Let's name some of these recidivists: Boeing, General Electric, Grumman, Honeywell, Hughes Aircraft, Litton Industries, Magnavox, Martin Marietta, McDonnell Douglas, Northrop, Raytheon, Rockwell International, Teledyne, Texas Instruments, United Technologies.
All of these corporations are major defense contractors, and all have been caught defrauding the federal government in one way or another. And all of these companies have been nailed at least three times in recent years. Typically, they pay a fine or negotiate a settlement and promise not to do it again. The pattern of corporate crime is not restricted to defense contractors, of course, but they offer the most dramatic examples of a system that street criminals might reasonably describe as unequal justice.
GE seems almost in a criminal class by itself. At least, it gets caught more often than others. According to the Project on Government Oversight (the folks who first spotlighted the $600 toilet seats that the Pentagon was buying in the '80s), GE has been involved in 16 different episodes of lawlessness --everything from false billings and weapons-procurement fraud to money laundering and bribery. Hughes Aircraft has nine strikes against it, and it's still at the plate. Grumman, Martin Marietta and Teledyne have each had five offenses against the taxpayers.
GE has pumped out more than $130 million in fines and settlements to cover its various transgressions. Since 1986, the federal government has collected more than $588 million under the False Claims Act from corporations that tried to chisel on contracts and got caught, usually because a whistle-blower on the inside went public. How widespread is such crime? A 10-year survey by a George Washington University professor found that two-thirds of the Fortune 500 were involved in one or more "significant illegalities." Seventy-five of the corporations were involved in five or more cases.
The three-strikes approach may or may not do much to frighten street hoodlums, but a similar approach to corporate crime would certainty put the squeeze on recidivist CEOs by hitting their bottom line. Ralph Nader has proposed that repeat companies that regularly defraud taxpayers be banned from selling to the government for a fixed period of time. The same principle could be extended further to cover the multitude of special tax breaks and subsidies made available to business: If you regularly break the law, you are not eligible to share in Uncle Sam's pork and gravy.
Let's not hold our breath waiting to see if this idea catches on in Washington. The same defense contractors who get nailed so regularly for fraud are currently lobbying Congress to weaken the False Claims Act, complaining that it's unfair to them. The message is clear: Muggers who wear suits should get an unlimited number of strikes.
Source: Rolling Stone, April 21, 1994.
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