Point-Counterpoint: Not all business corruption is illegal

Mark Stepp

When most people worry about corruption in business, they are talking about employee theft and embezzlement, or customers shoplifting.

Not all business corruption is illegal, however, and it takes many forms: hiding money offshore to avoid taxes, failing to pay withholding taxes on employees, robbing money from employee retirement accounts, government payoffs, skimming profits from local, state and federal projects, and using the government to steal land and property, to name a few.

Finding hidden assets and profits in offshore banks has long been the purview of federal agencies, such as the Federal Bureau of Investigation. However, even Swiss bank accounts, long the protector of organized crime and corrupt government officials, have succumbed to international law and are making their records more open to investigation by governments around the world.

A much more common type of business corruption - and one that has destroyed numerous working-class families - is failing to pay withholding on employees. State agencies and the Internal Revenue Service are not very quick to catch this type of violation, but like the famous tortoise of mythology, they eventually get around to catching the problem. Violators here pay dearly for their deception or negligence. The penalties and interest racked up by offenders should be enough to discourage even the most callous, unscrupulous businessman, but it's only in recent years the perpetrators - rather than victims - had to pay.

Corporate raiders were famous a few years ago for doing hostile takeovers, and then gutting the employee retirement fund before selling off the company's assets. Thankfully, Congress and the Securities and Exchange Commission eliminated most of these problems back before the turn of the century with new laws that made such takeovers much harder and that protected employee pension plans, even when a company went bankrupt. Unfortunately, corporate officers have since made most of the otherwise healthy retirement programs extremely unhealthy by reducing or eliminating benefits for millions of employees into cash cows for themselves. Golden parachutes and exorbitant salaries for upper-level management, originally designed to block hostile takeovers, are now destroying company retirement plans.

We tend to associate skimming profits from government projects with organized crime; such is not always the case. A few years ago, street contractors in Texas were convicted of substituting low-grade asphalt mixed with oil and sand when repairing city streets. Substandard buildings and bridges built with low-grade cement are more than just thievery; such acts are actually life threatening.

The most insidious criminal activity that is never prosecuted is the theft of private property by powerful individuals via public domain laws to take land and property from local residents, usually at a fraction of the actual value. Across the country, large corporations and individuals have teamed with local and state governments to take personal property for projects that never materialize or that only create problems, rather than solving the intended issues.

Most business people are scrupulously honest, but in the words John Dalberg-Acton: "Power tends to corrupt; absolute power corrupts absolutely." Corruption seems to be a natural state for powerful individuals. So long as we have powerful people, we will have corruption in business and government. At best, government bodies will always play catch up with laws to protect the citizenry, but crooks always find ways to cheat the public, and corrupt bureaucrats are more than willing to help the bad guys win. Thieves totally outnumber those assigned to catch them.

The founding fathers knew corruption would always occur, but they also realized a free press system was our best defense against both business and government.

Mark Stepp is a retired senior technical writer and former newspaper reporter/editor. He is a veteran of the U.S. Air Force, and a graduate of NSUwith a BA in education and journalism.

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