Readers know I have long argued that we are over-regulated but under-punished. The easy solution to every problem always seems to be yet more paperwork.
Brazil seems to have reached that conclusion as well, as they have just charged certain executives of Chevron, who live in that country, with criminal acts related to an offshore oil spill last November. Now, I see no justice in charging a CEO who was unaware of the problem, but what about the executive who would benefit most from bringing in the project on time and within budget? That executive could be motivated to cut corners.
HEADS — If he cuts corners and succeeds, his career is enhanced. TAILS — If he cuts corners and fails, his company (and its shareholders) suffer, while the executive just moves on to another company. There is more inconvenience to the executive than real downside risk if he cuts corners.
Proving criminal negligence is very difficult in a courtroom, but the stronger the probability that the executive will face legal charges, the less likely he will be recklessly cutting corners. Staying out of court will motivate a person, just like an incentive plan . . . maybe more.
So, another law saying, for example, “Thou shalt not pollute” is unlikely to prevent reckless risk-taking. Sending in experts to determine who made the reckless decision and publicly humiliating them is much more likely to protect the environment or whatever.
Civil rights lawyers rail against this approach, citing such examples as the security guard wrongly accused of the bombing at the Atlanta Olympics. Should a serious, impartial investigation not be made of a reckless decision? If evidence is found, shouldn’t the reckless decision-maker/executive not be charged? Why punish the company and its shareholders but not the decision-maker?
Of course, lawyers benefit from the increased paperwork of increased regulation.