A CEO Goes to Jail for Killing People

(Photo: Peanuts via Shutterstock)The former owner of the now defunct Peanut Corporation of America faces 28 years in prison for his role in one of the largest salmonella outbreaks in US history. (Photo: Peanuts via Shutterstock)

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On Monday, a federal jury sentenced the former owner of the now defunct Peanut Corporation of America to 28 years in prison for his role in one of the largest salmonella outbreaks in US history.

The outbreak happened in 2008 and 2009. It was blamed for nine deaths and hundreds of cases of salmonella, and it triggered one of the largest food recalls in US history.

The 28-year sentence is the stiffest punishment that a producer has ever received in a case of foodborne illness.

But Parnell wasn’t charged with killing or sickening anybody, even though the outbreak was connected to at least nine deaths across five states.

No, even though his actions led to the equivalent of a killing spree across multiple states, he was charged for 67 counts of defrauding customers.

But this case is actually even more basic than fraud. At its roots is the simple motivator that has tainted business dealings since the beginning of time: greed.

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As District Judge W. Louis Sands explained about the case: “these acts were driven simply by the desire to profit and to protect profits notwithstanding the known risks [from Salmonella]. This is commonly and accurately referred to as greed.”

And that shouldn’t be surprising to anyone – for-profit corporations exist first and foremost to make money.

Even the framers of the US Constitution knew that. James Madison wrote in 1817,

“There is an evil which ought to be guarded against in the indefinite accumulation of property from the capacity of holding it in perpetuity by … corporations. The power of all corporations ought to be limited in this respect. The growing wealth acquired by them never fails to be a source of abuses.”

And for over a century states maintained control over corporations and corporate power in order to keep that “source of abuses” in check.

The framers of the Constitution had just fought the Revolutionary War to break the hold of the monopolistic British East India Company over the colonies and were suspicious of overwhelming corporate power.

But they also knew that the newly-founded country wouldn’t be able to grow without manufacturing and domestic corporations that could facilitate that.

And so from the very first days of our country, local, state and federal legislatures retained the power to limit corporate activity while still encouraging entrepreneurship.

Much of that power was based in “revocation clauses” – the ability of the state to revoke the corporate charter. “The corporate death penalty.”

It was a well-recognized legal fact at that time that corporations are “artificial persons,” and that they only really exist by the authorization of state legislatures in the form of a corporate charter.

And corporate charters were like a driver’s license for much of our country’s history – the government granted the owners of a corporation permission to operate in a certain way for a certain period of time.

There’s two key parts there. First, that the government is giving permission to operate – permission which can be revoked.

The second key part is that the license or the charter only gives permission to operate in a certain way.

A driver’s license isn’t a license to drive a car at any speed anywhere – those are things that can lead to a suspended license.

And historically a business charter would be revoked if the corporation acted anti-competitively or put citizens at risk with its operations.

And much like a driver’s license, for much of our country’s history, a corporation would have to apply to have its charter renewed after a set amount of time.

But that all changed in the late 19th century and early 20th century when states like New Jersey and Delaware started changing their charter laws to appeal to the nation’s largest corporations and to allow them to operate in ways that other states didn’t.

Those states led the charge against limits on corporate behavior – they allowed corporations to live forever – and they allowed them to have interlocking boards.

And that started a nationwide race to the bottom in terms of limiting corporate behavior.

If states wanted to attract the largest and most successful corporations, they would have to loosen their restrictions on corporate charters.

And that race to the bottom turned international as businesses grew into the multinational monopolists that we know today.

It’s good that Stewart Parnell is being held accountable for knowingly putting the public in danger.

And it’s good for the public that, in this case, the Peanut Corporation went bankrupt shortly after the initial recall of their products.

But the simple fact is this isn’t the first or the last time that corporate greed has been “a source of abuses.”

Take liability caps on oil spills, pipeline ruptures and mine collapses that let fossil fuel companies continue to operate, even after poisoning our waterways and endangering their workers.

Or the world’s biggest banks that brought the global financial system to its knees by defrauding anyone and everyone in the pursuit of endless profits.

Those businesses will keep putting profits over people as long as they know that the worst that will happen is a fine.