Not even fines to the company will stop it.

You have to go directly after the people who are making decisions for the company.

Executives seem to have a pretty good time tanking companies to line their pockets and then leave before the company has to deal with the fallout.

I really wish I could refute this. The protections incorporation provides for executives seem a bit too strong in cases like these.

Which protections are these? I thought that incorporation didn't give any protections for maliciousness, it's just that DAs rarely go after executives because any particular blame is so distributed throughout the corporation that it would make any case difficult to prosecute.

The diffusion of responsibility is one of those protections. There should definitely be some strict liability for certain corporate malfeasance, where it doesn't too much matter who specifically did the deed, the executive/C-level is responsible and takes the fall. Then prosecution comes down to 'Did your company do X? If yes, you're guilty.'

Exactly. If the CEO goes to prison if the company commits X crime, the CEO has a strong incentive to ensure the business is not doing that.

If the CEO's only concern is shareholder profit, crime usually pays pretty well.

The idea that a 10000 year jail sentence must be served by every share holder disturbed in proportion to how much they owe would make “shareholder value” mean “not making me check into jail to serve my 2 days of the sentence for my 1 share” which might change corporate behavior a bit. Especially if insuring shareholders income against that risk becomes a line item in the budget.

I think shareholders might be too detached from decisionmaking for that to make sense. It'd definitely have a huge negative impact on stock values, but I'm not sure it would prevent corporate malfeasance.

If nothing else it would make jail nicer in that case.

A more realistic approach is to take away personhood rights that these corporations rely on. A 10 year ban on political donations and lobbying would be a good starting point. Then prison for the C-levels if they violate those terms which are directly under their control.

Yes and the less you know the better for you when it eventually goes to court.

We had one of these cases recently in my country.

CEO of one of the biggest X in the country goes to trial for lying/not informing correctly about Y gross malfeasance. Walks free after years of investigation, because didn't know about it.

Not only would that be effective in disincentivizing the malfeasance, it has the added benefit of limiting the scale of corporations to what execs can effectively manage.

In the Coast Guard and Navy it doesn't matter if the Captain didn't know what was going on, its their job to know what was going on and they're always the ones held responsible one way or another.

This is because if you are in the military your subordinates are bound by UCMJ to follow all lawful orders. The officers are granted complete authority over the subordinates but bear the responsibility for all the actions of those under their command. There is no civilian equivalent for this kind of relationship between authority and responsibility(though law enforcement should be using the same model).

Holding both companies and management responsible can be tricky as well. IIRC Exxon-Mobil had an aggressive policy of destroying records from projects as soon as they were legally able to prevent them from being used against the company in litigation or investigations. In this case, having poorly structured laws or regulations encouraged the company solve the problem of liability, rather than one of accountability.

I think what you're describing is the difficulty in "piercing the veil" of an LLC to hold individuals accountable. You can search that legal principle and learn more about how an LLC structure shields individuals from repercussions for their actions.

I remember a nice Obama quote "the buck stops with me".

If you get the big pay check for leadership it is your responsibility when shit goes bad. Sadly about the worst consequence a failed CEO has is that he/she doesn't get invited to play golf for a few years.

> it's just that DAs rarely go after executives

I think after taking down Enron and Arthur Andersen and lot of people lost their jobs, which does not look good on TV. Politicians on both sides stopped supporting taking down execs/companys. So now the new normal is to push for fines.

I always wonder what will come first: laws to jail negligent execs for the next disaster, or an ambitious legislator with a magic solution to jail negligent execs for the current disaster.

Neither.

There's a web of power and influence invisible to people who aren't part of the system. Politicians who could create this legislation don't get reelected if they aren't participants; their election war chest evaporates.

This is how monied interests managed to design the system to work.

Where by "magic" you mean an ex post facto law? I'm all for going after execs for their crimes, but let's try to keep that particular part of the constitution in tact.

The article describes some pretty blatant negligence, though I suppose suggesting that a legislator might get involved implies ex-post facto lawmaking.

Maybe the responsibility is too diffuse. But these "no one could have predicted this" kind of Therac-25 situations with multiple people responsible are exactly where that boss -- the one getting paid the big bucks (for the risk they take! for the difficult decisions they have to make! for the complex structures they have to oversee!) -- to actually take responsibility for the decisions inherent in the incentive structure they created in the workplace that they have total control over.

> The article describes some pretty blatant negligence

Is it? The article tries strongly to imply that the whistleblower is right and the manager is wrong, but that's never conclusively established. With the same facts presented in the article, I can paint a different story of the whistleblower trying to make a mountain out of a mole hill, and how he was obviously wrong everyone else seems to think it's fine.

It is interesting that we can use RICO go to after mob bosses even when they have layers and layers of indirection to protect them.

But with CEOs it seems RICO doesn't apply.

CEOs generally aren’t racketeering so they can’t usually be hit with that

The main driver of RICO, however, wasn't to stop racketeering. It provided the provisions for the FBI to pursue mob bosses for hits they ordered. Prior to RICO it was very difficult to throw a mob boss in jail for such things.

All we need to do is extract that portion of the bill. However, I suspect the answer is like usual. Congress does not represent the people and their corporate owners would not be pleased. Larry Fink would probably have a millenia worth of consecutive life sentences alone. We might spur innovation in healthcare technology just making him serve the time he owes.

The reason for that is there are only a tiny number of crimes that qualify as RICO predicates. We need to expand RICO to include more types of criminal activity.

Exactly, fining companies doesn't do anything. Fine and jail the PEOPLE doing these crimes.

There's always plausible deniability so that if anybody does take the fall it's probably going to be some mid level suit that was 'just following orders.' I'd rather that liability starts with the CEO and Chairman. You need to make sure executives cannot simply hide behind fallguys.

You then create a top-down incentive for these people to genuinely make sure everything is on the up and up. The biggest problem is that this probably creates a strict cap on how large a single corporation can grow, which sounds much more like a feature than a bug.

This is all well and good to say, but impossible to implement within our current system. That's what's so depressing about it. And by 'impossible' I grant its theoretically possible, just not in practical terms. Of course the other side of the coin is that even if it was implemented, then prosecutors, and hence government, would now have this new power over CEOs and it wouldn't be long before some corrupt politician got in office and used it corruptly.

Sarbanes-Oxley would seem to imply that it’s possible to enact new laws that enforce consequences for fraud among top level executives?

In theory at least I guess. Maybe someone else can comment on how it actually works in practice.

Its not enough for the laws to exist, they must also be enforced.

>I'd rather that liability starts with the CEO and Chairman. You need to make sure executives cannot simply hide behind fallguys.

Why can't you appoint a fall guy as the "CEO", and then have a COO or whatever that actually runs the day to day?

Even c-levels, including the CEO, can be fired by the board, which is why I think accountability should include such.

Okay, then you have a whole c-suite of fall guys, and the real CEO is actually called "VP of global operations" or whatever.

I prefer jail time for companies. The entire operation has to shut down for a set period of time. No money going in or out. No one can work. No one can open their laptop. No one can go in the office. No one can discuss business. No new contracts signed.

If corporations have the same rights as humans, make them suffer the same consequences.

So all of the employees get fired en masse, but the rich CEO, managers and shareholders actually responsible for malfeasance get an extended vacation?

Yeah... that'll show them.

The effective outcome of corporate jailtime is that the company is instantly destroyed. There are no companies that would survive being shit down for years. Shareholders would be left with nothing.

And if people would be out of jobs - good. It would stop people from working for companies that don't provide transparency into the legality of their operations.

> You have to go directly after the people who are making decisions for the company.

Usually in this case the person really making the decision doesn't take the blame; that just flows downhill.

Yeah, it's one thing when you make some billionaires lose money, it's another thing when you potentially give thousands of people cancer because you polluted their land and air with carcinogens.

Cost of fines would be transferred to customers. What can hurt is jail.

Breach the corporate veil. Throw any share holders in jail for varying times.

HSBC leaders never went to jail for being the bank of trafficking $2bn of drugs. As in, they recognized the deed, and signed off with the DoJ a deal with no executive would be sent to prison.

Truth be told, CIA needed the drug sales to fund ISIS before it was cool, but I digress. Anyway, if you expect corporations to be held responsible in penal courts…

A most appropriate use for prisons in the US. Finally.

If a company can just pass fines on to the consumer and not suffer badly for it, competition in their market is totally fucked.

Which, sure, is probably true in many industries, but it's not supposed to be the case that any given business can just pass extra costs to consumers. If they could, they should already have been charging higher prices.

Railroad companies basically don’t have competition. Check out a track ownership map and see how little overlap there is, if you need to use the railroad to move stuff odds are you have one choice, and when it goes further than their track, sometimes you’ll have to truck it from one rail yard to another company’s rail yard because there’s so little interaction between railroads.

Trucking between railyards may happen. It is by far not the norm, though. They interchange traffic all the time. "So little interaction" is either ignorance or propaganda.

And, you only truck things that are already in trailers or containers. You don't truck things that are in boxcars or tank cars - the cost of unloading into a trailer just to truck it to a different railroad would be insane.

And, trucks carry, what, 70% of freight in this country? That's the railroads' competition. It's not other railroads. (That said, competition between railroads is not the constraint on railroads passing the cost of fines onto their customers.)

I think you’re focusing on my mistake estimating the size of my supporting point. The existence of trucking between rail yards was meant as a surprising fact to highlight the fact that the railroad companies don’t go out of their way to maximise their level of interconnection. If they interconnected to a higher level, the sort needed for meaningful competition, then you’ll never truck between rail yards because someone would be competing for that money since loading and unloading containers costs money, any practical solution that avoids it would have margin (the loading and unloading costs plus the trucking mileage costs) to work with where some profit could be found…

And obviously the primary competitor to shipping via train is trucks, I deliberately ignored it because there’s a huge class of rail freight that can’t really use trucks (non-perishable bulk commodities like coal, potash, construction gravel for cement, bauxite and other minerals) and this is slowly becoming a larger component of their bottom line because they aren’t incentivised to compete with each other, let alone the trucking industry… they are all in their own individual races to the bottom by way of profit maximising efforts like precision scheduled railroading and a general aversion to capital spending inherent in their focus on business metrics such as the “operating ratio” which is quickly undermined by capital expenditure on things like new locomotives and rolling stock. Most of the “parallel running” (two companies can ship from A to B) rail lines where they had to compete with other companies were dumped as not productive enough long ago… (or never built back in the days when it was cheaper, or got rationalised away as part of the government restructuring on the east coast… because railroad history is a whole different subject)

Not always.

It's not law enforcement that keeps everyone from committing crimes, because you cannot put a policeman watching everyone.

Way more efficient way is self-policing, that's the main difference of developed cultures IMO.

That's kind of the definition of a company in our current system. It's working as designed.

That's why companies cannot be allowed to run a nuclear power plant. A place where negligence has no place.

Can't disagree but The Ministry of Medium Machine-Building Industry of the USSR wasn't exactly driven by profit motive and we still got Chernobyl.

We got Chernobyl because there wasn't transparency. The flaw that caused the explosion was known to the USSR but it was covered up and a correction to existing reactors in production was not implemented until after it became impossible to ignore. The same would be happening to production reactors here in the US if it weren't for the strict government regulations that ensured that no western reactors could be built the way Chernobyl was (no containment building, graphite moderation etc.). This regulation is forcing transparency in design.

That's true, but money saving did result in the lack of a proper containment building.

can you point out a human organization not susceptible to negligence?

There's a question of motivation.

A public service ought to be motivated to deliver a good service. It won't be motivated by taking shortcuts. A private company seeks profit and cannot afford to lose money, contrary to a public service which can be not profitable. Offering a good service it a means to be profitable but that's not the end goal, even if many people actually want to do good work.

Of course there's a big if. IF the government throws enough money at it.

This IF is unfortunately too often "IF only". If not, we are back to shortcuts.

The service I get from AAA's DMV services is far superior to the service I get from the DMV itself.

bureaucrats and civil servants get paid regardless of how shit they do their jobs because the government puts a gun to your head to pay their wages and consume whatever service they provide (also applies to some "private" companies)

They should be run by an entity devoid of negligence, like the US government.

We're not only not going to fine them, but we're going to make special laws to protect them from the threat of their employees getting sick days.

Should be on a case by case basis. If eliminating profits causes 11 other people in the company to lose their jobs, is it worth it?

This only works if execs have the company's best interests at heart, which they don't. They reap the benefits when things go well but jump ship as the company files bankruptcy when things go south.

You need Unions. Blue collar workers care about safety and can pressure execs into doing the safe thing when the incentives aren't there higher up.

Also labour protections when reasonable action is taken to stop unsafe acts. If someone got fired for stopping unsafe thing they should get big enough payout. Probably years worth of wages.

That exists.

https://www.osha.gov/laws-regs/mou/2012-07-16

Note regarding "refusing to work under certain conditions:"

https://www.osha.gov/workers/right-to-refuse

I used to work in interstate freight (barge, not train). They make it crystal clear any employee has the right to stop work and are protected. The rail workers could have stopped working under their dangerous conditions, they just negligently kept going. The big bad railroad is to blame, but so are the employees.

The regulation was vague, so now you have a situation where two sides are interpreting things differently:

>She said: “The regulation at the time stated that a wheel bearing was bad when it had ‘visible seepage’. But that was very vague, and the bosses used that vagueness to their advantage. For me, it was whenever oil was visible on the bearing. For my bosses, they wanted actual droplets and proof it would leak on the ground.

That's probably why we have an audio leak story, because the company may have some ground to stand on because of this vagueness.

> You need Unions.

The railway has unions. They even wanted to strike at the end of last year over working conditions, but Congress and Biden quickly passed a law in December to prevent it.

A lot of people forget or don’t know about how the Railroads have a very different system of laws about several of the things that basically everyone else has to deal with.

Starting with social security, railroad employees have a different social security system and other related law regarding retirement benefits.

Second there’s the labour laws, much of which is older and more Byzantine than “normal” labour laws because of the historical context behind the era when they were introduced, and having been introduced in such a way that they managed to isolate themselves from other kinds of workers. You can really see this in the complex series of steps necessary for a railroad union strike, compared to other workers it’s just crazy, but each step of that complicated process had at least some justification from greed and backhanding to genuine concerns regarding the crucial role the railroad has in the fabric of the nation.

That sort of “crucial role” or justification has been at the heart of how the railroads got to the present state. The railroads were at one point in the 19th century, arguably more powerful than the federal government, to the point where in some places you had to clarify that “The President” didn’t mean the president of the Pennsylvania Railroad if you wanted to refer to the President of the United States. This level of power is obviously long gone, but it represents the level of power they once had, power which has translated into over a century of “special cases” carved out for railways in law at all levels of society across the USA.

The railroad unions can’t just threaten to stop work like others can, because the government has a right of refusal on their ability to strike, which basically acts as a muzzle on widespread union action and allows the railroads to squeeze the shit out of employees… if you haven’t, look at what the unions were trying to strike for last year… and then think about if employees willing to put up with that, will be the sort of people to take a stand and blow the whistle on bad workplace practices… railroad unions just don’t have the same level of power as normal unions, they do have power, just not “tactical” power, the kind you use to fight the small things like individual safety breaches by having everyone in the workplace threaten to walk out.

> You need Unions. Blue collar workers care about safety and can pressure execs into doing the safe thing when the incentives aren't there higher up.

Yep. This happens all the time in other unionized industries. Manager: "Do [unsafe thing that is against policy / the law, or even that is simply physically impossible]". Worker: "Yeeeeah, I'll be looping my union rep into this conversation". Manager: "On second thought, never mind".

I'd guess the problem's that the railroad workers' union is toothless.

Upvoted since this is indeed common

just nationalize it

Because the US government never did anything negligent/shady right?

Fines?! No, executives doing jail time is the only solution.

As another HN poster posted fines need to be 1-10% per incident of controlling stock put into trust of the relevant enforcement agency unable to be sold or diluted for 10 years. Can't get your act together then eventually overship/control/adult supervision goes to the government.