Citigroup has some interesting commercials. I love the ones about some old lady whose voice is of a gruff-hardened criminal who took her card and went on a spending spree. There are countless of other good ones. Citigroup has been bragging about their ability to thwart personal information theft and their new technology to accomplish that.

Well, it looks as if the brain-surgeons at Citigroup have royally screwed up. 4.9 million social security numbers and other information was lost in being shipped via UPS.




Now the above quote is very cute. If an employee lost confidential information, would anyone here maintain that "sorry" would cut it? "we regret this has happened"????? Really?

In all fairness, privacy FUBAR operations isn't just a specialty of Citigroup. Other corporations are suddenly acting like the three blind mice when it comes to important information.



My solutions?

-Each person whose private information was compromised will be paid $2 million by Citigroup.

-If it happens again, chop up the corporation and sell it off piece-meal to it's competitors.

-Appoint Ralph Nader to a federal board overseeing banking matters.
Questions for debate:

1.)What penalties should be instituted to punish groups like Citigroup who aren't careful enough with private records?

2.)What procedures should companies who deal with private information undertake to make sure they don't royally screw up again?

3.)Is UPS or Citigroup to blame for corporate incompetentness?

1.)What penalties should be instituted to punish groups like Citigroup who aren't careful enough with private records?
IMO there needs to be a dramatic overhaul of corporate law to address this issue, and any other corporate law-breaking (up to and including corporate manslaughter, or even corporate mass-murder - BASF made gas for the Nazis. Where were BASF executives and stockholders at Nuremburg?).

First off, Ford vs Dodge needs to be overhauled. The judgement was narrowly correct in it's original intent - to establish that if the interests of stockholders conflict with those of any other stakeholders group, the stockholders' interest should prevail - but it has been used as the foundation of the modern corporate sociopathy that permits any behaviour, as long as it makes money, and that calculates that lawbreaking is entirely acceptable if the penalties do not outweight the potential costs of staying legal.

Second, we need to look again at the whole concept of limited liability in stockholding. Originally, companies were small-scale things and the only real risk of loss was if the business was badly-run or just plain unlucky. We need to keep hold of that, because the people funding that kind of corporate risk-taking are the ones who keep the economic blood pumping in the (now global) economy. Liability should be limited, as now, to losses incurred during normal business activity.

BUT - IMO, any lawbreaking by any corporate entity should waive all limitations on the stockholders' liability. If a court awards punitive damages in a criminal or civil case (that fits certain defined parameters), the business doesn't pay, the stockholders do. In criminal cases, that would almost certainly mean that trading in stock had to be suspended for the defendant company, so the stockholders who should have been holding their employees - the executives - to account cannot sell up and run away (just as an individual criminal has to stay in the state, or whatever bail conditions apply). If that logic were in place, how many businesses would ever risk breaking the law? We talk about the penalty fitting the crime, and about the deterrant effects of harsh penalties, for individual offenders. But mention the same thing in a corporate context, and suddenly that undermining capitalism. Nonsense - it's undermining law-breaking. It doesn't undermine capitalism any more than prison undermines society. (I believe it would actually help build a well-ordered and responsible capitalism the same way that the penal system can help to build a well-ordered and responsible society.)

Thirdly, if a case is really serious (say a Chernobyl or a Bhopal) then there should be some kind of corporate equivalent of prison, which would probably mean some kind of forced nationalisation for a defined period. Prisoners are at the disposal of the state, and their work and income is determined and directed by the penal authorities. Offender businesses could and should be treated similarly.

Businesses, especially big businesses, have been allowed by government to do pretty much whatever they want in the last 100 years. The biggest ones barely pay taxes any longer, let alone behave as responsible corporate citizens. Enough is enough.

Some people might say that growth would be put in jeopardy. I say that any growth that relies on treating people less well that money isn't worth having. One of the reasons we don't like organised criminals is that they get rich by exploiting people, bribing officials, not paying their taxes, cutting the corners that the rest of us have to walk around. If a legitimate business behaves the same way - sweatshop labour, campaign contributions, interdivisional loans to tax havens, mis-statement of accounts, lackadaisical treatment of customer records - why don't we put them in the same bracket as the Mob?

2.)What procedures should companies who deal with private information undertake to make sure they don't royally screw up again?
Whatever it takes. If they lose money doing it, that's their look-out.

3.)Is UPS or Citigroup to blame for corporate incompetentness?
Citigroup chose to subcontract work to UPS, so the main responsibility rests with Citigroup. If they want to sue UPS to recover whatever they have to pay out to their aggreived customers, that's their business (pun intended)

Julian's response is almost frightening . Forced nationalization of companies if a courier loses a package?

In case you do not realize it, corporate officers ARE personally liable for certain activities of the company. Recall that Kenneth Lay character who is standing trial for the Enron debacle?



Who in their right mind is going to invest everything they have every time they buy a single share of some company? The stockholders DO pay, but only up to the amount of their investment (their stock). Anything further would be crazy. That is the meaning of limited liability: it is limited to your investment in the company.

1.)What penalties should be instituted to punish groups like Citigroup who aren't careful enough with private records?

I think you could have come up with a better example than this one... This information was lost during transit. It wasn't stolen by an employee or lost via computer hackers or something else preventable. If anything, it is UPS' fault.

Er, no. I refer you to my original response with additional emphasis added later - IMO there needs to be a dramatic overhaul of corporate law to address this issue, and any other corporate law-breaking (up to and including corporate manslaughter.
Forced nationalisation, were it an option, would be about the most serious available punishment for corporations that broke the law; the equivalent of a life (or death) sentence. Losing a package accidentally would be very unlikely to be that serious. Maybe a 0.5 cent fine per share to the stockholders would be enough incentive for them to sit on their board directors hard enough to make sure that they look after their records better in this case.


Who from Union Carbide stood trial for Bhopal? Anyone? Nobody died because of what Ken Lay did. And Enron's customers weren't the ones who lost out the most. He is being prosecuted because he fleeced his stockholders - the only crime corporations think is serious enough to want to throw the book at their executives. Corporations get away with murder, almost literally, and stockholders get to benefit from the profits that are made whether or not any company executives get scapegoated. That's the injustice that I perceive, and that's the one I want redressed.


As I said before - that is certainly the case, and should remain the case, for losses due to normal business operations. If a retailer opens a new store and it folds, stockholders shouldn't have to pay any extra (but they often do - ever heard of slashed dividends, or a rights issue, because of a corporate screw-up? I have).

If that same retailer poisons a customer by adulterating their milk, consumer protection law will enable the family to sue, and may even bring the wrath of government. The company will get a fine, and may have to pay damages.

If the damages are infrequent, or they are (in the corporate scheme of things) surviveable, the cost benefit analysis that was carried out to decide to adulterate the milk in the first place may also decide that it's worth continuing doing it because the potential cost of damages if they get caught is outweighed by the cost saving of not being responsible in the first place (e.g. the Ford PintoFord Pinto).

Stockholders are the people who ultimately are meant to hold corporate officers to account. If corporate officers break the law, and are not discouraged from doing so by internal corporate procedures, then stockholders should risk more than their initial investment. I can't think of a better way of making them pay attention how the business they own is run, rather than just how much their stock price went up last week.