Right now, the populations of many nations have levels of trust in their governments that are the lowest they’ve been in decades. For example in the United Kingdom, the British Social Attitudes Survey reported in October 2020 that only 15% of respondents believed that they trusted their government most of the time or always, less than half as many as those who said they “never” trust the government. In the United States, a September 2021 poll put the number at roughly 39%. With government trust at such low levels, the idea of privatizing sectors of the government may seem more appealing than it has for some time. There are a lot of pundits out there for the notion that the free market is the best guarantor of efficiency.
Well hopefully after reflecting on the contents of this list, you’ll be giving that notion a second thought. Corporations can be as clumsy, callous, or even downright malicious as governments. While the technology for whistleblowers has reached potent heights in recent years, it’s by no means a recent phenomenon.
10. Blackwater
Older viewers may remember how during the US Invasions of Iraq and Afghanistan, mounting US body counts were lowering the popularity of conflicts that were already acquiring a reputation for stretching off unbearably long and costing a horrific number of lives. Because the deaths of mercenaries did not play as negatively in the press, reliance on them increased. One of the most prominent beneficiaries of this policy was Blackwater, which in the wake of the September 11, 2001 attacks received more than $1 billion in government contracts to supply security services in Afghanistan and Iraq under CEO Erik Prince.
Blackwater came roaring into public consciousness in September 2007 when four soldiers opened fire on civilians in Nisour Square, Baghdad and killed 14 while wounding an additional 18. While the mercenaries would be found guilty (one of murder, three of voluntary manslaughter, all pardoned in 2020 except the one who testified against the others) and there was considerable outcry from the military that would have to deal with the insurgents inspired by the war crime, it would not be the end of Blackwater’s opportunities to commit war crimes. In 2010, four more contractors would be charged with murder of two Afghan civilians in Kabul, firing into a civilian vehicle because it drove past their own overturned vehicle. In 2011 contractor Justin Cannon was found guilty and sentenced to thirty months in prison.
So what consequences would Blackwater suffer? Well, in 2010, the company agreed to pay $42 million in fines to the US. By the next year, Erik Prince would leave, and the business would have such a tarnished reputation that it would in turn change its name to Xe, and then to Academi. All in all, fleeting public humiliation sounds like a small cost compared with nearly a billion dollars in contracts.
9. Enron
Founded in 1985, Enron began as a modest energy company. In the ’90s Enron found more success by negotiating energy deals between natural gas suppliers and clients. It was said to negotiate as much as $2.5 billion a day, in large part a beneficiary of newly emergent internet commerce. The real trouble started in the early 2000s, when competition made its growth unsustainable. Projections of future profits began to become reported as regular income, while less profitable sectors of the company were moved to shell companies labeled “special purpose entities.” To help cover this brewing trouble while still claiming rapid growth, the accounting firm Arthur Andersen served as both consultant and auditor.
The charade became unsustainable in August 2001, when Jeffrey Skilling resigned as Chief Executive Officer and company founder Kenneth Lay was brought back. By October that year, the company’s record profits would abruptly change to a quarterly loss of $600 million, leading to an investigation that would see the company declare bankruptcy to the loss of $74 billion, including the pensions of many employees (a large amount of which were lost permanently).
In what might seem hard to believe in the wake of the recent Great Recession, a number of Enron executives served significant prison sentences. Jeffrey Skilling would serve 12 years of a 24 year sentence for 18 counts of fraud. Chief Financial Officer Andrew Fastow, who pleaded guilty, served six years. Kenneth Lay did not live to see the ruling on his case.
8. Volkswagen Group
While Volkswagen claims that it intends to be a carbon neutral company by 2050 to combat climate change, it’s very difficult to take that claim seriously in wake of findings that first went to court in September 2015. In what may seem like one of the most high tech forms of fraud ever committed, VW would be investigated for placing software in its diesel vehicles that monitored if they were under test conditions, and then adjusted the vehicle’s performance to emit less carbon for the duration of the test. VW admitted that it sent 482,000 vehicles with the software to America, but overall it had sent 11 million worldwide.
While it’s hardly unknown for corporate trials to drag out for years, even if the company admits to its wrongdoings early in the proceedings, Dieselgate is a suit that just seems to get bigger. In September 2021, four former employees went to court for knowingly concealing the presence of the software. As of December 2021, a 91,000-plaintiff lawsuit from the UK was ongoing against the company. Even if the latest trials all go VW’s way, as of 2021 it will have already cost the company more than $37.7 billion in direct fees, settlements, etc. It also gives the green energy movement quite the black eye.
7. Peanut Corporation of America
In 2008, peanut paste from Peanut Corporation of America was to be found in more than 4,000 products, including cookie products from Nabisco. This would be something of a problem for the nation, as their product had one of the largest and most dangerous concentrations of salmonella in food safety history. In all, seven deaths and 714 additional illnesses, many involving critical hospitalizations, would result before the largest food recall in history took place, to the tune of over $1 billion in losses.
By 2015, Stewart and Michael Parnell, the brothers who served as the company’s Chief Executive and “peanut broker” would be sentenced to 28 and 20 years, respectively. It was the first time that a chief executive was convicted in a food safety lawsuit. Perhaps the most significant change was that in 2011 President Obama signed the Food Safety Modernization Act. Or at least that might have been if the bill hadn’t included clauses that delayed its implementation date by several years, allowing President Trump to further delay its implementation in 2018. To date the Biden Administration has not made any known efforts to reverse the delay.
6. Bank of America
You’ll recall a reference from a few entries ago to the 2008 Global Recession. One of the largest perpetrators of the fraud that caused the recession which 30% of the US population still hadn’t recovered from by 2017 as reported by US News was ruled to be Bank of America. In August 2014, the US Department of Justice reported that Bank of America would pay the US government a settlement of $16.5 billion for fraudulently selling mislabeled home loan securities. In layman’s terms, they were selling portions of debt to investors based on false reports of how likely the indebted were to be able to pay it back. Of that, roughly $7 billion was earmarked to be sent to the hundreds of thousands of consumers who could prove they were impacted by the fraud. That was the largest fine a single company paid in US history.
To put the severity of that punishment in perspective, in 2021, Bank of America reported $7.7 billion in 3rd quarter profits alone. So the largest amount any company has ever been directly fined for its crimes cost it significantly less than a decent year’s profits. Doesn’t inspire much confidence that the law is equipped to do much that’ll keep the financial firms in line.
5. Du Pont
The petrochemical giant Du Pont has been connected to nightmarishly shady dealings since the 1930s. Perhaps the most shameful aspect of its history is that it was one of 150 major American corporations whose dealings with the Third Reich facilitated the war economy that would plunge Europe into World War II. Du Pont was unique in that Nazi Germany declaring was on America in December 1941 did not put an end to those business dealings. The company continued its business with America’s enemy until September 1943, and it only ended because the Reich seized all Du Pont assets in Reich territory. When you’re in a relationship with a Nazi, and they’re the one that breaks it up, you’ve got problems.
In February 2009, Du Pont became associated with a breathtakingly heinous crime. Du Pont heir Robert Richards pled guilty to sexually assaulting his daughter when she was three years old. The judge gave him eight years probation, a fine of under $6,500 (it would be alleged he didn’t pay that). In 2014, his ex-wife sued him for damages that the case had caused, and it became the news sensation it had somehow avoided being for five years. Beyond Du Pont, another prominent name was pulled into the fray when it turned out Attorney General Beau Biden, the late son of President Joe Biden, was the prosecutor who allowed that extremely light sentence. It’s amazing just how little coverage this case received during the 2020 presidential campaign.
4. United Fruit
The early 20th Century is replete with stories of labor and management conflicts that escalated to violence, sometimes with loss of life. Almost certainly the single deadliest incident from this period was when 25,000 employees of the United Fruit Company in Bogota, Columbia went on strike in December 1928. They had nine demands, including that they work six day weeks and that they be paid in cash instead of company scrip. United Fruit responded by reporting that the workers were turning communist, which meant the US marines would have to invade Columbia. To preserve national sovereignty, Columbian police and armed forces opened fire on the striking workers. On the first night, they left nine bodies on the ground in reference to the nine demands.
Accounts for just how many people were paid to keep United Fruit from having to pay wages vary. It is quite revealing that US ambassador Jefferson Caffery, hardly a communist propagandist, sent a message to the State Department claiming that over 1,000 strikers had been killed.
United Fruit, later changing its name to Chiquita Banana, apparently decided the blood money was worth it and turned to violence again decades later. In 2007, the company pled guilty to funding right wing terrorists an cocaine dealers known as the United Self-Defense Forces of Columbia. The fine for all the death and mayhem that they financed that second time came to $25 million.
3. Theranos
Few frauds attract as many high profile marks as Elizabeth Holmes. By 2014, Henry Kissinger and former Defense Secretary James “Warrior Monk” Mattis had been board members for her company Theranos. Her investors included the Walton Family, particularly through Walgreens, and Rupert Murdoch. The Clinton Foundation hosted her during a panel when her company was valued at $9 billion, when she was only 31 years old.
There was only one problem: The company’s main product, an innovative form of blood test, didn’t detect cancer, diabetes, or any of the other diseases it was reputed to with any reliability. This failure meant that by 2018, the company was dissolved. By January 2022, she was found guilty of four counts of defrauding investors. The fact she was not found guilty of using her company to defraud patients was presumably cold comfort, especially as she had embarrassed many rich and powerful enemies.
2. Chevron
In the 1960s, the oil company Texaco signed a contract to develop land in Ecuador around the Lago Agrio region for drilling. In their wake they left behind 1,700 acres of land polluted with byproduct that the locals would allege in a lawsuit raised leukemia and cancer rates significantly, employing the services of human rights lawyer Steven Donzinger. In 2011, they won the suit and Chevron, the company which had acquired Texaco, was ordered to pay $9.5 billion, the first time an indigenous population had such a lawsuit against an oil corporation. ‘
Instead of paying, Chevron seemed determined to go after Donzinger personally. Even after n three appellate courts confirmed the verdict, Judge Lewis Kaplan overturned the verdict and under strategic lawsuits by Chevron ordered Donzinger to turn over decades of records protected by attorney client privilege. When Donzinger refused to do so, he was put under a house arrest for an unprecidented over two years while Kaplan handpicked a judge to handle his contempt of court charges against Donzinger. Meanwhile a judge that the prosecution had called as a witness admitted that he had lied in his testimony against Donzinger. Eventually Donzinger was found guilty and sentenced to an additional six months in prison, though part way through that sentence was commuted to house arrest.
By the way, the Judge Lewis Kaplan who presided over this corruption? He was appointed by President Clinton. Some forms of judicial abuse transcend party politics.
1. Dyncorp
Years before Blackwater even existed, Dyncorp was proving just what atrocities military contractors are capable of. In 1999, Dyncorp employees Ben Johnston and Kathryn Bolkovac were working in Bosnia, the former as a helicopter mechanic and the latter as a police officer for the United Nations. While there, they witnessed women “obviously underage” being trafficked around. In Johnston’s case, he reported seeing Dyncorp employees at Camp Comanche near the city of Tuzla actively partaking in the crime. By 2002, 13 Dyncorp employees would be sent home for hiring child prostitutes or trafficking them, though none faced criminal prosecution. Both Johnston and Bolkovac would be fired shortly after making their reports, and both would win wrongful termination suits.
By now you’re probably not expecting Dyncorp to have faced severe consequences for this, which would be correct. The US government didn’t just continue to contract Dyncorp’s services. In 2014, it was reported by The Daily Beast that over the course of America’s disastrous invasion of Afghanistan, 69% went to Dyncorp. For example, $2.5 billion of $4 billion earmarked for Afghan reconstruction went to the child trafficking company. In 2018, Stephen Feinberg, the company owner, was appointed to chair an executive board reviewing information from foreign intelligence agencies. As embarrassing as President Biden’s withdrawal from Afghanistan was, it seems to have been the closest Dyncorp has suffered to a punishment.
Dustin Koski recommends his fantasy novel A Tale of Magic Gone Wrong, since clearly this list has shown you can trust a business person pushing their product.