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According to Merriam-Webster, a double standard is a set of principles that applies differently and usually more rigorously to one group of people than another.
Last week, Takata, a major automobile supplier of airbags, agreed to plead guilty to wire fraud and pay a total of $1 billion in criminal penalties. This stems from the company’s fraudulent conduct in relation to sales of defective air bag inflators. Takata air bag inflators can explode with too much force, spraying shrapnel into drivers and passengers.
What is more remarkable is that a federal grand jury indicted three former employees of the major automotive supplier on charges of wire fraud and conspiracy, accusing them of concealing defects in the company’s air bag inflators. While these executives are the “fall guys” (the CEO was not named) for a culture that put profit over safety, according to The National Highway Traffic Safety Administration the required recall affects 42 million vehicles with a total of 69 million inflators covering more than 12 automakers.
The defect has been connected to 16 deaths worldwide and more than 180 injuries. What is truly remarkable is that executives have been indicted and may very well go to jail.
On the other hand we have the banking industry. The complex mortgage-based financial products that banks created are largely to blame for creating the global financial crisis of 2007 and 2008, which ultimately led to the Great Recession. Since then, the following banks have paid the following fines to the U.S. Department of Justice:
- JP Morgan – $13 billion (2013)
- Citigroup – $7 billion (2014)
- Bank of America – $16.7 billion (2014)
- Goldman Sachs – $5.1 billion (2016)
- Morgan Stanley – $3.2 billion (2016)
- Deutsche Bank – $7.2 billion (2016)
- Credit Suisse – $5.3 billion (2016)
That is $60.5 Billion dollars in fines to the U.S. Department of Justices, not including what they were forced to pay in lawsuits to investors and other federal agencies. The fines were the result of investigations into widespread fraud and abuse in the mortgage market and were pursued by multiple U.S. government agencies.
Findings indicated that the banks packaged poor-quality mortgages into investments and sold them to clients globally. When the mortgages soured, investors lost billions, and the housing market and global economy crashed.
You may think…so? The banks paid their fines just like Takata, and their fines were much larger. Where’s the double standard? No person or group was ever indicted or went to jail. You may think that Takata’s deception killed people; the banking industries did not. Really? I know that correlation is not causation, but there was indeed an increase in suicides during 2008 -2009. There is no way to prove that the increase in suicides occurred due to the banking crisis, but is it that hard to imagine that people might take their own life when they see no light at the end of the tunnel?
If we, as a culture writ-large, want to prevent this type of decision-making that puts profit above the wellbeing of society, we must agree that executives (that build cultures that foster, reward and/or compel these decisions) should be indicted, convicted, and removed from our culture writ-large. Fines to a corporation without individual executive accountability to not change fraudulent behavior. If it did, we would not have seen the dozens of frauds that have taken place over the last several decades. When executives understand that their decisions can cost them their freedom, then we will see an end to the organizational cultures that promote profit at the cost of our culture writ-large.
Let’s cultivate our culture, together!