THE BLOG

12 Miners Dead -- Will Justice Get the Shaft?

The Sago, West Virginia mining tragedy should spur an investigation into the causes of this crime. Yes, crime. Although the company says it was caused by an act of God (lightning), it cannot be trusted given that it initially concealed the fact that the miners died, misleading their families into a false sense of hope.

According to NPR's Daniel Zwerdling, the company also has a record of very serious violations, including a "high degree of negligence," twice the average number of injuries, etc. The mine was forced to shut down 15 times in the last year alone.
Given the fact that the government rarely shuts down mines, this is off the scale.

If anything good could come out of a disaster like this, it should be to spur a broader debate about the inadequacy of corporate homicide law enforcement in the U.S.

More so since Sago is no anomaly, but rather one of numerous major work-related accidents that have occurred in recent years.

Last March, for example, an explosion ripped through a Texas City refinery, killing 15 people and injuring 170. ( BP leads the US refinery industry in worker deaths - with 22 fatalities in 8 accidents since 1995. The oil giant was already on an OSHA "watch list" based after a 2004 explosion killed two pipefitters.)

In September, OSHA announced an unprecedented workplace safety fine of $21 million.

Big fines like that are rare for workplace disasters, although there have been a few in recent years. Last March, Motiva, an oil refinery owned by Shell Oil, pled guilty to negligently endangering workers and committing environmental crimes in Delaware. Motiva-Shell was prosecuted by the Delaware Attorney General and ordered by a Delaware court to pay a $10 million fine and sentenced to three years probation.

Before the BP and Motiva fines the largest fine in the history of environmental and workplace safety enforcement was $11 million imposed on IMC Fertilizer, in Sterlington, Louisiana, in 1991 after an explosion killed 8 workers and injured 128.

Nevertheless, fines are usually just a fraction of a large corporation's annual revenues (in BP's case, just 2 hours of the company's annual revenue stream). As such, they constitute a mere slap-on-the-wrist as sanctions. Too often, the value of a corporation's stock rises upon the announcement of such settlements, because it means the uncertainty and adverse publicity resulting from the incident will diminish with time.

When it comes to workplace death, big accidents that get some news coverage like Sago are just the tip of the iceberg. According to government figures gathered by the AFL, nearly 6,000 or so workplace deaths each year (not to mention the 50,000 or so who die from work-related diseases). But with the occasional exception of excellent investigative series like Mike Casey's series for the Kansas City Star, it rarely strikes us as a big problem. Until we are personally affected.

Although sometimes local prosecutors get riled up by these cases, it's rare that the feds crack down on this type of corporate crime. In December 2003 the Department of Justice indicted senior managers at a New Jersey foundry on charges of conspiring to violate safety and environmental laws and repeatedly obstructing government investigations into workplace dangers. The NJ foundry is owned by McWane Corporation, the largest manufacturer of cast-iron pipes. The Department of Justice called it a pioneering indictment - by using federal conspiracy statutes they avoid the sentencing limitations under the OSHA misdemeanor rule. But indictments such as those issued against McWane executives are very rare. And it came on the heels of a major investigation by the New York Times.

Meanwhile, on the Hill, the West Virginia accident should give renewed impetus to the "Wrongful Death Accountability Act," introduced by Senators Corzine and Kennedy introduced bills in 2003 and 2005. The bill calls for increased penalties for deaths resulting from willful failure to comply with safety regulations to a felony with a maximum of ten years imprisonment for corporate executives.

That's the kind of reaction the families of the dead miners should expect from Congress. And the kind of response we've seen in other countries.

For example, in 1992, an explosion at the Westray mine in Nova Scotia killed 26 miners. A subsequent investigation traced the cause of the disaster to numerous violations of health and safety regulations. The judge who investigated concluded that senior executives had been grossly negligent, recommending that the government of Canada, through the Department of Justice, institute a study of the accountability of corporate executives and directors for the wrongful or negligent acts of the corporation and "introduce in the Parliament of Canada such amendments to legislation as are necessary to ensure that corporate executives and directors are held properly accountable for workplace safety." (To learn more, go here.)

A decade later, after numerous consultations with industry and other experts, a bill known as the "Westray bill" was passed by the Canadian Parliament.

Under Canada's new law, if anyone with supervisory authority in a corporation (not just top executives) knows about a crime committed by employees, or does nothing about corporate operations that will likely result in a crime being committed, then both the individuals and the corporation can be found guilty.

Prosecuting both the culpable individuals and the company sometimes makes sense. The latter because it creates an deterrent incentive for companies which, if convicted, can face huge potential consequences from adverse publicity and/or debarment sanctions making them ineligible for government contracts.

Yet as the Corporate Crime Reporter recently reported, it is becoming increasingly rare for prosecutors to charge the corporation. Instead, federal and state prosecutors are increasingly offering major corporations special deals (known as deferred prosecution or non prosecution agreements) in exchange for cooperating with its investigation and prosecution of culpable executives (the "bad apple" strategy). (This is especially the case with financial crimes.)

Ever since the prosecution of Arthur Andersen, prosecutors have either been overruled when trying to go after companies (or firms, like KPMG) and told to use the deferred prosecution agreements instead, even though such agreements were originally intended only to apply to minor drug and juvenile delinquency cases (which were clogging the courts).

"It used to be that major corporations caught committing serious crimes would be brought to justice -- convicted of a crime and sentenced," says Russell Mokhiber, editor of the Corporate Crime Reporter. "No longer."