The GM Settlement

The GM Settlement

This is what it comes down to. After 124 deaths, General Motors in a deferred prosecution agreement pays the government 900 million dollars. GM has also set aside 575 million to cover private complaints.

The GM Settlement

If GM complies with the agreement, all criminal charges will be dropped in three years. The government says that pursuing criminal charges would have been difficult –

Bharara hinted that criminal charges would be difficult to bring in the GM case. This rationale pervades the White House. President Barack Obama, who for years taught Constitutional law at the University of Chicago, made the same weak excuse, telling 60 Minutes in 2011 that “some of the most damaging behavior on Wall Street, in some cases some of the least ethical behavior on Wall Street, wasn’t illegal. That’s why we had to change the laws.”

Wrong. Fraud is always a crime. Filing false statements under oath, transferring money by wire and mailing documents signed under penalty of perjury constitutes fraud.

David Cay Johnston writing for Al Jazeera is exactly right. What GM did was a series of crimes and they could have been successfully prosecuted. President Obama’s claim that “some of the least ethical behavior … wasn’t illegal” is simple nonsense. I’m an attorney. I can see massive fraud from a considerable distance. The level of deception here is massive. GM sold a defective product that had an often lethal problem to millions of American without warning when it knew the scope of the problem. They did it for years, and the trail of memos and other communications would have added up to a staggering case in which I have no doubt the defendants would have been forced to plead because there was no hope of acquittal.

Justice is supposed to be served by a 900 million dollar fine. How much money did GM make off of concealing this defect? Is there any relationship between the money made and the penalty collected?

In the Old Testament, it is said that blood cries for justice from the ground.

Will that blood be silenced by 900 million dollars? Will the families be made whole by GM’s funds? And is justice served by a fine? Or is this more similar to a medieval knight cutting down a mere serf and paying a small fine for the inconvenience?

When did giant corporations gain immunity for their crimes? When did justice become a routine profit and loss calculation in the accounting departments of these great multinationals?

Today 124 people lay dead at the hands of a major company. Tomorrow, it could be you or your spouse or your child or a parent because why shouldn’t they do it again and again and again?

They made money. I have no reason to believe that GM lost a dime on this transaction. I’m sure they profited. So, why not kill again?

Haven’t you read Milton Friedman? A CEO’s duty is to maximize shareholder value? Here’s a quote –

In a free-enterprise, private-property sys­tem, a corporate executive is an employee of the owners of the business. He has direct re­sponsibility to his employers. That responsi­bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con­forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.

It can be said that Friedman called for ethical behavior. I’ve never thought so. The word, conforming, is not obedience and “basic rules” are subject to interpretation. It could be argued that GM violated the basic rules of society. You can claim they violated the law and “ethical custom.” But do you really believe that? The law, embodied by the Obama Administration, says that fines are adequate and GM will go on making cars and huge profits in spite of ethical custom.  The “basic rules of society” appear to be little more than tissue paper to be discarded when used.

Our current administration talks a good game –

In a recent speech about efforts to focus on individuals responsible for corporate misconduct, Sally Q. Yates, the deputy attorney general, said that “Americans should never believe, even incorrectly, that one’s criminal activity will go unpunished simply because it was committed on behalf of a corporation.”

But with this settlement, the administration has told the corporate world that this bold statement is nothing but PR, nothing but empty words.

We Americans, we who build and sustain this nation, we who follow the law deserve better.

James Pilant