U.S. Attorney General Eric Holder today announced that the government had settled a criminal complaint against Toyota by accepting a $1.2 billion fine. That’s a hefty sum and I don’t want to diminish its stinging value on the $234 billion company. The fine represents more than 8% of the company’s operating profit of $14 billion.
But not one individual went to jail in the case. And therein lies the problem.
The “corporation” didn’t make the decisions that led up to the accidents, injuries and five deaths caused by the design defect. Individual employees and executives did. Fining the company doesn’t discourage any individual from behaving in ways that result in similar issues arising in the future.
The auto industry, not uniquely but famously, will generally put profits ahead of consumer safety. GM just proved that by waiting a full 10 years after discovering a serious flaw in the ignition switches on millions of its vehicles before finally issuing a recall under government pressure. You can bet that if some vice-president or the CEO of Toyota or GM was facing jail time for their malfeasance, issues would get resolved much more quickly. But as long as the company can do a cost-benefits analysis and conclude it’s cheaper to pay the fines and lawsuit verdicts than to fix the problem, public safety will continue to take a back seat.
Corporations are not people, not so long as they can avoid jail hen they break the law as Toyota here admitted. Criminal prosecution for misconduct must reach to the individual decision-makers responsible for the conduct. It’s long past time for that shift in American judicial philosophy.