Until the mid-19th century in America, corporations’ incorporation charters—the articles that clarify a corporation’s mission—were selectively granted. Their charters were subject to alteration or revocation by the governments of the states where they were headquartered. Charters were evaluated based on how well a corporation’s practices exemplified its stated mission.
In the Citizens United v. The FEC (Federal Election Commission) case of 2010, the U.S. Supreme Court ruled five-to-four that corporations’ political spending was free speech. Corporate “speech” was protected under the First Amendment of the U.S. Constitution, just as an individual voter’s would be. Not all countries have such court cases, but Nobel Prize winning economist Joseph Stiglitz says the trade deals a global economy makes possible often benefit corporations at the expense of their workers. Not all of the corporations on this list are from the same country or the same historical period. All of them have intentionally exploited either consumers, employees, or the environment for their financial benefit.
10. Facebook Allows Cambridge Analytica To Access Users’ Data
Facebook‘s penchant for unrepentantly releasing users’ data has been detailed in one of our previous lists. As we noted in that list, the company’s executives claim users agree to Facebook’s usage of their data when they create an account. Basically, the service is free because its users—or, rather, their value as captive consumers to various advertisers—are the company’s product. When Facebook allowed the British consulting firm Cambridge Analytica to access users’ data, its actions were not inconsistent with its previous practices. However, Cambridge Analytica is under investigation in both the U.S. and the U.K.
The investigation was launched to determine whether or not the firm used the data of 87 million Facebook users to create targeted propaganda in an attempt to influence the 2016 U.S. presidential election. Facebook played no role in creating the propaganda. However, Facebook’s Chief Operating Officer, Sheryl Sandberg, has admitted that Facebook executives knew Cambridge Analytica was mishandling data. They chose not to do an audit, instead accepting Cambridge Analytica’s claim that it had deleted the mishandled data. Facebook has more than one unfavorable affiliation with the 2016 U.S. election. In his investigation, U.S. Special Counsel Robert Mueller revealed Russia had used Facebook and other electronic sources to create propaganda that may have influenced the election. Calexit, an online group calling for California’s secession from the United States, is one example of such Russian propaganda.
9. Faulty Equipment Causes the British Petroleum Oil Spill
In 2010, the Deepwater Horizon oil rig exploded in the Gulf of Mexico. The explosion killed 11 people, and the oil leak caused long term damage to the Gulf of Mexico and its wildlife. The oil rig was owned by the offshore drilling contractor Transocean, and leased by the oil company British Petroleum (BP). Though British Petroleum executives accepted responsibility for the oil spill and conducted an investigation, the company released a public statement indicating its contractors also bore responsibility. The investigation revealed that eight safety systems on the oil rig had failed. The cement didn’t create a seal, allowing oil and gas to leak. The mechanical valves in the pipe to the surface also failed, allowing further leaks.
The results of the pressure tests to determine whether the well was working properly were misinterpreted. The valve in the blowout preventer released mud and gas into the rig. The blowout preventer didn’t close when its valves malfunctioned, because the preventer had faulty batteries. Instead of diverting the mud and gas away from the rig, the crew diverted it into a device designed to separate the gas from the mud. The material in the device overflowed, and gas filled the rig. The gas alarm did not work. Lastly (and perhaps most obviously), the leak wasn’t discovered in a timely manner. A federal judge ruled British Petroleum’s “gross negligence” caused the oil spill. Proving one company’s disaster is another’s marketing opportunity, the American dish soap brand Dawn created a nine part documentary, where the first part showed wildlife preservationists using Dawn dish soap to clean the animals affected by the oil spill.
8. Massey Energy’s Safety Violations Cause A Coal Mine Explosion
The 2010 mine explosion at Massey Energy Company killed 29 workers. In 2015, Chief Executive Officer Don Blankenship was convicted of a misdemeanor for conspiring to violate safety laws in his West Virginia mine. Federal mine safety records revealed Blankenship compromised workers’ safety at all of his mines. In 2009, all of Blankenship’s 10 mines had injury rates above the U.S. national average, and they received a combined 2,400 citations.
Massey Energy’s violations include improper ventilation of methane gas and excessive coal dust. Though Blankenship served a year and a half prison sentence, he denies responsibility for the mine explosion, saying federal regulators are to blame. Blakenship’s belief in his own untarnished reputation is so strong that he sought to run as a third party candidate for the U.S. Senate in 2018, representing West Virginia.
7. Dish Network Makes Illegal Telemarketing Calls
From May 2010 until August 2011, Dish Network sent robocalls to 18,066 phone numbers on the National Do Not Call Registry. The National Do Not Call Registry is a list of the cell phone numbers of consumers in the United States who have indicated they forbid robocalls.
By calling consumers whose numbers were on this list, Dish Network violated the Telephone Consumer Protection Act. Perhaps the most shocking part of this incident of corporate abuse was the size of the penalty. A North Carolina judge ordered the company to pay a fine of $280 million. Individual consumers were entitled to settlements of up to$1,200.
6. Enron Causes Blackouts In California
In 2001, Californians endured six consecutive days of electricity blackouts. At the time, no one knew the blackouts were the work of one energy company, Enron. Enron executives deliberately created energy shortages or caused congestion on the power grids. The company disregarded state pricing caps and drove up the price of energy for profit. Enron bought electricity at $250 per megawatt hour, the maximum price allowed in California, then sold the electricity to other Northern Pacific states at five times its original purchasing price. Enron overstated its customers’ energy usage and flooded the transmission lines so the state energy providers would pay Enron to reduce its usage rates. In an internal memo, company lawyers wrote, “This strategy appears not to present any problems, other than a public relations risk arising from the fact that such exports may have contributed to California’s declaration of a [blackout].”
In the end, the strategy presented a legal risk as well. During a criminal investigation in 2002, accounting firm, Arthur Anderson LLP, disclosed that it had destroyed audits at Enron’s request. Kenneth Lay and Jeff Skilling, both of whom had served as the company’s Chief Executive Officer in 2001, were charged. Lay was indicted on 11 charges, including conspiracy, securities fraud, wire fraud, bank fraud, and making false statements. He died of a heart attack while awaiting sentencing. Skilling was convicted of conspiracy, fraud, insider trading, and making false statements. The company’s name now epitomizes corporate corruption in America.
5. Ranbaxy Sells Ineffective Generic Drugs
In 2013, executives at Ranbaxy, a subsidiary pharmaceutical manufacturer to the Japanese company Daaichi Sankyo, pled guilty to selling adulterated drugs manufactured in India to U.S. consumers. The company manufactures generic drugs, sold at lower prices than name brands.
Its products include medications to treat Alzheimer’s, high blood pressure, and herpes, among other conditions. In 2007, company executives admitted they had knowingly sold drugs with impurities to distributors in America. Roughly 75 million pills needed to be recalled. The court imposed a $500 million fine. Thankfully, as far as can be determined, no customers have suffered undesirable side effects from the impure pills.
4. Chinese Dairy Companies Sell Contaminated Milk
In 2008, 300,000 Chinese babies became ill. 16 babies were diagnosed with painful kidney stones. Six of those sixteen babies died. The product that was making them sick was one that was made for them, baby formula. There is nothing in baby formula that should make a child sick… unless the formula isn’t formula at all.
22 Chinese dairy companies exported milk containing melamine, in order to cut production costs. Melamine is a compound that is found in glues, dinnerware, adhesives, molding compounds, and flame retardants. As recently as 2018, the dairy industry still had not recovered Chinese parents’ trust.
3. Distributing Company Distillers Knows Thalidomide Could Cause Disabilities
Between 1958 and 1961, many pregnant mothers were prescribed a drug that treated morning sickness. The drug was effective. Unfortunately, Thalidomide had a grave side effect. The children of women who had taken the drug were born without arms, without legs, with short limbs, and with webbed fingers and toes. 10,000 “Thalidomide babies” were born worldwide, and roughly half of them died. In his 2015 book Silent Shock: The Men Behind the Thalidomide Scandal, lawyer and journalist Michael Magazanik alleges that executives at Distillers, the British company that distributed and sold Thalidomide, continued to market the drug six months after they were aware it caused children to be born with disabilities. (Full disclosure: Magazanik represented Thalidomide baby Lynette Reed in her 2012 lawsuit against Distillers, which she won.)
Salesman Hubert “Woody” Woodhouse, who worked at Distillers’ Australian branch while Thalidomide was being sold, testified during the trial that senior officials were aware of warnings from Australian obstetrician William McBride before the end of 1961. McBride told senior officials the children of mothers who had taken the drug were born with disabilities. Woodhouse assumed the complaint had also been passed to the company’s British headquarters. In 2013, Diageo, the British drinks group that is the legacy owner of Distillers, paid $89 million to 100 Thalidomide babies born in Australia and New Zealand in order to settle a class action lawsuit.
2. Bechtel Privatizes Water In Bolivia
From 1999 to 2000, the citizens of Bolivia’s third largest city, Cochabamba, marched through the streets. They were protesting the idea that affordable access to fresh water is not a human right. Unlike the other acts of corruption on this list, which are solely corporate decisions, this one was supported by the government. The Bolivian government was complicit in the privatization the Bolivian press dubbed “The Water War.”
Water is one of many resources Bolivia has privatized in order to increase its economic growth. In 2000, the Bolivian government invited Bechtel, an American company, to buy SEMAPA, its public municipal water supply. Bechtel charged 50% more than SEMAPA had, and the company eventually claimed communal water supplies as well. As water became less affordable in Cochabamba, protestors overran the city streets. Their efforts were successful. Eventually, Bechtel broke its contract and returned SEMAPA to public control, though the company did seek $50 million in compensation from the Bolivian government. Unfortunately, Bolivians still struggle with water scarcity, but they have provided a useful model for water rights protests around the world.
1. Theranos Markets A Product That Doesn’t Exist
Elizabeth Holmes founded the technology company Theranos in 2003, when she was a 19-year-old Stanford University dropout. She told investors her invention would allow patients to conduct various reliable blood tests using a fingerstick needle. By 2007, her company had developed the Edison, a modification of a glue-dispensing robot. This prototype helped the company garner $9 billion in investments. Unfortunately, despite what Holmes told investors, there was never a working model of the Edison.
Demonstrations for potential investors, such as Joe Biden, were rigged. Employees were directed to secretly test the blood samples of investors who arrived for product demonstrations on other companies’ equipment. By 2013, some employees, such as chief scientist Ian Gibbons, were expressing concern about the inaccuracy of the company’s blood tests. In 2014, Holmes told Fortune magazine that the Edison accurately performed 200 blood tests using fingerstick technology, and it would soon perform 1,000 tests. The claim was false. Markers of infectious diseases can’t be detected without a large blood sample.
Holmes inaccurately represented even the tests Theranos could perform. Most of them weren’t performed on the Edison, and Theranos’ medical employees were training the staff at Walgreens’ Theranos Wellness Centers to do venal blood draws, not fingersticks. In 2018, The U.S. Department of Justice charged Holmes and her boyfriend, Theranos president Sunny Balwani, with criminal fraud. The company shut down the same year. Holmes and Balwani will stand trial in 2020. Director Alex Gibney explores the sudden success and disgraceful downfall of Elizabeth Holmes in the HBO documentary The Inventor: Out For Blood In Silicon Valley.