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Thursday, September 27, 2012

Google Execs Evade Brazilian Jail Time

In late September 2012, the Brazilian state police detained the head of Google’s operations in the state after the company’s management failed to act on an electoral judge’s order to remove videos from its YouTube site criticizing a candidate in a rural county election. Separately, a judge ordered Google to remove a religiously-offensive video, which had sparked riots in the Middle East, within ten days or face fines. Google’s lawyers claim that the company is not responsible for what users upload. Earlier in the year, Brazil’s government threatened the head of Chevron’s operations there with arrest and passport-confiscation after a small leak occurred in the company.

                                                                                                         Brazil, the largest state in South America.   World Atlas 
 
The Wall Street Journal goes on to note the opinion of legal analysts that no executive at Google or Chevron was likely to “set foot in jail.” Brazil’s appeals process is long, and companies like Google and Chevron have deep pockets for legal defense. Consequently, even business practitioners convicted of major white-collar crimes are rarely, if ever, jailed in Brazil. Even so, the threats could thwart the South American state from being able to attract foreign direct investment. In other words, competition for foreign companies gives governments an incentive to look the other way in enforcing state law. Put another way, the lowest common denominator in terms of holding corporations accountable on the constraint of law and order could be one of the consequences of the spread of capitalism around the world. No public official wants to risk turning a potential “job creator” away.
 
Especially with the separation of ownership and control in the modern corporation, managerial accountability is crucial to ensuring that corporations abide by judicial orders. In many cases, senior managers can get away with making corporate-policy decisions that essentially ignore the constraints manifesting as judicial orders because deep corporate pockets can pay any resulting fines. Senior executives can be rather “free-wheeling” on corporate policies because the officials themselves—as citizens—are not subject to fines or imprisonment.
 
Corporations are not citizens; rather, the associations are creatures of the state created for particular purposes. Therefore, it can be said that the citizens operating the associations can and indeed should be held criminally liable for any “corporate” wrong-doing. Put another way, the actual decision-makers should be held accountable criminally for any decisions that violate a law or a judicial order. Otherwise, “corporations” can evade the law while their managers have little incentive to treat it as a constraint on profit-seeking.
 
Corporations do not act apart from the human beings within. An association just is its members. The people responsible for a “corporate” decision that violates the law can at least in many cases be identified, even if as scratched initials on the margins of a policy proposal. In fact, the police could charge a corporate official whose role the offending policy falls under even if that official had been negligent in not having kept up on the decision made by his or her subordinates. So coverage of responsibility is something that can be applied to particular people within the management of a company. Such coverage, if resulting in real jail time, would doubtless get managers’ attention rather quickly, as opposed to merely fining a company’s treasury. Unfortunately, Brazilian officials had a disincentive to implement such coverage with consequences with teeth, due to the countering pressure to attract businesses rather than repel their decision-makers.
 
Lest it be thought that creating an international body with the power to imprison executives of MNCs for crimes against an international code, the problem of how to enforce Brazil’s law on an international organization (e.g., Google) would go unanswered. One “consensus” global code would not touch on the regional and local specificities in criminal law. That people in Brazil were offended by a video does not mean that a global consensus would necessarily emerge in favor of criminalizing the video. For one thing, some governments support free speech even on opinions that are offensive to a majority.
 
The problem can be said to be that of cultural particularity vs. economic globalization. Both are viable and thus must be recognized. Multinational corporations must legally at least be multi-domestic in responding to cultural-legal particulars even while being the instruments of efficient international competition. Both values are legitimate, and yet they are in conflict at least in terms of the enforcement of local law. Statesmanship on behalf of such law even at the risk of losing a potential foreign business investing in local jobs is unfortunately all too rare, given the countervailing greed involved in attracting suitors away from other potential hosts.
 
All too often, leadership is gloss for greed rather than based on standards and principle. Put another way, the “principle” of efficient comparative advantage is often used by self-promoting governments as a means of obfuscating the real selling-out of the country’s own laws, which in turn ideally reflect moral values that are held by society. The question is perhaps whether governance structures geared to real accountability for business practitioners can be designed to counter the hegemony of greed over principled leadership. The political influence of the practitioners and their respective corporate treasuries over the governance itself—the creature coming to dominate its Creator—compounds the difficulty and suggests that it is no accident that corporate executives rarely see jail time.

Source:

Jeff Fick and John Lyons, “Google’s Brazil ChiefDetained; Court Bans Anti-Islam Video,” The Wall Street Journal, September 27, 2012.