This story is interesting. GlaxoSmithKline settled some civil and criminal charges for $3.1B. It’s for abuses marketing drugs. They tried to convince doctors to prescribe a drug “off-label”, a use for which the drug was not approved. They gave doctors kickbacks, based on the amount of each drug they prescribed. According to that article, the $3.1B settles all criminal and civil offenses regarding these abuses.
What’s the problem? According to Yahoo Finance, Glaxosmithkline (GSK) had gross profit of $33B last year, and $8B of net earnings.
A fool would say “$3.1B is a lot of money! That’ll teach them!” To the average slave, $3.1B is a huge amount of money. To a large corporate State monopoly, $3.1B is less than 2 months’ earnings.
Suppose that 10k+ people got sick or died as a result of GSK’s abuses. In effect, GSK was sentenced to two months in prison for all those crimes.
$3.1B seems like a lot of money, but in a class action settlement like this each victim may get $10k or even much less. The only people who make money off big class action lawsuits are the lawyers.
There really should be a “corporate death penalty”. If executives of a corporation commit severe abuses, then the corporation should be liquidated and the assets given to the victims. In effect, the victims would become the new shareholders, and all other shareholders and bondholders should get $0.
Unfortunately, judges say that lawsuit damages should never be so big that they bankrupt the corporation. That is false. If the executives commit severe crimes, they should lose their corporation and job and career.
The $3.1B isn’t even paid by the executives who broke the law. The $3.1B is paid by GSK shareholders, and not by the criminals.
$3.1B is only 2 months of profit, and probably less than the money GSK made by breaking the law.
In effect, this “settlement” says “It’s OK for executives to break the law. If they get caught, the fine will be negligible compared to the amount of money you stole.”
That’s a clear established precedent. When insiders get caught doing something wrong, the penalty is usually less than the money they stole.
Suppose you robbed a bank and stole $10k. If you get caught, you have to give back $5k and you can keep the other $5k. If that was the law, then wouldn’t you steal as much as you can? In effect, that’s what these settlements say.
This is a very common pattern. Drug corporation CEOs cover up negative side effects of drugs, or encourage harmful off-label use. When they get caught, the fine is effectively a slap on the wrist.
There are two justice systems, one for insiders and one for everyone else. Conrad Murray murdered Michael Jackson with a drug overdose, and he went to jail. GSK executives made a lot of people sick by encouraging misuse of prescription drugs, and they got a slap on the wrist.
$3.1B seems like a lot of money, but it’s negligible compared to GSK’s total earnings and the amount they gained by breaking the law. Whenever a CEO breaks the law, the fine is typically negligible compared to his corporation’s profits. Even worse, the fine is not paid by the criminals, but rather by GSK shareholders. With a fine equal to less than 2 months of earnings, GSK effectively spent 2 months in jail for all the people they hurt.