citizen's rights


Judicial Democracy. Equality before Justice
Antonio P. García 14.07.2013

There is a growing conscience that Too Big To Fail banks pose a huge threat to economies and society.
The fact that they additionally are Too Big To Jail increases that threat.

Illegal Settlements

In late November 2013, JPMorgan Chase & Co. signed a record $13 billion deal to end probes into mortgage-bond sales. This will save the bank billions since the US government allowed them to avoid an explicit admission of wrongdoing. Additionally, JPMorgan top officers are allowed to keep committing felonies and getting the profits that derive from their crimes, while they receive no punishment at all.

In early July 2013, a United States Federal Court approved a 1.9 billion USD settlement between the U.S. government and HSBC Bank, despite "heavy public criticism." This agreement cleared the way for HSBC to whitewash crimes of money laundering for terrorist organizations and drug cartels. By means of this settlement, the US government lets HSBC to continue to violate the law, and allows the HSBC executives who were responsible for the design and execution of these crimes to continue reaping personal profits from criminal schemes.

Amazingly, nearly every month governments sign settlements that allow corporations to avoid prosecution for known crimes, and halt investigations into acknowledged corporate malfeasance.

In exchange for avoiding trials, corporations agree to pay sums which are vast to the untrained eye, but insignificant if compared with the profits these policies reap, and are unjust as punishment for the damages these corporations cause with their illegal activities.

Agreements that allow criminal corporations to avoid legal punishment go against one of the fundamental pillars of democracy. Additionally, they violate human rights and represent a major contributor to income disparity.

Settlements have permitted some corporations to build their wealth and their market dominance by means of committing felonies, again and again.

These agreements are a key piece in the complicity between governments and corporations, and they have contributed to the great increase in corporation’s share in the income pie, giving rise to vast social injustice and discontent.

Often, these corporations continue violating the law and keep committing crimes, while governments keep running into settlements with them. This endless cycle allows the institutionalization of illegal corporate policies, with the routine paying of fines that are mere fractions of the direct illicit income that corporations receive from their felonies.

No further investigation

Governments enter into these agreements even when the corporation is simultaneously being investigated for other connected crimes, allowing it to dodge the law on certain criminal acts while it is still under investigation for other crimes, and ensuring the big picture stays hidden. When individuals, as opposed to corporations, are prosecuted for connected criminals acts, additional accusations lead to consolidated charges, allowing the prosecution to build a strong case that weighs the scope and purpose of the criminal conspiracy of the accused. Instead, plea agreements granted to corporations allow diverse criminal conspiracies to be judged as distinct and discreet criminal acts, as if the various component crimes were entirely independent deeds, which is not true since they are committed by the same organization and they are included in the same budget and financial plan.

Furthermore, though the top executives of these corporations are the clear criminal architects of the crimes their companies are accused of, the executives are rarely, if ever, punished at all. Routinely, executives at criminal corporations are paid huge bonuses that represent their share in the profits corporations receive from felonious acts.

After settlements are reached, the governments and the corporations typically launch media blitz campaigns to convince the public that a huge, punitive fine has been achieved. These press releases stress the hugeness of the dollar numbers involved, despite the obvious fact that these sums are plainly mere fractions of the actual profits gained illegally, and are insignificant both as deterrent or as just compensation for the damaged caused.

Many companies have become rich by means of their illegal actions and by their repeatedly entering into settlements that have allowed them to avoid been convicted of systematically violating the law. Medtronic and Microsoft are two corporations frequently named in settlements of this kind, as well as "Big Banks" such as HSBC, Goldman Sachs and Barclays. Enormous harm has been done to individuals, communities and to other companies as a result of the crimes these companies has committed. And they would have been convicted of committing those crimes, had not they been allowed to reach settlements. Nonetheless, these same companies and others are repeatedly offered similar settlements, allowing them to conceive and pursue further new crimes.

Corporations that routinely violate the law make allowances on their balance sheets for the contingency of their crimes being discovered. They budget for the eventuality that their reputations might require white washing by means of paying a settlement price. Corporate felonies are simply a moderate risk investment, as any legal investment a corporation makes might be. Just as with "legit" investments, these criminal endeavors are weighed for their costs, risks, opportunities and benefits, and the threat of a large cash settlement is just another calculable cost of doing business.

Governments that enter into these settlement are accomplices to crimes, as they conspire to prevent the criminal corporations from being dully punished. This default government policy encourages and promotes the institutionalization of criminal conduct.

Governments that sign on for these settlements go against the tenets of independent democracy, colluding with corporate entities to apply unequal and preferential law enforcement for the few and the powerful. The availability of these settlements hamstrings judges from honouring their duty to impose the law.

Executive branch runs over Judiciary Power

When Governments sign these settlements they are claiming negotiating rights that don't belong to them.

The duties of judges go well beyond simply applying fines to create the appearance of justice served. Punishments must match the severity and impact of the crimes committed. It is the responsibility of justice systems to ensure that punitive fines outweigh and deter the corporate monetary gains from illegal, exploitative acts. Furthermore, it is the job of law enforcement to expose the scope and impact of criminal acts. These settlement agreements allow corporations to keep details of their crimes secret, halting further investigation and encouraging a culture of criminal activity by keeping the true size of crimes out of the public eye.

Judges represent a central pillar of democracy, and must be allowed to impart equally applied justice that honors the scope of their duty:
a. to apply the law both in its form and spirit
b. to impose the punishment that society deems necessary, both to punish and to dissuade
c. to guarantee that those affected by the crimes are fully compensated, and
d. to defend each citizen and the society as a whole from the possibility of being affected by the repetition of those crimes.

It is clear that these settlements that suspend legitimate criminal probes impede the effective application of justice, and thus threaten one of the very pillars on which democracy rests.

Settlements violate Human Rights

Furthermore, these settlements violate human rights and equal protection, since these state that “all are equal before the law and are entitled without any discrimination to equal protection of the law."

Top executives of corporations that face repeated investigations for crimes that end in settlements enjoy the privilege of being immune from punishment and free to commit crimes. They are allowed to violate the law, once and again, without even been prosecuted.

This is in stark contrast from the fate of two million individuals imprisoned in US jails, most of them serving time for crimes that are insignificant compared with those committed by executives of large corporations.

If only these inmates had access to huge cash reserves, connections to the right attorneys and friendly judges, and a general juridical predisposition, they could have avoided jail altogether and could instead be indulging in new and profitable misdeeds.

The importance of a juridical predisposition cannot be overstressed, as in so many cases corporations inhabit a legal structure which has been specially designed for them, engineered to allow great criminals to keep out of reach of the law and to achieve social recognition from the wealth they have accumulated as the spoils of their crimes.

Meanwhile, modest street-level criminals suffer grave economic damage as a consequence of being "caught" for their crimes; typically forced to disclose their "felon" status when applying for jobs, as well as punished with crippling fines that amount to several times their personal wealth.

Top executives of criminal corporations face a very different fate. Frequently executives at corporations who settle out of criminal charges are neither jailed nor are punished in any way, with settlements instead negotiated to exempt the executives from prosecution and to enshrine closed records hiding executives' involvement in the conspiracy.

The fines governments accept in order to bury the corporations' criminal charges are paid by stockholders, and not by the executives involved in those crimes.

The bonus and stock options system, by which most corporate executive pay is derived, serves to reward business elite criminals for growing their corporations' profits through illicit means. As corporate profits grow, so grow their bonuses, either thanks to their crimes or, in many cases entirely as a result of their crimes, since were it not for illegal activities many corporations would permanently operate at a loss.

Settlements allowing corporations to avoid prosecution generate profound disparities in economic rights. Governments are instrumental in creating and protecting this discrimination.

It is impossible for individuals to enjoy similar rights and opportunities to what these corporations are granted. Individuals are not able to avoid trial without plea or admittance of guilt, nor can negotiate for special secrecy and preferential treatment in the eyes of the law. In this world of special corporate rights, individuals cannot entirely enjoy democracy, so long as this unequal Judicial Democracy continues to dominate.

When governments sign settlements agreeing to abandon corporate criminal probes, they relinquish their obligations to defend their citizens. These settlements allow criminals to continuously develop the same and new crimes, posing a threat to society and exposing regular citizens to entrapment and scams.

These agreements kill justice and create a persistent economic inequality that exacerbates income disparity, allowing a few criminals to become immensely rich, collecting profits from illegal schemes and frauds imposed at the expense of millions of individuals, who end up poorer as a result of these crimes.

Huge damages done by Too Big To Jail receive light punishment, if any, while normal individuals suffer quite a different fate

The sheer magnitude of societal damages must be considered in the analysis of this unholy marriage between government and criminals, signed with each settlement.

Medtronic has caused damages to both the health and finances of thousands of individuals through unfair marketing practices and unsafe medical equipment, all documented and settled out of court.

Microsoft has systematically abused its monopolies and near-monopolies and has imposed illegal "rent-seeking" causing huge economic damages to countries, corporations and millions of individuals.

HSBC, Goldman Sachs and Barclays, among many banks guilty of widespread corporate malfeasance, are central parts of the financial elite that caused the world financial and economic crisis of the past five years, and have together given fuel to economic suffering that has caused death, misery, hunger, social unrest and large destruction of the labor and social fabric almost worldwide.

The individual corporate executives responsible for these great crimes have not received the slightest punishment, and have benefited immensely from them, while petty criminals who are accused of stealing objects from shops, and similar crimes whose social impact and cost are comparatively meaningless, have been sentenced to lengthy jail terms, social scorn, and stigmatization in the media, even in cases where those accused have never before been accused of any wrongdoing.

Too Big To Jail individuals do not even lose their job

The chief executive officers of these "repeat offender" felonious corporations and banks typically keep their position and seldom are fired without massive severance packages. The complicity is self-evident, between criminal corporations and the criminal executives who run them, and between the government authorities who sign on for these settlements that do not even entail the immediate removal of the actual criminals.

Media reports show that Bob Diamond, CEO of Barclays Plc (BARC), was fired with a £2,000,000 severance package, a few days after his bank paid $453 million USD in an agreement to halt simultaneous US and UK investigations into the bank's participation in fixing Libor. This "London Interbank Offered Rate" is the daily interest rate, fixed by a group of international leading banks, at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The Libor scheme artificially manipulated these rates, and caused immense damage to millions of individuals and to a great number of banks, while generating huge profits for the ten banks that participated in the scheme. Before widespread public condemnation forced a reduction, Diamond's severance from Barclays had initially been set at a staggering £30,000,000.

And though Diamond was, in fact, fired, many other famous top executives have been implicated in huge felony scandals but have continued their leadership positions. Famous examples are Jamie Dimon, currently JPMorgan Chase & Co. (JPM) CEO, and Lloyd Blankfein, Goldman Sachs Group Inc. (GS) CEO, who have stayed on running their banks even after billion-dollar scandals have been settled.

On April 2010, Goldman Sachs, under the direction of Lloyd Blankfein, agreed to pay US $550 million to end an investigation by the US Congress into huge transaction of securities backed by fraudulent mortgages. These fradulent mortgage-backed securities were precisely the trigger mechanism of the world financial crisis that has shaken countries and markets during the last six years.

Jamie Dimon's administration at JPMorgan Chase engineered illegal investments that led to over 7 billion dollars in losses, and that after a recovery from initially losing a mind-blowing 50 billion dollars of Chase customers' and shareholders' money due to the scheme. Dimon managed to reduce the reported loss from $50 billion to $7 billion by means of desperate financial manoeuvring and probably thanks to what billionaire Warren Buffet calls “the possibility that bankers have of adding a few zeros here and there”.

Warren Buffet himself proposed Dimon for appointment as Secretary of Treasure of the USA, even after the illegal fiscally catastrophic activities in which Dimon was involved as JPMorgan CEO were known. Buffet argued that Dimon has the confidence of great corporations and that he is the most qualified individual to handle a crisis in financial markets .

The fact that Warren Buffet believes in Dimon does not speak to a lack of honesty on Buffet's part. Rather it speaks volumes to one additional damage caused by settlements to dodge justice: even a man as brilliant, informed, and serious as Warren Buffet still does not absorb that Dimon is a criminal. The white-washing effects of these settlements allow even the most guilty individuals to cloak their criminality with a "legalized" legitimacy. Buffet lets himself be taken by Dimon's sympathy and cynicism. This is no surprise, since after observing that the US government has not acted against him, Buffet assumes Dimon innocence. He is not alone in making this mistake.

Some experts have asserted that Dimon and Blanksfein held onto their jobs, and their wealth and reputations, thanks largely to a $9,000,0000 bonus paid by the Financial Industry Regulatory Authority, a private organization of Wall Street top executives, to Mary Shapiro when she stepped down as Chairman and CEO of FINRA to accept an appointment by President Obama to head the US Securities and Exchange Commission. As head of the SEC, Shapiro is the top authority that oversees Wall Street financial activities .

What is to be done

There are a few measures that could help to put an end to settlements to dodge justice:

1. Judges must refuse to approve these corporate agreements, and must direct prosecutors and regulators to not seek such settlements. When these settlements are proposed, judicial power must be weighed instead to reopen these cases and move forward with the due course of justice, until those individuals and corporations involved are justly penalized.

2. The top executives of these corporations that run into illegal activities are themselves culpable for these crimes, and they must be condemned to pay, from their personal wealth, at least a 50% of each fine and compensation that the corporation must pay resulting from illegal activities developed under their management.

3. Any executive officer of a corporation involved in illegal activities must be prosecuted for the crimes they engineered or allowed to happen under their watch, and must be punished with jail time when their corporations are found guilty of crimes.

4. Corporations’ crimes must be investigated to their full extent. There is no justification for any settlement that allows the government to not investigate criminal activity. On the contrary, the public's interest can only be served through investigation, prosecution and public disclosure of the full extent and peculiarities whenever a corporation is accused of a new criminal scam.