Criminal Penalties for CEOs? ; Product-Safety Cases Raise Issue of Corporate Ethics

By Laurent Belsie writer of The Christian Science Monitor | The Christian Science Monitor, September 29, 2000 | Go to article overview
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Criminal Penalties for CEOs? ; Product-Safety Cases Raise Issue of Corporate Ethics

Laurent Belsie writer of The Christian Science Monitor, The Christian Science Monitor

At least since the 1970s, when the Ford Pinto rolled off the assembly line with its gas tanks prone to explode, US corporations have faced a moral conundrum: In a capitalist society, how do you balance safety with profit?

It's a foggy area of corporate ethics. Executives must decide, for example, whether to spend the money to make a product safer, if it costs less to pay off a few injury lawsuits. And they must come to terms with the question that underlies most such decisions: Is it ever ethical to put a price on human life?

The wrong step in this ethical swamp can lead to retribution, as executives of Bridgestone/Firestone and Ford Motor Co. are finding out. Already, a group of lawmakers and prosecutors is considering adding criminal penalties to the civil litigation now being launched against the tiremaker. Some observers even call for jail time if executives are found to have engaged in egregious conduct.

But it's not clear more penalties solve the underlying problem. What's needed, ethicists say, is a moral compass and a hard look at company values.

"Those values are intended to give guidance in new areas that pop up, which aren't covered by their existing code of conduct," says Steve Voien of Business for Social Responsibility.

Sadly, many corporations could do a better job of following their values, ethicists say.

"There is no reason why industries can't do more to make sure they put out the safest possible products that would be attractive to consumers," says W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley College in Waltham, Mass.

The growing flap over Bridgestone/Firestone's defective tires, now linked to at least 100 fatalities, is driving a push to add criminal charges in product-liability cases.

The US Senate Commerce Committee last week approved legislation that would allow up to 15 years of prison time and $50,000 in fines for manufacturers who knowingly introduce safety defects in vehicles that cause deaths. The House is working on similar legislation. Backers hope they can pass a law in the waning days of Congress.

In California, the regional Consumers Union has asked the state attorney general to launch a criminal investigation of Ford and Bridgestone/Firestone. Already, attorneys general in three-quarters of the states have pooled resources to probe the case. Unlike other states, California has a law that calls for fines and imprisonment for up to three years for individuals who know of a "serious concealed danger" in a product or business practice and don't report it promptly.

Local prosecutors are taking a close look at filing criminal charges in the case. "If we receive such information that there was a serious injury or death in Milwaukee County, we will initiate a criminal investigation," says Michael McCann, the Wisconsin county's district attorney. So far, none of the 19 known instances involving suspect Firestone tires in Wisconsin has caused serious injury or death, according to the National Highway Traffic Safety Administration.

The jailhouse balk

So far, society has opted not to put executives behind bars for selling unsafe products. From tobacco firms to food companies, executives who have misled the public have avoided prison time.

Supporters of criminal sanctions also argue that multimillion- dollar civil fines against companies have not stopped the manufacture of unsafe products.

"We're not for lots of lawsuits at all, but we really believe that consumers' interests and consumer safety should be at the top of the list [in corporations]," says Elisa Odabashian, an analyst in the San Francisco office of Consumers Union, publisher of Consumer Reports magazine.

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