There is nothing more valuable in the Monopoly board game than to draw a “get out of jail free” card. Hoping for an equivalent card in the real world, corporate directors want the laws changed so they cannot be held criminally accountable for pollution, deaths and serious injuries at work and for operating companies while insolvent, and therefore avoid jail time.
A trial balloon is being floated in Australia on behalf of the Global Network of Director Institutes (GNDI), a top lobby group for company directors from Australia, Brazil, Canada, Europe, Malaysia, New Zealand, South Africa, the United Kingdom and the United States. Created in December 2012, its mission is to be the “global voice” of company directors. One of the first campaigns this powerful lobby group has taken on is to wind back laws that hold directors personally liable for their decisions that result in their company committing a crime.
During the 1980s, governments were frustrated at their inability to use the law to discourage corporations from undertaking risky activities that caused injury and even death. Substantial penalties didn’t work, according to the Missouri Secretary of State, Matt Blunt, who explained that: “[Fines are just] an operating cost for these companies: They pay the fine, which becomes just a cost of doing business.” The legal system was so much of a joke that companies wrote off penalties as a tax deduction.
As a result, over the last thirty years or so, laws have been enacted that hold company directors legally responsible. In fact, some have even been jailed. Consequently, directors no longer bother calculating what they might save by not addressing health or environmental risks against the fines they might attract. With their tails on the line, company directors have started to take their responsibilities to their workers and the community more seriously.
Leading the charge, GNDI’s foundation chairman, John Colvin, told The Australian newspaper (December 27, 2012), that “the main thing is changing the culture from a blame culture to an entrepreneurial culture.” He went onto to issue a veiled threat: companies would “vote with their feet” by relocating their headquarters to countries with less onerous director liability laws.
Now that company directors are organized on a global scale, expect to see countries played off against each other, urged to write business-friendly laws to attract corporate headquarters to their shores. Unless governments kowtow, they risk losing jobs and tax revenue to countries that provide a more relaxed legal environment.
This has become a cause célèbre for neoliberals, who see director liability interfering with the free market. According to George J Terwilliger III, former deputy Attorney General in the first Bush Administration, “[t]he adventurous, risk taking endeavors that lie at the heart of American commerce will thrive only so long as they are nourished in a hospitable environment. And the trend toward criminalization of the enforcement of regulated activities poses a threat to that environment”.
As company directors crank up their campaign for a permanent “get of jail free” card, expect to go back to the bad old days, when they showed contempt for environmental laws and those that protect consumers and employees.