Special Economic Report
Twelve Steps to an Effective Crackdown on
The 2008 Independent Candidate for President of the United States.
Nader Proposes Crackdown on Corporate Crime, Fraud and Abuse
US needs to crackdown on corporate crime, fraud and abuse that have
in the last four years looted and drained trillions of dollars from
workers, investors, pension holders and consumers.
Among the reforms needed are resources to prosecute and convict
the corporate executive crooks and to democratize corporate
governance so shareholders have real power; pay back ill-gotten
gains; rein in executive pay; and enact corporate sunshine laws,
Below are twelve initial steps for an effective crackdown on
corporate crime, fraud and abuse. The Nader campaign will return to
this issue and expand the discussion on the solution to corporate
crime and abuse.
Twelve Steps to an Effective Crackdown on Corporate Crime
- Increase Corporate Crime Prosecution Budgets: The
Department of Justice's corporate crime division and the
Securities and Exchange Commission have been chronically under
funded and therefore do not have sufficient resources to combat
the corporate crime wave in the United States. This results in
inadequate investigation, settlement of cases for weak fines,
and ignoring many corporate crime violators completely. There
needs to be a strong corporate law and order will in the White
- Ban Corporate Criminals from Government Contracts:
The US should enact a tough, serious debarment statute that
would deny federal business to serious and/or repeat corporate
lawbreakers. The federal government spends $265 billion annually
on goods and services. These contracts should not support
corporate criminals. These standards should also apply to
procurement contracts in Iraq.
- Crack Down on Corporate Tax Avoidance: The US should
punish corporate tax escapees by closing the offshore
reincorporation loophole and banning government contracts and
subsidies for companies that relocate their headquarters to an
offshore tax haven. The IRS should be given more power and more
budgetary resources to go after corporate tax avoiders.
Publicly-traded corporations should be required to make their
tax returns public.
- Democratize Corporate Governance: Shareholders should
be granted the right to democratically nominate and elect the
corporate board of directors by opening up proxy access to
minority shareholders and introducing cumulative voting and
competitive elections. Shareholders should be given the power to
approve all major business decisions, including top executive
compensation. Shareholders should be treated as the owners of
the corporation since, in fact, that is what they are.
- Expand Corporate Disclosure: Corporate sunshine laws
should be enacted that require corporations to provide better
information about their records on the environment, human
rights, worker safety, and taxes, as well as their criminal and
civil litigation records.
- Rein in Excessive Executive Pay: Shareholder
authorization should be required for top executive compensation
packages at each annual shareholder meeting. Stock options,
which now account for about half of the executive compensation,
should be counted on financial statements as an expense (which
they are). Tax deductions for compensation 25 times above the
compensation received by the lowest paid worker in a corporation
should be eliminated, as recommended by business guru Peter
- Fix the Pension System: Corporations must be held
more responsible for the retirement security of their employees.
At a minimum we need to give workers a voice on the pension
board; not require workers to stuff their 401(k) plans with
company stock; and give workers the right to control their
401(k) plans. In addition, an Office of Participant Advocacy
should be created in the Department of Labor to monitor pension
- Restore the Rights of Defrauded Investors: Repeal the
self-styled securities reform laws that block defrauded
investors from seeking private restitution, such as the private
Securities Litigation Reform Act of 1995, which allowed the
aiders and abettors of massive corporate crime (e.g.,
accountants, lawyers, and bankers) to escape civil liability.
- Regulate Derivatives Trading: All over-the-counter
financial instruments, including derivatives, should be
subjected to the same or equivalent audit and reporting
requirements as other financial instruments traded on stock
exchanges. Rules should be enacted regarding collateral-margin,
reporting and dealer licensing in order to maintain regulatory
parity and ensure that markets are transparent and problems can
be detected before they become a crisis.
- End Conflicts of Interest on Wall Street: Enact
structural reforms that separate commercial and investment
banking services and prevent other costly, documented conflicts
of interest among financial entities, such as those that have
dominated big banks and security firms in recent years.
- Track the Extent and Cost of Corporate Crime: The
Department of Justice should establish an online corporate crime
database. Also, just as the FBI issues an annual street crime
report, "Crime in the United States," it should also publish an
annual report on corporate and white collar crime with
- Foster a National Discussion on Corporate Power:
Establish a Congressional Commission on Corporate Power to
explore various legal and economic proposals that would rein in
unaccountable giant corporations. The Commission should seek
ways to improve upon the current state corporate chartering
system in a world of global corporations and propose ways to
correct the inequitable legal status of corporations as
"persons." The Commission would be led by
congressionally-appointed experts on corporate and
constitutional law, and should hold citizen hearings in at least
ten cities followed by a report and recommendations.
About Ralph Nader
Attorney, author, and consumer advocate Ralph Nader has been named
by Time Magazine one of the "100 Most Influential Americans in the
20th Century." For more than four decades he has exposed problems
and organized more than 100 public interest groups. He led the
movement to establish the Occupational Safety and Health
Administration (OSHA), the Environmental Protection Agency (EPA),
the Consumer Product Safety Commission, and was instrumental in
enacting the Safe Drinking Water Act, the Motor Vehicle Safety Act,
the Freedom of Information Act (FOIA). Nader graduated from
Princeton University and received an LL.B from Harvard Law School.