5 Companies That Had to Pay Up For a Big Screw Up

Patrik Stollarz/AFP/Getty Images

Many times, it’s difficult to see the justice in corporate America. Companies screw up — big-time — and they seem to get away with it unscathed. Meanwhile, the people they affected go on without a significant amount of cash, their job, or even without a loved one who lost their life as a result of alleged corporate negligence. Whatever the case, all too often it seems like a slap on the wrist compared to the wrongdoing.

This was the case with many of the big banks involved in perpetuating the unstable conditions that brought about the Great Recession. Huge financial firms played a key role in the plunge of the stock market, the derailing of the housing market, and several other factors that crippled the United States’ economy for several years. Yet only one man went to jail for the whole thing, and many of those same banks are still behaving badly.

Plus, even huge fines tend to become less meaningful when you realize many companies, including car manufacturers and oil producers, are able to get huge tax breaks on punitive payouts to victims. Criminal payouts to the government aren’t eligible, The New York Times reports, but the $13 billion fine assessed to JPMorgan Chase after the recession was.

The silver lining is that several lawmakers, including Senator Patrick Leahy from Vermont, have introduced bills that would close those tax loopholes so companies are on the hook for the full bill. (The reality remains that it’s very difficult to move those bills through Congress.) Though that loophole makes justice seem very murky, the fact is that many companies have been held to a high standard, and were forced to pay reparations after making life-altering mistakes. Let’s take a look at some of those companies, and another one that will likely be facing similar penalties in the near future.

1. Volkswagen

If the court proceedings for the German car manufacturer are anything like past cases, it will be years before the case between the company and the United States is settled. But already, estimates are that the company could pay up to $18 billion in fines for using software to cheat on emissions tests.

Nearly 500,000 cars in the United States, including the VW Jetta, Passat, Golf, and Audi A3, were created with “defeat device” that turns off full emissions control when cars are in regular operation. (The device turns the full control on only when it detects it’s under official emissions testing.) The Environmental Protection Agency told the Associated Press the car company could be fined up to $37,500 per vehicle for the infractions, which have been allegedly happening for at least seven years.

Though the company will likely do everything it can to avoid paying those fines, some repercussions have already taken place. The company’s CEO, Martin Winterkorn, took the fall for the error and resigned from his post less than a week after the EPA ordered the recall. Though that may be justice in the making, the downside is that Volkswagen stocks fell 17% the day the EPA recall was announced, which means shareholders will suffer along with the company itself.

2. General Motors

Bill Pugliano/Getty Images
Bill Pugliano/Getty Images

General Motors is probably just a little bit thankful that another car company is taking some regulatory heat — misery loves company, right? The American car manufacturer has had a host of issues in the past 1.5 years that all seem to blur together, adding up to a recall of about 2.2 million cars with airbag deficiencies and ignition switch defects that caused a host of crashes and about 100 tragic deaths.

This problem won’t go away anytime soon, and the car company still faces 370 injury and 84 death lawsuits related to the defects, the Los Angeles Times reported. On a larger scale, however, the company has begun paying for its errors. It began with a $35 million civil penalty in May 2014, and most recently includes a $900 million settlement to resolve federal criminal charges. Another $575 million will be spent to settle many of the civil cases against the company, The Associated Press reported, bringing the cost so far to $5.3 billion.

3. Peanut Corporation of America

Mark Wilson/Getty Images
Mark Wilson/Getty Images

Over the past few years, the peanut processing plant has had much more to worry about than the 3 million people in the U.S. who are allergic to peanuts. The salmonella outbreak in 2008-2009 that killed nine people and sickened more than 700 people also led to the hardest hitting penalty for a food manufacturing company in history.

In mid-September, the former CEO of PCA, 61-year-old Stewart Parnell, was sentenced to 28 years in prison. He could have faced a life sentence based on sentencing guidelines, but even so it was the most severe punishment for a food-borne illness case. Two other PCA executives were sentenced to 20 years and 5 years in prison respectively, and the three people alone are responsible for $250 million in fines.

Though many companies face fines for egregious acts, this case is one of the few in which individuals were held responsible. “Honestly, I think the fact that [Stewart] was prosecuted at all is a victory for consumers,” Bill Marler, a food safety lawyer, said in an email to TIME. “Although, his sentence is less than the maximum, it is the longest sentence ever in a food poisoning case. This sentence is going to send a stiff, cold wind through board rooms across the U.S.”

4. Enron

Johnny Hanson/Getty Images
Johnny Hanson/Getty Images

While cooking the books sometimes goes unpunished, one of the more infamous financial cases landed company executives behind bars. Enron, a Texas-based energy supplier, began doctoring its financial statements to hide debt and other financial mismanagement. The company declared bankruptcy after the fraud was discovered, and the government levied a $1.5 billion fine on the company to try to get some money back for its investors. Settlement money in the hundreds of millions was collected by the Securities and Exchange Commission, though returning it to shareholders faced numerous obstacles.

However, unlike many white collar financial crimes, someone did actually go to prison. Enron’s former CEO, Jeffrey Skilling, was initially sentenced to 24 years in prison, a term that was slashed to 14 years in 2013. In return for a “get out of jail early” card (he could be released in 2017), Skilling agreed to pay out $40 million of her personal fortune to victims of the company’s fraud — money that has been frozen since his conviction in 2006.

5. British Petroleum

Justin E. Stumberg/U.S. Navy via Getty Images
Justin E. Stumberg/U.S. Navy via Getty Images

It’s impossible to list corporate punishments without bringing BP into the mix. The company’s Deepwater Horizon oil rig exploded and killed 11 people, sent millions of gallons of oil gushing into the Gulf of Mexico, and destroyed jobs that depended on the gulf’s natural resources. At first, it seemed like the company might be on the hook for $34 billion in fines to the Unites States government alone, though that decreased over time to a final $18.5 billion to the federal government and five coastal states in July 2015. The settlement resolved pretty much all of the outstanding claims against the company from the 2010 disaster, and in total the company has paid out a reported $53.8 billion in cleanup and settlement costs.

Sweet justice? Perhaps. But what makes it a little less satisfying — but oh-so-typical of corporate America — is that 80% of those payments are eligible for tax breaks, saving BP an estimated $10 billion to $14 billion. Is it good they’re paying up? Absolutely. But it doesn’t quite seem like the poetic justice we’d like when a company gets to save billions in the wake of disasters of this magnitude.

Follow Nikelle on Twitter @Nikelle_CS
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