Corporate Three Strikes Bill in California

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JACK CAFFERTY – CNN HOST: Corporate bad boys have been the talk of America since the Enron scandal and before that. Now, in California, they’re not just talking about the crook in the gray flannel suit, they are trying to take him out of action. A Senate committee in Sacramento has passed a bill that would apply the three strikes rule to corporations. If companies doing business in California racked up three or more felony convictions, they would effectively be shut down and unable to do business in California. For more about the three strikes idea, we’re joined now from Los Angeles by Carmen Balber, she’s a consumer advocate with the Foundation for Taxpayer & Consumer Rights (FTCR), which is a non-profit advocacy group based in California. Carmen, nice to have you with us.


CAFFERTY: Aren’t there laws on the books now presumably designed to prevent corporate malfeasance? I mean don’t we have enough laws on the books against evildoers and wrongdoers? Do we really need more?

BALBER: There are certainly laws on the books to prevent corporate crime but we’ve seen time and again is that fines simply aren’t enough. You can’t put a corporation in prison and that’s usually the ultimate punishment for individual crime. We need a corollary in corporate crime, and this three strikes you’re out law here in California will be exactly that.

ANDY SERWER, FORTUNE MAGAZINE: Carmen, I think this law, this proposed law, you’ve got very good intentions here, but I mean come on, how practical is this thing? I don’t want to be defending corporate greed or corporate malfeasance here, but companies do stupid little things all the time where they might be convicted, they might even be felonies. For instance, take your giant utilities. This is another example of how I think it might be impractical. They’ve done some bad things. What are you going to do, kick the utilities out of your state? I mean, you can’t do that.

BALBER: I’ll take that utility example and tell you that, as far as I’ve been able to find at least here in California, none of the three major utilities have been convicted of a felony crime. Sure, companies do small things that maybe they didn’t mean to do and they get fined, or maybe they even get convicted of a misdemeanor crime for that, but this law really focuses on those most egregious acts, felony crimes, huge violations of consumer protection, environmental protection, labor law that is really the heart of the most egregious corporate crime here in California.

CAFFERTY: If it focuses on major crimes, why three strikes? Why not one strike? I mean, if you do something to destroy the environment, if you rip off a bunch of people, I mean, why three strikes?

BALBER: We think there’s a corollary here with the three strikes and you’re out for individuals. We think everybody deserves a second chance, and the same thing may just be the case with corporations. We want to give companies a chance to reform their actions and be good corporate actors here in California.

SUSAN LISOVICZ, CNN FINANCIAL NEWS CORRESPONDENT: You know, Carmen, I have looked at some of your research and some of these companies that have felonies, which are obviously very serious crimes, are some of the bluest of the blue chip companies, including United Technologies and IBM, which are both members of the Dow 30. You actually have a company in California that’s been convicted of four felonies. Is that correct?

BALBER: That is correct, and that company is Teledyne, which is a military contractor. Over the last, I’d say, 10.5 years, maybe 12, they’ve been convicted of four felony crimes, most of which involved lying to the U.S. government.

SERWER: Carmen, just to follow up on this. A lot of people, you’re talking about a corollary to the three strikes and you’re out for individuals, but a lot of people have problems with that law, too. Mistakes are made. It is sort of like a death penalty in a way. You are locked up forever, you’re kicked out of the state of California forever. What if there’s a mistake?

BALBER: I think that there are pretty good distinctions between what we’re doing here with the corporate three strikes act and that individual three strikes act. The problem people have with that bill — or with that law, if you’re here in California, is that it punishes people for small crimes when it’s their third strike, so we have got the famous example of the guy who went to jail for 25 years to life for stealing $150 worth of Disney tapes. That’s not going to happen with corporations. Corporations, when they are tried for criminal acts, are tried for the most egregious, the most blatant, the company-wide problems. That’s not falling to the level of the problem people have with the three strikes act for individuals here in California.

CAFFERTY: It will be interesting to see how it works out. Carmen, thanks for taking some time to join us on IN THE MONEY today. I appreciate it.

BALBER: No problem.

CAFFERTY: Carmen Balber, consumer advocate, Foundation for Taxpayer & Consumer Rights, and they’re looking at a three strikes and you’re out corporate bill in California.

Consumer Watchdog
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