Ripoffs Incorporated

Written by Mike Minehan on .

The USA needs to drastically revise its response to irresponsible corporate behaviour.

Corporate irresponsibility was highlighted this week by the retirement payout to Michael Pearson, the former CEO of the drug company, Valeant. CEO Pearson received a golden parachute of nine million dollars payout, including a further $83,333 per month as an on-going consultant until the end of 2016, and then $15,000 per month thereafter whilst providing services.

This was despite a catastrophic drop in the Valeant share price under Pearson’s watch, and other questionable practices, as explained in this video:

Pearson is the CEO who oversaw the purchase of two life-saving heart drugs, and then tripled the price for one and increased the other six-fold. This hike in prices generated $547 million in revenue and around $351 million in profits last year alone.

Such corporate irresponsibility helped result in the collapse of Valeant stock by almost 90 per cent over the past year. This collapse followed an investigation by federal prosecutors into its pricing and distribution of drugs, its struggles to file an annual report, and allegations of Enron-like fraud.
It’s long overdue for tough measures to hold CEOs and financial leaders more accountable for predatory behaviour. For example, the 2008 financial crisis was remarkable for not only threatening the global economy (it has never fully recovered) but also for the extraordinary statistic that only one financial executive was ever sent to jail.

This was Kareem Serageldin, sentenced to 30 months in jail for concealing hundreds of millions in losses in Credit Suisse’s mortgage-backed securities portfolio. Serageldin was neither a mortgage executive (who created toxic products) nor the CEO of a bank (who peddled them). Amazingly, the US Justice Department settled for going after only one such comparatively small fry because of its fear that protracted and expensive litigation might fail against the big banks and financial institutions. 

Perhaps it's not just the corporate and financial system, and the justice system, that are at fault. It’s everyone’s responsibility to try and ensure responsible institutional conduct – and to speak up when the fat cats rip off the system. And get away with it.

This wouldn't be such a big deal if the world wasn't still trying to recover from the last financial crisis. But the world is still suffering from this, while Wall Street and the banks are acting as though it never happened.

No wonder Americans so emphatically rejected the establishment in the 2016 Presidential elections. But Trump is not exactly the people's champion, and there is still no end to this saga in sight.