President Cornelia Woll discusses her new book Corporate Crime and Punishment: The Politics of Negotiated Justice in Global Markets.
In recent years, many of the world’s biggest companies have become entangled in legal disputes with United States law enforcement due to corruption, fraud, environmental damage, tax evasion, and sanction violations. While critics of globalisation and corporate impunity celebrate the fact that multinational companies like Volkswagen and BP are being held accountable for their misconduct, others question American dominance in legal battles that extend far beyond the country’s borders. In her new book, Corporate Crime and Punishment: The Politics of Negotiated Justice in Global Markets, Hertie School President and Professor of International Political Economy Cornelia Woll examines the geopolitics of American corporate criminal law, its extraterritorial reach, and how it affects business-government relations in global markets.
Professor Woll, in your book, you use the term negotiated corporate justice. How do corporations “negotiate” justice?
The goal of any criminal justice system is to distinguish right from wrong. One may not think that this is something to bargain over. And yet, it may be advantageous for authorities to reward cooperation from those accused of a crime in order to establish the facts. This is what happens in plea deals, for example, where somebody admits his or her role in a crime in exchange for a reduced sentence. Such “justice deals” are now important in corporate criminal law, too, as new instruments have been created to allow prosecutors to incentivise cooperation and settle claims.
In the United States, such settlements are called “deferred prosecution agreements”. They make it easier to tackle misconduct across borders, sometimes even for foreign companies in third countries, assuming that the companies have an interest in maintaining an operating licence in the United States. But the United States is not the only country to introduce such measures: other countries, including the United Kingdom, Brazil, Spain, France, Mexico, Japan, Argentina, and Singapore, have devised similar instruments over the last ten years.
Corporate Crime and Punishment traces cases of geopolitical legal conflict between the United States and other actors, including the European Union. How have companies and governments responded to litigation from the United States?
Most global companies are well aware of the long arm of the American legal system, and this is reflected in compliance efforts and the amount they spend on advice from US law firms. For Volkswagen, legal advice due to the Dieselgate scandal amounted to 2 billion euros according to one estimate, which is not such an incredible sum when one considers that the costs of payouts to customers and settlements were over 30 billion euros.
Legal disputes take on geopolitical dimensions when companies are the site of conflict between countries, for example in sanctions violation or the provision of financial information. Such conflicts have led the European Union to become active in deterring foreign country’s use of legal proceedings against its companies. Last year, the EU enacted the Anti-Coercion Instrument, which allows it to respond with its own restrictions when European companies face unjustified pressure from a foreign country. And at the national level, foreign offices have included work on coercion deterrence in their units on economic diplomacy.
Could the United States’ approach to corporate justice be putting a wedge between the US and its allies?
Most observers would agree that it is important to ensure corporate accountability in global markets. However, corporate criminal law is a powerful instrument and its legitimacy rests on its proper use. If the United States’ allies perceive that it abuses its position to squeeze foreign companies and provide favourable conditions for domestic ones, it will exacerbate tensions.
Economic networks are used for political ends, and trade wars with punitive tariffs are common. I believe legal instruments are just as powerful and prone to abuse. And as geopolitical tensions grow, conflict is likely to increase.
Corporate Crime and Punishment: The Politics of Negotiated Justice in Global Markets was published on 31 October 2023 by Princeton University Press.
The Hertie School is not responsible for any contents linked or referred to from these pages. Views expressed by the author/interviewee may not necessarily reflect the views and values of the Hertie School.