Thursday, August 18, 2022

Haunted by the Impunity of Rich Business Leaders - Will One Criminal Conviction make a Difference? The Trump Organization Chief Financial Officer Pleads Guilty

 Impunity: an Introduction

We believe that unaccountable leadership is a major cause of health care dysfunction.  Impunity is an extreme form of unaccountable leadership.

We have noted that despite numerous legal settlements made by health care organizations of allegations like fraud, bribery, and kickbacks, almost never do top leaders who presided over these actions face any negative consequences.  Lack of deterrence caused by such impunity appears to be a major cause of  the epidemic of continuing unethical behavior, crime and corruption on the part of large health care organizations. How executives got to the point of having such impunity has never been clear.

But consider two important cases.  

Columbia/HCA CEO Not Held Responsible for Defrauding the Federal Government in 2003

 In 2010, we described the case of early dominant for-profit hospital system Columbia/HCA, which, after investigations beginning in the late 1990s, settled charges of defrauding the federal government.  The company paid a fine of $1.7 billion, a record amount at that time, but did not admit guilt.  More importantly, the company CEO, Rick Scott, was not charged with anything, suffered no negative consequences even though it was on his watch that the company was involved in apparently fraudulent behavior, and retired with a large golden parachute.  

Mr Scott then went on to be elected Governor of, then Senator from Florida as a Republican.  He is still in the Senate, and has become a big supporter for former President Trump.

In 2010 we wrote:

we have noted a parade of legal settlements involving and guilty pleas and criminal convictions by  health care organizations, (or often just subsidiaries conveniently available to take the rap).  As we have noted, resulting fines may be just be treated as costs of doing business by health care leaders.  Almost never have the people who authorized, directed, or implemented wrong-doing almost never suffer negative consequences.

Instead, they may just continue to haunt health care and society at large
.

and

as I have repeated seemingly infinitum, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Purdue Pharma Executives Convicted in 2007

In 2007, we made quite a lot about criminal convictions for Purdue Pharma, and of three of its executives for the "misbranding" of Oxycontin.  (That was just the beginning of the legal problems for Purdue, and other manufacturers and distributors of "legal" narcotics and their contribution to the epidemic of narcotic abuse.)  At the time, we marveled that

At least in the Purdue Pharma/ Oxycontin case top company leaders were prosecuted, plead guilty, and will personally have to pay substantial financial penalties. Maybe this will convince the leaders of health care organizations that deceptive marketing practices may not be in their long term interests.

Of course, at the time we did not realize that Purdue Pharma was a privately held corporation run largely by the family that owned it, the Sacklers.  While the three executives had some responsibility for company operations, they were not as powerful as the top executives of publicly held health care companies, and so their convictions did not really end the impunity even of the top leaders of even one important health care corporation.

Trump Organization CFO to Plead Guilty of 15 Felonies Involving Tax Cheating in New York Court

Today, as the New York Times reported:

 One of Donald J. Trump’s most trusted executives stood before a judge on Thursday and pleaded guilty to 15 felonies, admitting that he conspired with Mr. Trump’s company to carry out a scheme to avoid paying taxes on lavish perks — even while refusing to implicate the former president himself.

As part of the plea deal with the Manhattan district attorney’s office, the executive, Allen H. Weisselberg, is required to testify at the company’s trial if prosecutors choose to call on him, and to admit his role in conspiring with Mr. Trump’s company to carry out the tax scheme. That testimony could tilt the scales against the company, the Trump Organization, as it prepares for an October trial related to the same accusations. 

This demonstrates that in 2022, it is still big news if an apparently top corporate executive is convicted of a crime involving his management of the corporation.  We have progressed so little.

In particular, we certainly have not yet progressed to the point at which the actual top leaders of big corporations are held accountable for their misbehavior.  The Trump Organization is a closely held private corporation.  Its top leader is generally acknowledged as Donald J Trump, and its other top leaders are likely his children.  None of them so far have been charged in this case.

Donald J Trump as leader of the Trump Organization had a very long record of impunity as leader of the Trump Organization (look here).  It is possible that had he been held to account for his earlier actions, we might never have run for President of the United States.  Trump as President was accused of a long list of conflicts of interest and corrupt acts (look here).  He has denounced the 2020 election, which he lost, as "rigged" despite no evidence in support of that.  He currently is under investigation for leading an insurrection to overturn the election and stage an auto-coup.

Conclusion

We are still haunted, now dangerously haunted, for our failures as a society to hold rich, top business leaders accountable for their actions.

When will we ever learn? Will be learn before it is too late?

 

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