by Zwackus
Sun Nov 13th, 2011 at 09:47:02 PM EST
ET is excellent at deconstructing events in politics and economics, and at picking apart the dominant narratives that are destroying Western society. Further, there has been a fair bit of discussion regarding alternative solutions (TINA) to the European financial crisis.
However, I've not seen so much in the way of real discussion of larger reforms that would help fix the mess we're in. I'm not talking about utopian social reforms so much as legislative-type proposals that could use existing institutions and frameworks to solve various social problems. Obviously, anything effective would be anathema to the powers that be, but it doesn't hurt to think about and discuss these sorts of things.
So here's an idea for people to mull over - Corporate Governance Reform.
As I see it, there are several rather large problems with the way modern corporations work. Among the larger ones is the fact that there is no real way to hold large corporations accountable for the kinds of world-destroying disasters they are able to cause. Deepwater Horizon, Fukushima, the Bhopal disaster, the Niger Delta, the current financial crisis - in none of these situations have the corporate entity, or the people within it, been held properly accountable.
Now, a large part of this is simply lax enforcement of already existing rules and regulations. But, in my rather uninformed opinion, I suspect a fair bit of it also has to do with the structure of the laws regarding the corporations. Management is largely insulated from legal consequences of their actions, encouraging gross irresponsibility.
What sort of legal framework could improve this situation? My rather simplistic and draconian idea is as follows.
Top management and middle management should be held responsible for the actions of their corporations, in much the same manner as the captain of a ship is responsible for the actions of his/her crew. Serious screwups are ultimately the fault of the captain, who will probably never be given command again, and may well face serious sanctions.
Large corporations, given their power in society, must have sober and responsible governance. Their mismanagement can simply cause too much damage to society. Therefore, there is a strong public interest in enforcing sober and responsible corporate management. To that end, I would propose that in the case of a serious disaster, there be a legal framework in place so that "nobody could have imagined" or "I wasn't aware of that" are simply not acceptable excuses.
1 - Management was either aware of the problems, and is thus criminally liable for the disaster. The CEO, and appropriate division managers, go to jail and face massive fines proportionate to their compensation package, and the board is discharged for inadequate supervision.
2 - Management was so incompetent that it was truly unaware of the situation. The CEO and appropriate division managers face a lifetime ban from corporate or government service, and face massive fines proportionate to their compensation package. The board is discharged for inadequate supervision.
The various officers can plead incompetence to avoid criminal liability, but have to prove it. They were supposedly responsible, so the burden of proof is on them. There is not alternative - you were either criminally irresponsible, or criminally incompetent.
Would this be enough? All on its own, probably not. There are still issues of lax or corrupt enforcement, which would require an entirely different set of governmental and campaign reforms to clean up. But something along these lines seems entirely fit and appropriate in cases of massive environmental disasters. We've discussed before how it is literally impossible to truly punish anyone in proportion to the damage caused by something like the Deepwater Horizon spill or Fukushima, but fines and jail time are a start.
