News Journal If CEOs are worth so much money, why are they never punished for wrongdoing?

If CEOs are worth so much money, why are they never punished for wrongdoing?
Ted Kaufman Published 10:33 a.m. ET Aug. 9, 2018 | Updated 11:36 a.m. ET Aug. 9, 2018
Take this finding from the Economic Policy Institute: Since 1978, adjusted for inflation, American workers have seen a total 11.2 percent increase in compensation. During the same period, CEOs have seen a 937 percent increase. That increase in CEO compensation over those years was 70 percent faster than the rise of the stock market.
“They are worth every penny,” argue those who believe that an outstanding CEO is the driving force behind the success of his or her corporation.
Really? If that is so, doesn’t it also follow that CEOs bear the responsibility when their corporations make big mistakes? Isn’t it especially true when a corporation has to pay billions in fines and is found guilty of criminal activity?
I was in the Senate right after the 2008 financial meltdown. One of the things I pushed for was a $35 million appropriation for the Justice Department to investigate criminal activity that may well have caused the crisis.
Sad to say, we taxpayers didn’t get much for our $35 million. Not a single CEO of a Wall Street bank was ever indicted for his bank’s wrongdoing.
Years later, it still rankles me. According to the Financial Times, “U.S. authorities have levied $150 billion in fines from financial institutions for shady dealings with subprime mortgages since the beginning of the credit crisis in 2007.”
But that was then, this is now, right? Wrong. CEOs at major corporations are still escaping scot-free despite criminal activity in their companies.
Wells Fargo Bank, for instance, has admitted to opening 3.5 million fake accounts, forcing auto borrowers to pay for insurance they didn’t need, and charging homebuyers for mortgage fees they didn’t deserve. It did cost CEO John Stumpf his job, although he blamed “5,300 bad employees” who were fired.
He has retired with a $131 million dollar pay package.
Do you believe “5,300 bad employees” in the lower levels of a bank could pull off a scam like this over so many years without the CEO knowing? I have a bridge to sell you.
Purdue Pharma is the corporation credited with starting the opioid explosion through its aggressive promotion of OxyContin. Purdue Pharma for years claimed it knew nothing of its misuse. But the Department of Justice found that Purdue Pharma knew and hid information about “significant” abuse of OxyContin from its early marketing in the late 1990s.
Based on this, Department of Justice prosecutors recommended that CEO Michael Friedman and two of his lieutenants be indicted on felony charges. The case against them was resolved when DOJ leadership decided to let the three plead guilty to a misdemeanor charge, pay $34.5 million in fines, and avoid all jail time.
Steven A. Cohen founded and headed a group of hedge funds called SAC Capital Advisors. In November 2013, SAC Capital pleaded guilty to insider trading. It was forced to pay a total of $1.8 billion in fines.
Bloomberg BusinessWeek reported, “Six former employees were convicted or pled guilty to trafficking in material, nonpublic information. One other had charges dropped, and another’s guilty plea was dismissed, while its leader Steven A. Cohen, 61, was never charged with wrongdoing,”
Again, doesn’t it strain credulity to believe that so many employees could have engaged in insider trading while their multibillionaire boss knew nothing about it?
In 2008, Volkswagen started installing “defeat devices” on its diesel cars to hide how polluting those cars actually were. When the deception was finally exposed, the company’s 2017 annual report said, “None of the members of the board of management had, at that time and for many years to follow, knowledge of the development and implementation of this software function.”
Millions of cars were involved. Hundreds of millions in corporate profits were generated by the deception. And no one but a few lowly engineers knew anything about it?
Toyota was hit with a $1.2 billion fine after the DOJ proved the company had been lying for years to customers, regulators and Congress about its vehicles’ “sudden acceleration.” It still faces nearly 400 wrongful-death and personal-injury lawsuits.
The Washington Post quoted critics of the settlement this way: “The hefty fine means little as long as no executives face jail time. The facts of the case describe a level of coordinated lying and greed that warrants stiffer punishment.”
What has changed in our culture and law enforcement since CEOs went to jail years ago for “mistakes” in the Enron and Savings and Loan disasters? I believe it is about time we decided that our incredibly high paid CEOS are not above the law.

Ted Kaufman is a former U.S. senator from Delaware.