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‘I CAN’T believe they got away with it again.’ Mertinsky slumped in my one extra office chair. His expensive suit looked uncharacteristically rumpled, his usually well-groomed features surrendered to months of highpressured days and sleepless nights.

Mertinsky was a class-action lawyer fresh from court. He was trying to win back retirement funds for workers forced to invest them in the self-destructing stock portfolios of corporate America. As so often in his star career he had won another battle but was losing the war. He had got the judgement but not the money in anything like the amounts that had been lost. He shook his head despondently: ‘Where did all that pension money go, anyway?’

I’d known Mertinsky since we were university students together in the heady days of the New Left. We’d fought the good fight together. He was the idealist, I was the cynic. But idealism paid better than cynicism. I ended up as a hand-to-mouth private eye, a kind of urban hunter-gatherer, working out of a crumbling old office building on New York’s Lower East Side – mostly looking for teenage runaways and proof of adultery. Mertinsky battled Big Tobacco to a standstill. Made chemical companies pay millions for using poor people’s neighbourhoods as toxic dumps. Took on Big Pharma when they rushed barely tested drugs on to the market, destroying livers and immune systems. He had it all – a blonde trophy wife, a house in the Hollywood Hills, an Olympic-size pool and a credit-rating that made me drool. But Mertinsky was no selfsatisfied egomaniac. He still believed – devoted his time and money to the campaigns and organizations trying to bring corporate power to brook for wrongdoing. It was a thankless task.

As for me, I had the reduced expectations of a cynic, which led more easily to a life of little satisfactions – a good salami-on-rye, the smile of a beautiful woman or a ninth-inning comeback by the Mets. Still Mertinsky and a couple of other class-action lawyers from the old days occasionally threw me a little research ‘bone’ to help pay the office rent and keep me out of the smoky bars. This is what he was offering now, more out of frustration than hope – a research dossier that looked at corporate crime and why it kept happening. Mertinsky and his pals were at their wits’ end. They kept running up against the limits of litigation. Juries awarded huge settlements only to have them rolled back on appeal. The companies easily wrote off these final settlements as part of the price of doing business. Then there was a legion of ‘good ole boy’ politicians down in DC pushing something called ‘tort reform’ to eliminate such ‘vexatious lawsuits’ entirely. The corporate honchos were most grateful.

‘We need to think differently, to anticipate,’ Mertinsky muttered. ‘These guys are getting away with murder – one step ahead of us all the time! Why does it keep happening? We need to know stuff – the next big corporate boondoggle, their next defence strategy in court. These guys are real lowlifes and that’s your department. We want you to check into it.’

Thanks, I thought. But pride was the one deadly sin I couldn’t afford. I pretended I could be helpful. I hoped he didn’t notice me scratching my head.

All illustrations © 2003 Jim Miller

I guessed the best places to start were the library and the internet. It just took a couple of days to come to the conclusion that this was big. Real big. Corporate crime was everywhere.

As a matter of course, corporations tried to evade laws and regulations if they stood in the way of profits. They dumped toxic waste illegally. Evaded taxes. Exposed their workers to dangerous substances and deadly working conditions. Gave bribes. Spewed poisons into the air and water. Sold a gullible public everything from dangerous baby toys to cars that flipped over and drugs whose sideeffects were worse than the diseases they were supposed to cure. They hyped their stocks by hiding losses and cooking the books. Whoa, if I did a quarter of this stuff I’d be waking up in the crowbar hotel!

I started at the beginning of the big corporate meltdown that so exercised Mertinsky and company – the Enron case. The basic facts were pretty well known by now. Enron, Worldcom, Tyco and a number of other wunderkinder of the tech revolution had hidden their precarious economics with the help of the accounting industry and the big investment banks. In the meantime the top execs walked away with billions in over-inflated salaries, fat bonuses, soft insider loans and lucrative stock options – a cool $3.3 billion from the 25 biggest companies to go bust in 2002. And that’s just the stocks they sold. And when the bubble finally burst the exec cash was safely stowed in fancy real estate, solid securities and bank accounts – some of them offshore.

But this wasn’t just a US story. Open up any business page – it was all over the world. HIH, a big Aussie insurance company, took both policyholders and investors to the cleaners while people like their execs Ray Williams and Rodney Adler hid losses, cashed bonus cheques and issued rosy financial predictions. Then there was the rogue trader Nick Leeson who hid so much in losses in the derivatives market that he bankrupted Britain’s prestigious Barings Bank. The interesting thing about Enron was how the guys down in Houston, Jeffery Skillings and Ken Lay (known to his buddy George Bush as ‘Kenny Boy’) were able to convince people Enron, in debt up to its ears, was ‘the best company in the world.’ When I dug a little deeper I found out that what Enron was into was something called ‘market making.’ They were trading in a lot of stuff that nobody quite understood – gas pipeline capacity, broadband width, banks of electrical power, water supply. They even dabbled in trying to buy and sell Japanese and European weather futures. Who even knows what this stuff is, to say nothing of how to price it or evaluate supply-anddemand curves? Enron used to claim that their main product was in fact markets.

Now I was on to something. The more I looked into it the more I realized that this ‘market making’ was fertile ground for all kinds of corporate shenanigans. It fitted neatly into all that deregulation and privatization stuff so dear to the hearts of free enterprisers and their political cheerleaders everywhere. It wasn’t rocket science to figure out that the first one into a new market – say, selling you the water you used to get as a public service – made a killing. Take all this derivatives stuff, the futures market. It was making my head spin. How the hell was anyone even supposed to understand this crap with its ‘puts’ and ‘calls’, ‘options’ and ‘swaps’ and ‘swaptions’ in currency, bonds, stocks and interest rates? They made up 25 to 30 new ones every year – futures in everything from shipping charges to air pollution.

But what use was it to anybody? These guys were trading $142 trillion a year worth of nothing as far as I could see. They called it ‘hedging risk’. But I thought the reason we let corporations run the damn economy was that they were such big risk-takers. It was all simply a playground for deception, a recipe for instability. But don’t take my word for it. Even Warren Buffett, the cranky old investment guru, saw through it:‘weapons of financial mass destruction... that facilitated huge-scale frauds and near frauds,’ muttered the Oracle of Omaha.

I started working the phones. I needed some stuff from the horse’s mouth. But all I got were terse ‘no comments’ or bland reassurances that ‘things were bad once but we’ve cleaned it all up now’. I wasn’t buying it.

Then I thought of Jerry. He worked just off Wall Street as some kind of corporate consultant. I’d known him for a dog’s age but a little bit of Jer went a long way. He was the kind of friend you get together with to catch a ball game or some music – he always seems to get great seats. But stay away from politics. Jer made that redneck talk show host Rush Limbaugh sound liberal and polite. We met down at a steak place Jer likes, that specializes in three-pounders.

‘What can I do for ya fella?’ I told Jerry I was investigating corporate crime and I was in up to my neck. ‘Corporate crime,’ he snorted. ‘There’s no such thing. It’s just business as usual. You bleeding hearts, you have your way we’d be rubbing two sticks together just to cook this meat. I know I like it rare but...’ That’s my Jer – shallow as a wading pool. But he quickly warmed to the subject. ‘Crime, let’s see you try and prove it. Remember that big deal they made about Bhopal a few years back? Some gas escaped, something like that. Well, Warren Anderson was CEO of Carbide at the time. People were calling for his head on a platter. I did some work for the PR company on the Carbide account so I know. First it wasn’t Carbide, it was Carbide’s Indian subsidiary that controlled that pesticide factory. Carbide had certain profit targets the subsidiary was expected to meet. After all, this wasn’t charity work. I guess maybe in order to meet the targets, a few corners got cut on safety... staff laid off... Turned off one of the refrigeration units, as I recall. It was all too bad, but you can hardly blame Anderson. He didn’t personally lie about the storage or turn off the unit. Didn’t even tell anyone else to. See what I mean? Even if it was a crime, there is no criminal. Just try and prove something against a CEO or other corporate exec. Plausible deniability, fella, plausible deniability.’

I thought of the 8,000 gas-dead and I felt depressed. I needed a stiff drink. But Jer at least made me realize that these corporate criminals had protection most gangsters couldn’t dream of. First a lot of what seemed like corporate crime wasn’t actually illegal. These guys spent a fortune on lobbyists and political donations to make sure the rules worked in their favour. A couple of years back they tried to push through an investors’ rights treaty (something called the MAI) to protect them even more. A big campaign against it worked, but now they are trying to sneak it in through the back door with the help of their buddies at the World Trade Organization. Even when they slip up – which they do a lot – it’s real hard to pin it on anyone important. Sure there was someone who turned off a valve or entered a figure in the wrong column but who made them do it? A lot of it was automatic pilot stuff – company policy really. Or the old ‘just following orders’ excuse. It was a culture of corruption where profit came before consequence.

Then a lot of it took place where people either weren’t watching or didn’t much care. A company like Dyncorp drenches Ecuadorian peasants and Amazonian Indians with chemical poisons as part of the US War on Drugs – who knows? Who cares? Royal Caribbean Cruise Lines dumps waste at sea – the tourists were probably safely tucked away in bed. Some brand-name in the rag trade subcontracts into Burma or Honduras to make fancy shirts and the army pushes around some trade unionists or maybe there’s a scandal about child labour. Hell, the CEO probably didn’t even know. Does that mean they are off the hook?

How many of these guys actually end up in jail, I wondered. I started looking at the penalties. Mostly fines – a small portion of what had been filched. Fine a corporation for cheating their stockholders and who ends up paying? The same stockholders. The inside player’s money is mostly long gone. You can bet their wrists aren’t stinging too much. In some places you can even write off bribes as a business expense against your taxes.

Sure, in the recent spate of US financial scandals a few execs actually went to jail but not too many and not for too long – country-club prisons mostly. Not much of a deterrent when you consider the hard time thrown at some poor kid caught with a joint or a welfare mother for shoplifting again to feed her family. Down in Texas they nailed this one habitual shoplifter, Kenneth Payne, for 16 years for stealing a dollar Snickers bar. But that’s Texas for you.

Execs always go down for the financial stuff, fraud, maybe tax evasion. But almost no-one ever gets hard time for selling dangerous products, spewing poisons into the local river, criminal negligence in the death of workers or something like that. I guess the judges think that would create too much of a precedent – people who go to the same clubs they do, actually responsible for the damage done when just trying to make a buck. Revolutionary concept.

Mertinsky phoned. He was getting impatient. The meter was running. I needed to turn in some kind of report. What the hell could I tell them? It had to be more than a list of corporate crooks. I needed some ‘underlying forces’ stuff – the kind of thing they droned on about in the Marxism 201 course back in college.

Two points seemed to stand out. The economy was actually not in great shape in the 1990s. Profits were stagnating and there was a crisis of overproduction in traditional manufacturing. All the bubble growth was largely sleight-ofhand based on financial services and the romance with new technologies – telecommunications firms surviving on the edge and dot.com start-ups whose stock prices boomed but never made any actual money.

But despite this the nineties saw a massive grab for power and wealth by corporate insiders. When all the smoke cleared, it was evident there had been a massive transfer of wealth to corporate insiders – in 1992 corporate CEOs held 2 per cent of all stock in US corporations while today it’s a staggering 12 per cent. A major shift. It was an odd kind of socialism at the top – CEOs achieved an almost cult celebrity status. A sycophantic business press worshipped at their shrine. When a company hit an economic downturn it might mean hard times and layoffs for some, but ‘understanding’ for the CEO. Kenneth Chenault at American Express saw his 2001 salary go up 86 per cent to $30.2 million while shareholder return slumped 35-per-cent. Across the pond in Britain Shell CEO Sir Phillip Watts got a 55-per-cent increase while the share price slumped 27-per-cent and 4,000 staff were forced to hit the bricks. Man, how do you get in on these kind of deals!

The question still hung in the air, unanswered – how do you stop them getting away with it?

People were sure trying. The Brits, reeling from some 2,000 workrelated deaths in the last six years, including four major train wrecks on their newly privatized rail system – were trying to pass a bill on corporate killing that just might put those responsible behind bars. New Labour was working overtime to water it down. In California activists were rallying behind a ‘three-strikes-and-you-are-out’ law that denied serial corporate criminals the right to bid on public contracts. In one mega-suit launched on behalf of the victims of apartheid, 34 of the world’s biggest companies were being sued for $100 billion for aiding and profiting from white supremacy in South Africa. Almost everywhere I looked, groups were organizing to expose corporate abuse, rally communities, workers and shareholders to make corporations think about something aside from the bottom line.

All good stuff and important changes. The corporations were plainly worried as their liability insurance rates doubled and tripled.

But, like I said, me – I’m a cynic. Scott Sullivan, the Chief Financial Officer of WorldCom, was on trial for fraud downtown and offering up the unique defence of ‘common practice’. You could see his point – why pick on him when they were all doing it? If you have a system of highly concentrated wealth and power that runs on the basis of selfinterested greed – what the hell did you expect? I think it was that old socialist John Maynard Keynes who said: ‘The love of money as a possession... as distinguished from the love of money as a means to the enjoyments of life... is a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental diseases.’ I’d have to throw that into the report.

As for me, the light bulbs were starting to go on. Mertinksy didn’t need a gumshoe like me. He needed an entire overhaul of the rigged rules. A system of profit with no thought to consequence was simply mad. I could even see the day they would fall back on that as legal defence – ‘not guilty by reason of systemic insanity.’

I collected my evidence – from rewriting corporate charters to bribery in the upper echelons of the Peruvian élite – in a buff, coffee-stained dossier and reached for the phone. Maybe Mertinsky would be impressed enough that I could buy season tickets at Shea Stadium.