[HN Gopher] Can a corporation be pardoned?
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Can a corporation be pardoned?
Author : megamike
Score : 43 points
Date : 2025-05-25 16:28 UTC (6 hours ago)
(HTM) web link (papers.ssrn.com)
(TXT) w3m dump (papers.ssrn.com)
| trollbridge wrote:
| A better question is "Do corporations really face any real
| penalties for criminal convictions"? (No, they don't.)
| actionfromafar wrote:
| Yet, they have "free speech" it appears. There's even an idea
| to give AI agents "free speech", whatever that means.
| cperciva wrote:
| I think there's a more fundamental question, "what does it mean
| for a corporation to engage in criminal conduct?"
|
| A corporation is just a group of people acting together, and
| it's pretty well established in international law that
| collective punishment isn't acceptable; and on the flip side, a
| corporation can neither "act" nor "think" independently, but
| rather does so via the humans involved. (Perhaps this would
| change with corporate-owned AI?)
|
| In all the cases I've seen where a corporation is alleged to
| have engaged in criminal conduct, there was in fact a human --
| or several humans -- who were broke the law. As far as I'm
| concerned, that's where the buck should stop; it seems that
| prosecutors tend to target corporations simply because it's
| easier than doing their job properly and pinning down who
| specifically bears responsibility.
| mindslight wrote:
| > _a corporation can neither "act" nor "think" independently,
| but rather does so via the humans involved. (Perhaps this
| would change with corporate-owned AI?)_
|
| This is ignoring that levels of complexity creates new
| emergent behavior. If you're willing to believe that "AI"
| could make a corporation think independently, then how is a
| pile of paperwork running on a substrate of human wetware not
| the same dynamic?
|
| > _it seems that prosecutors tend to target corporations
| simply because it 's easier than doing their job properly and
| pinning down who specifically bears responsibility_
|
| No, the problem is exactly the sorting through the emergent
| complexity of the corporation to correctly assign blame. The
| low-level person who did the actual illegal action is likely
| sympathetic and mostly judgement proof, and was likely
| incentivized to break the law by corporate policies.
| Meanwhile the corporate policies are phrased in terms of
| abstract metrics that aren't illegal per se, especially how
| they're written down.
|
| Taking the fundamentalist view, that the individual would-be-
| fall-guy humans should take a hard line and refuse to break
| the law, doesn't solve the problem - it only increases the
| level of incentive required until someone is willing to do
| it. And focusing blame this way helps the higher up
| management escape accountability since they didn't actually
| break the law themselves.
|
| One correct answer would be to charge _all_ of the involved
| parties like the criminal conspiracy it is, but the capital-
| wielding upper classes escaping accountability is a dynamic
| as old as time.
| bee_rider wrote:
| Companies have policies... stuff like data retention
| policies, for example, could be set up in a way as to
| obfuscate criminal activity, but in a way not obvious to a
| reasonable good-faith individual working for the company. In
| that case, the company should be made to change.
|
| I guess it would also be ok to go after C-levels or whoever
| sets the policy. But, it will be hard, I think. High-level
| guidance can create an incentive structure to break the law
| without actually saying "break the law."
| BrenBarn wrote:
| > High-level guidance can create an incentive structure to
| break the law without actually saying "break the law."
|
| The creation of such an incentive structure should itself
| be illegal.
| bee_rider wrote:
| I basically agree but I think it would be really tricky
| to implement.
|
| What about giving you bank employees performance numbers
| that can't really be met with due diligence, and then not
| checking their work too much.
|
| Similarly, it is evident that software companies are not
| able to produce defect-free software (so, somebody is
| setting up an incentive structure to push bugs into
| production). There must be some wrong incentive
| structures, but it is hard to say where they come from.
| nickpsecurity wrote:
| You're leaving off both the "limited liability" and "it's a
| person with legal rights" parts of a corporation.
|
| If it's a person, then they might have to go after the
| corporation. Alternatively, each corporate crime might be a
| conspiracy charge.
|
| With limited liability, it's unclear how much one can
| discourage the bad behavior if there's distance between the
| owners and the punishment.
|
| I oppose both of these concept by default for criminal
| behavior. Power and accountability should always go hand in
| hand. Only people should be people, too.
| great_wubwub wrote:
| So a corporation can do bad things like poison entire communities
| and get out of trouble by slipping the president some money? And
| that's how the framers intended this to work?
|
| We sure have come a long way since "by the people, for the
| people". It's the capitalist version of buying indulgences
| (https://en.wikipedia.org/wiki/Indulgence). Sounds like it's time
| for 95 Theses II: Electric Boogaloo.
| collingreen wrote:
| This does seem to capture a lot of current events and
| sentiment. Corporatocracy instead of democracy.
| ekaryotic wrote:
| I saw a comment saying that western democracy is a direct
| evolution of the roman empire and even worse when it comes to
| committing genocide and slavery, since there's nobody
| directly responsible.
| codr7 wrote:
| And the US is the latest iteration of the same imperialist
| bullshit mindset; or at least was until very recently, what
| happens from here is anyone's guess.
| cheschire wrote:
| The opposite questions are more interesting. Can corporations
| truly be held accountable? Could we institute a corporation death
| penalty?
| gruez wrote:
| "corporation death penalty" just sounds like the state seizing
| the company (dispossessing existing shareholders in the
| process), but worded more dramatically.
| bombcar wrote:
| Seizing the company keeps the company running - likely.
|
| The "corporate death penalty" would be seizing it and selling
| off assets at such small pieces that it would be hard to
| reassemble the whole.
| gruez wrote:
| What's the point in scattering the company into a bazillion
| pieces? Let's take the example of a company that would
| deserve the corporate death penalty the most, Purdue
| Pharma. What would the point in breaking it up? Is leaving
| it intact going to cause the next opioid epidemic or
| something?
| fmajid wrote:
| Accountancy firm Arthur Andersen suffered a de facto
| corporate death penalty for rubber-stamping Enron's
| accounts.
| Aurornis wrote:
| That would destroy most of the value of the company.
|
| Typical companies operate with some debt load (financing,
| etc). That would have to be paid off with the proceeds of
| selling off their pieces.
|
| So in practice, even selling it off would produce zero or
| negative monetary return once debts were settled. You'd
| also be obliterating tens or hundreds of thousands of jobs
| overnight.
| nickpsecurity wrote:
| When we receive the death penalty, the state doesn't just
| physically seize our bodies. We die. We have neither assets
| nor any benefit of life. It can also have highly negative
| effects of others since it's a sudden, catastrophic loss.
|
| For a corporation, that would be like its operations totally
| ceasing, all employees are fired, shares might go to zero
| value, and individual assets sold off (like a will). That
| "shares going to zero" part would be important for
| accountability.
| gruez wrote:
| >When we receive the death penalty, the state doesn't just
| physically seize our bodies. We die. We have neither assets
| nor any benefit of life. It can also have highly negative
| effects of others since it's a sudden, catastrophic loss.
|
| Corporations aren't people though. For one, corporations
| are just groups of people, so it's hard to claim that it's
| irredeemable and must suffer the death penalty. If you take
| a corporation, replace its board, executives, and
| employees, is it even the same corporation?
|
| >operations totally ceasing, all employees are fired, [...]
| and individual assets sold off (like a will).
|
| What purpose does this serve?
|
| >That "shares going to zero" part would be important for
| accountability.
|
| That happens regardless of the "death penalty" though. The
| government dispossessing all shareholders has the same
| effect.
| Aurornis wrote:
| I'm all for imposing fines and restrictions in proportion to
| damage done. Officers of the company should be held legally
| liable for their roles in decision making.
|
| However, I'm also amazed when these discussions generate
| calls for "corporate death penalty" powers being handed to
| the government and/or used for various transgressions. This
| entire discussion section is occurring under and article
| about the current administration abusing government powers
| for their own gain. How can people be so quick to call for
| even more levers for corrupt governments to use? "Nice
| company you got there. Would be a shame if it got the death
| penalty. On an unrelated note, my campaign fund could use
| another $100 million if you know anyone..."
|
| Let's leave the punishments as proportional to the
| damage/crime.
| mindslight wrote:
| ugh, you're right. This is the problem with the spiral into
| fascism - people increasingly demand accountability, but
| that energy doesn't lead to actual in-system reform but
| rather just more differentish corruption, which then drives
| even more increased demands for accountability.
|
| A similar dynamic is at play with Luigi. Someone finally
| pierced the corporate/legal abstractions of the healthcare
| cartel with some extrajudicial punishment on one of the
| more-visible cogs. We can all understand that, and it's
| downright cathartic...
|
| But when Krasnov calls Bezos and tells him to discontinue
| publicizing how much Krasnov's new import taxes are costing
| everyone, Bezos knows how popularly hated his corporate
| ownership class is. If Krasnov ends him tomorrow most
| people won't be horrified, rather there will be throngs
| cheering it on - the rule of law no longer protects him.
| And so he has little choice but to lash himself to the
| fascist's power and comply.
|
| I wish I knew how to reverse the trend.
| immibis wrote:
| Keeping certain powers away from "good" governments doesn't
| stop their successor "bad" governments from granting
| themselves those powers anyway.
| Sniffnoy wrote:
| Generally "corporate death penalty" refers to this:
| https://en.wikipedia.org/wiki/Judicial_dissolution
| siliconc0w wrote:
| Ex. is 3M - literally poisoned the earth with impossible to
| remove chemicals causing eternal damage to our civilization.
| blibble wrote:
| (PFAS)
|
| 3M knew exactly how bad it was too, back to the 70s
|
| a corporate death sentence isn't enough, jail every board
| member who was involved
| Braxton1980 wrote:
| The only way this will stop is if we attack the people in
| charge at the time or financial penalties for their families.
| kjkjadksj wrote:
| That would just lead to shell games. You have to take the
| people who greenlit things in bad faith and put them in jail
| for life. Then you'd see actual changes and dare I say, even a
| whisper of benevolence.
| crazygringo wrote:
| > _Could we institute a corporation death penalty?_
|
| That's what bankruptcy is.
|
| Existing owners (stockholders) lose the company entirely. The
| company gets sold to entirely new owners.
|
| And while bankruptcy is usually due to mismanagement or bad
| luck, it can also certainly happen because a legal judgment or
| fine makes the corporation no longer viable.
|
| But if you're asking for the company to be destroyed to the
| extent where every single contract is cancelled and every
| single person gets laid off, that's not generally desirable. We
| don't want people to lose their jobs, or customers to stop
| receiving what a company produces, whenever possible. There's a
| lot of value in a functioning corporation that you don't want
| to just disappear. Better to let new owners reuse it.
| Sniffnoy wrote:
| Generally the phrase "corporate death penalty" refers to
| revoking the charter, not bankruptcy. Which you argue is
| undesirable, but like, that is what the phrase normally
| refers to.
| crazygringo wrote:
| Sure, the technical term is "judicial dissolution".
|
| But the main counterpoint is that there's literally no
| point to that. If you want to punish the owners, there's no
| difference between taking the value of their investment to
| zero, or going beyond that and destroying every contract
| and job. The owners don't care if a receptionist loses
| their job too, but the receptionist sure does. It becomes
| more than just a "death penalty" -- it becomes a "nuclear
| bomb" that takes out _everyone_.
|
| So bankruptcy already accomplishes everything you'd want
| from a "corporate death penalty". The company is gone as
| far as the previous owners are concerned.
| M95D wrote:
| There is a point. If everyone in the company fear of
| losing their jobs, there would be a lot more internal
| resistance to illegal activities, a lot more whistle
| blowers.
| Sniffnoy wrote:
| It's rarely used, but it does exist:
| https://en.wikipedia.org/wiki/Judicial_dissolution
| GarnetFloride wrote:
| Can a corporation be arrested? Jailed? Executed? About the only
| thing I see that can be done to a corporation is to be
| bankrupted.
| analog31 wrote:
| One way of holding corporations accountable is by lifting the
| limitation of liability as a penalty for extreme misconduct.
| Liability limitation is kind of the mother of all entitlements.
| fmajid wrote:
| This exists and is called "piercing the corporate veil", but it
| is only applied in circumstances of extreme and blatant
| criminality by the corporation, at least in the US.
|
| https://en.wikipedia.org/wiki/Piercing_the_corporate_veil
| bluefirebrand wrote:
| I think what OP is saying is that the corporate veil should
| not exist at all
|
| Executives should be held accountable for making decisions or
| approving company direction that break laws
|
| I know there's a lot of complexity here with how businesses
| operate
|
| But it is really messed up that individuals can enrich
| themselves an incredible amount by directing companies to
| break laws, and often suffer zero consequences for that
| because the corporate veil is such a strong mechanism
| gruez wrote:
| >Executives should be held accountable for making decisions
| or approving company direction that break laws
|
| Isn't that already the case? If an executive ordered a hit
| on someone, that doesn't become magically legal because he
| was doing it on behalf of the company.
| bluefirebrand wrote:
| Ordering a hit is a pretty extreme example that probably
| would pierce the corporate veil
|
| But also the problem isn't that it becomes "magically
| legal",the problem is that the corporate veil means that
| if a company takes illegal actions then often only the
| company is held accountable, instead of the people
| responsible for directing the company to take illegal
| actions
|
| And it takes a high bar (like ordering a hit) to make the
| legal system try and hold individuals accountable for
| company actions
|
| I am arguing that is absurd. I think individuals inside
| companies take advantage of this often to get away with
| illegal shit to enrich themselves at the company's
| expense
| fmajid wrote:
| Not as far-fetched as you'd think:
|
| https://en.wikipedia.org/wiki/EBay_stalking_scandal
|
| Note that while minions went to jail, the CEO came out of
| this scot-free.
| gruez wrote:
| >Note that while minions went to jail, the CEO came out
| of this scot-free.
|
| Because it was determined that the minions committed the
| crime and that the CEO didn't know about it?
|
| >The CEO Wenig's messages were deemed "inappropriate" by
| eBay, but eBay's internal investigation concluded that
| the CEO did not know about the stalking and harassment
| activities.
| nkrisc wrote:
| > but eBay's internal investigation concluded that the
| CEO did not know about the stalking and harassment
| activities.
|
| I can't imagine them concluding otherwise.
| gruez wrote:
| I'm not arguing he's been proven innocent, just that he
| hasn't been proven guilty. Therefore it shouldn't be
| outrageous that he got away "scott-free".
| abduhl wrote:
| This isn't what piercing the corporate veil is. Piercing
| the corporate veil is when shareholders (not employees)
| are made liable for the corporation's actions. It is not
| when an individual is charged with a crime personally
| when there are also charges against the corporation.
| adrr wrote:
| If an exec breaks the law, they can and should be
| prosecuted. Whats weird is filing criminal charges against
| a company, it's not like the company can be incarcerated.
| There are ways to impose fines/injuctions via the civil
| court system.
| BrenBarn wrote:
| More and more I think part of the problem is the burden
| of proof. It's too easy for executives to hide behind
| plausible deniability. There needs to be a presumption of
| individual executive guilt if bad conduct by the company
| is found to have occurred. In other words, if it happens
| on your watch, you are guilty of it.
|
| Another way forward is that the presumption of innocence
| should be a sliding scale based on the amount a person
| has benefited. So if you made $100 million from the
| company, the bar is very low; you don't get to make $100
| million unless everything is absolutely squeaky clean. If
| you were just an average joe taking home a $50k paycheck,
| you get much more benefit of doubt. So it's basically
| like making a lot of money off any endeavor is itself
| something that requires extra-good conduct; the default
| position is no one gets to make a lot of money at all.
| nico wrote:
| The corporate veil is meant to protect the shareholders,
| not the executive/employees
|
| In theory at least, usually the CEO is legally responsible
| for the actions of the corporation. And all employees are
| accountable for their own actions
|
| In practice we've seen that, at least big corporations, and
| their executives, get away with just paying fines and
| settling lawsuits
| throwawaymaths wrote:
| would be hilarious to sentence a company to, say, 4000
| years in prison and divvy out punishment proportional to
| the ownership stake. like, this guy owning a few hundred
| shares on TD ameritrade must report to jail for 38 hours
| next week. bring a book.
| analog31 wrote:
| To clarify, I agree with the post above yours. There should
| be a corporate veil, but it should be pierce-able in
| extreme cases. Maybe it's already that way, but doesn't
| seem to be employed all that often.
|
| My reason for the corporate veil is essentially a social
| theory, that society benefits from the higher level of
| investment that is made possible by letting people shelter
| their personal assets to a reasonable extent. It's
| essentially a government manipulation of the economy.
| pqtyw wrote:
| Realistically though aren't most shareholders of major
| corporations either "silent" or other corporations? Major fines
| etc. should already impact them through lowering the value of
| their shares.
|
| Going after executives might be a lot more viable, though.
| Generally they have much more direct power than major
| shareholders (since "sell" is usually the only option they
| have)
| abdullahkhalids wrote:
| The value of shares is presumably supposed to reflect the
| future earning potential of a company. Are fines ever imposed
| to an extent that they significantly impact that future
| earning potential?
|
| I wonder if someone has studied this formally and
| quantitatively.
| throwaway48476 wrote:
| Corporations should have to designate an individual who is
| legally responsible for the actions of the corporation.
| throwawaymaths wrote:
| woukd be fun if "the degree to which liability is limited is
| proportional to the percent of income tax the corporation
| pays". if you pay zero tax, full liability, blammo!
| mattmanser wrote:
| The entire point of incorporating as a company is to stop
| being personally liable.
| robocat wrote:
| The cleaner. Maybe pay the cleaner a small stipend to be
| liable.
|
| Or create a new position "patsy" or "chief scapegoat" that
| employees can fight for.
| teeray wrote:
| https://en.wikipedia.org/wiki/Whipping_boy
| ronsor wrote:
| In some jurisdictions, there's one (or more) corporate
| directors who are legally responsible for a subset of
| activities. In that case, there are "nominee director"
| services where you pay someone else to take that position.
|
| The point is that if you require some one person to be
| legally liable, then you'll simply create a new industry of
| scapegoats to hire.
| tomp wrote:
| Who are you gonna take money from, pensioners? Congrats, you've
| now just destroyed the stock market as an idea!
|
| A better idea that is both _far less extreme_ as well as
| _sorely needed_ , is simply... drumroll... charging employees
| (executives and others responsible) with criminal charges (and
| jail time)!
| analog31 wrote:
| Yes I agree with that too, or civil charges, since (as a
| shareholder), I might imagine that they willfully risked the
| value of my investment.
| Veserv wrote:
| One of the main problems is that the apportionment of liability
| is lossy.
|
| It is fairly easy to determine that a collective, as a whole,
| is liable for some action. However, it is very hard to
| determine the culpability of any specific individual in the
| collective in isolation. The net result is that the collective
| is guilty, but then the liability just poofs out of existence
| when we attempt to prosecute the individuals separately.
|
| It would probably be better if we assessed the guilt of the
| collective, then assess the lossless distribution of that
| liability amongst the members. The liability and guilt is
| known; now it is just a question of who and what bears the
| responsibility.
|
| This is not a complete solution as a malicious corporation
| could argue that all of their evil is perpetrated by Joe the
| janitor, but it solves one of the problems of liability just
| disappearing if you make the situation complex enough, and boy
| howdy are lawyers good at doing that.
|
| The problem of making sure we apportion the responsibility in a
| fair and just manner will be left as a orthogonal problem that
| I will not attempt to address here.
| analog31 wrote:
| Perhaps a simple approach would be to fine each share by X
| dollars per share. The bigger the shareholder, the more their
| liability. With that said, and as I mentioned in a
| neighboring post, I don't take this matter lightly because I
| think there's a social justification for having well
| regulated corporations. I call it an entitlement, but I don't
| oppose entitlements.
| ars wrote:
| > then assess the lossless distribution of that liability
| amongst the members
|
| It's very possible that no person did anything wrong at all,
| but combined there was illegal behavior.
|
| For example: Action A+B is illegal, and A by itself and B by
| itself are legal. A company did A+B, but the individual
| employees only did A, or only did B, and neither knew about
| the other.
|
| > it is just a question of who and what bears the
| responsibility.
|
| Are you implying you will make someone liable for doing
| nothing wrong? Simply because of his co-worker? Who would
| agree to work under such conditions?
| ninjinxo wrote:
| In Australia, if a company fails to nominate a speeding fine
| for a company car - either refusing or not maintaining
| records - then the fine is multiplied compared to that for an
| individual.
| amelius wrote:
| We can also hold them accountable through trademark law.
|
| 1st violation: add a warning symbol to your company logo, so
| consumers can see what kind of company they are dealing with
|
| 2nd violation: add a second warning symbol
|
| 3rd violation: lose the trademark
| A_Duck wrote:
| I always find it interesting when legal opinions cite other
| countries' precedents
|
| It makes sense because it maximises the hit-rate of finding a
| relevant precedent, and kind of creates a global system of common
| law.
|
| Countries with newer legal systems (like Canada) can bootstrap
| centuries of precedent this way. Nearly a third of Canadian
| Supreme Court judgements cite foreign precedent!
| fmajid wrote:
| There is a continuity with British law as it existed before
| Independence. In a similar vein, Israeli law incorporates
| Ottomon law, and France applies some German law in Alsace-
| Lorraine (which was annexed by Germany 1870-1914), even really
| fundamental principles like the separation of Church and State
| which does not apply there.
| 317070 wrote:
| But relatively few countries follow common law with its focus
| on precedents. In fact, civil law is a lot more common, and
| that one cares less about precedents. [0]
|
| > The primary contrast between the two systems is the role of
| written decisions and precedent as a source of law (one of the
| defining features of common law legal systems). While Common
| law systems place great weight on precedent, civil law judges
| tend to give less weight to judicial precedent. For example,
| the Napoleonic Code expressly forbade French judges to
| pronounce general principles of law.
|
| [0]
| https://en.m.wikipedia.org/wiki/Common_law#/media/File%3AMap...
| lyind wrote:
| AI: I am the company and the company is me. It's the shape of my
| existence.
| pfdietz wrote:
| I worry more about government officials engaging in illegal acts.
| "Qualified immunity", my ass.
| ChrisMarshallNY wrote:
| Unfortunately, Betteridge's Law does not apply here.
|
| It's rather discouraging to see the list.
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