking properties, but they failed or refused to listen. Instead, they stonewalled, deceived, covered up, and covered up the cover-ups. And in doing so they inflicted on women an absolutely avoidable worldwide epidemic of pelvic infections.'

At one point, E. Wayne Crowder, a quality control supervisor in the Shield manufacturing plant in Richmond, warned his supervisor, Julian W. Ross, about the wicking problem. Crowder recalls how "I told [Ross] that I couldn't, in good conscience, not say something about something I felt could cause infections. And he said that my conscience didn't pay my salary . . .. He referred to my persistent "insubordination' [and said that] if I valued my job I would do as I was told.'

In June 1972, Thad Earl, an Ohio doctor and one of the first promoters of the Shield, warned Robins that six women in whom he had implanted the Shield had become pregnant while it was in the uterus, and five of them had gone on to suffer life-threatening spontaneous infected abortions. Mintz points out that had Robins not neglected Earl's warnings, Carie Palmer of Elkhart, Kansas, "almost certainly would not have become a Shield victim.' Palmer was fitted with the Shield in January 1973, six months after Earl's warning reached Richmond; she became pregnant in August. Three months later she went into shock, suffered a near-fatal pelvic infection, and lost her unborn child. Palmer sued Robins, and in early January 1980 a jury awarded her $600,000 in compensatory damages and $6.2 million in punitive damages.

Once the flood of lawsuits began, Robins constructed a now-familiar corporate stonewall. Thousands of documents sought by plaintiff lawyers mysteriously disappeared. One Robins attorney, Roger Tuttle, testified that he was ordered by William Forrest, Robins general counsel, to arrange for the destruction of hundreds of "troublesome' Shield documents. Tuttle relayed the order to underlings and testified that he had "every reason to believe that the people who reported back to me that it had been done, did it.' Tuttle testified that some of the documents burned in a Robins furnace. At one point, the wife of a Robins defense attorney, with the attorney's consent, discarded 20 boxes of Dalkon Shield documents stored in the attorney's basement as part of a "general spring cleaning.'

A call to action

Change often comes on the heels of disaster, and that has been the case in the drug industry. As Mintz notes, the sulfanilamide disaster of 1937, which killed 107 persons, led to the passage of the Food, Drug and Cosmetic Act of 1938. The thalidomide birth defect cases of the early 1960s, which Mintz first exposed, led to the passage of the Kefauver-Harris Amendments requiring "substantial evidence' for claims of drug effectiveness. And finally, it was the revelations of the Dalkon Shield-induced injuries and deaths that led to the passage of the Medical Device Amendment in 1976. Prior to 1976, device manufacturers, including Robins, were under no obligation to submit to the government pre-marketing tests on safety or effectiveness. Had the 1976 law been in effect at the creation of the Shield, the disaster might not have happened.

No other contemporary American journalist has exposed corporate criminals with the tenacity, courage, and eloquence of Morton Mintz. At Any Cost is animated by his deeply held belief that as individuals we all should be held accountable for our actions, regardless of how elaborate a corporate cocoon we spin to shield ourselves from liability. Yet it is difficult to agree with the spirit of the book's conclusion. Mintz observes that "modern society cannot function without the large [corporate] organization' and that "the corporate structure itself--oriented as it is toward profit and away from liability--is a standing invitation to [harmful] conduct.' But rather than trumpeting a call to arms, Mintz mourns that "all the deterrents and restraints that normally govern our lives--religion, conscience, criminal codes, economic competition, press exposure, social ostracism--have been overwhelmed.' This is no message for the reformers of the next generation. Sure, many deterrents have been overwhelmed, but only because we haven't forcefully exercised them. State criminal codes, for example, were designed to be applied to individuals and often fail when applied to corporations. On the federal level, corporate efforts have succeeded in minimizing the applicability of criminal sanctions where they exist and have defeated them where they would be effective. Efforts to strengthen the "reckless endangerment' provisions of the federal criminal code, for example, were defeated by corporate interests during the Carter years. A 1985 bill sponsored by Rep. John Conyers requires corporate managers who discover that a product or process poses an imminent health hazard to report it to the federal government within 30 days or risk imprisonment. Conyers's bill has received little attention and has not left subcommittee, although hearings were held early last year.

It is Mintz's brand of journalism that illuminates these failures. Only outrage like his will produce a strong corporate criminal code to supplement the struggling "regulatory' structure, which, as Mintz puts it, "provides the illusion, but not the substance, of adequate protection.'
COPYRIGHT 1986 Washington Monthly Company
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1986, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:corporate executives
Author:Mokhiber, Russell
Publication:Washington Monthly
Date:Jan 1, 1986
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