Do Corporations Pay Fines to Protect their CEOs?
When Google settled a probe into its carrying ads for unlicensed pharmacies for $500 million, was part of the payment made to protect its CEO? The Rhode Island U.S. Attorney prosecuting the case, Peter Neronha, said that Google CEO Larry Page “knew what was going on.” The WSJ reports that Google executives had previously stated (WSJ sub. req’d) that Google had stopped running the ads, including in Congressional testimony by former executives Sheryl Sandberg, now Facebook’s COO, and Andrew McLaughlin, who later as President Obama’s Deputy U.S. Chief Technology Officer was reprimanded for inappropriate Google contacts. Neronha described Google’s actions as reflecting a “corporate decision to engage in this conduct,” rather than the actions of “two or three rogue employees.” Nonetheless, he indicated that no individual charges would be brought (WSJ sub. req’d), raising the question as to how much of the settlement might have been attributable to a deal under which Page would not be charged.
There have been many complaints that individual executives have been let off the hook in connection with the financial crisis. How many of those executives worked for firms that paid large settlements? How often has the DOJ announced the settlements while also indicating that individual charges would not be brought? And how often does the DOJ agree in a settlement not to release emails implicating a CEO and then explicitly cite “documents we reviewed” as proof of the CEO’s knowledge?
See video alleging Google is still carrying illegal ads two days after settlement: