SHORT TAKES #14: MORE EXAMPLES OF CORPORATE BAD BEHAVIOR

Here are short takes on three important stories that have gotten little attention in the mainstream media. Each provides a quick summary of the story, a hint as to why it’s important, and a link to more information. They range from irresponsible and dangerous behavior by the owners and operators of a cargo ship to corrupt behavior by a student loan servicer to illegal behavior by Apple and Goggle in Europe.

STORY #1: The cargo ship that crashed into and collapsed the bridge in Baltimore (killing six people who were working on the bridge) has asked a court to limit its liability to $44 million! The U.S. Justice Department, the U.S. attorney in Maryland, the State of Maryland, the City of Baltimore, business owners in the area, and the families of those who died are all opposing this effort. More realistically and fairly, the liability for this incident could be billions of dollars. [1]

Justice Department lawyers have asserted in court documents that the owners and operators of the ship prioritized profits over safety and knowingly allowed a dangerous, unseaworthy ship to set sail. Their court filing identified mechanical problems on the ship and described the owners’ “Band-Aid approach” to fixing some of them. It described the crew as “ill-prepared” and the owners as “cutting corners in ways that risked lives and infrastructure so that they could save time and money.”

Due to the “negligence” and “egregious facts” of the case, the Justice Department is seeking $100 million in economic damages and unspecified punitive damages. The economic damages could escalate as the cost of rebuilding the bridge is factored in and, along with the claims of other entities, including the families of those who died, the liability is likely to be in the billions. Unfortunately, the litigation to settle all this will likely drag on for years.

The FBI has opened an investigation into whether the ship’s owners’ and crew’s actions, in allowing the ship to sail with known problems, rise to the level of a crime. No criminal charges have yet been filed.

STORY #2: Navient Corp. has been banned from servicing federal student loans and will pay $100 million to harmed borrowers, as well as a $20 million penalty. This settlement with the Consumer Financial Protection Bureau (CFPB) comes after an investigation found that Navient had denied borrowers access to more affordable, income-based repayment plans, while channeling them into more expensive (and profitable) repayment plans. [2]

Navient is a repeat offender. In 2022, it paid $1.85 billion and canceled 66,000 student loans in a settlement with 39 states over its use of predatory lending practices. It has failed to report borrower complaints as is required by the U.S. Department of Education and has ranked dead last in borrower satisfaction according to surveys by the department. It has made it difficult for students who attended fraudulent for-profit schools to get debt relief.

Navient still services non-federal student loans for more than 12 million borrowers totaling nearly $300 billion in debt. If you or someone you know has a loan serviced by Navient, keep a close eye on the payment plan and options.

STORY #3: The European Union’s top court has ruled that Apple must pay over $14 billion in back taxes to Ireland. It concluded that two Apple subsidiaries got illegal, selective tax breaks from Ireland between 1991 and 2014 and that these tax breaks were illegal state aid that harmed competition. Apple’s taxes in Ireland, the base of its European operations since 1980, have been as low as 0.005% of profits. Ireland hosts the headquarters of many multinational corporations because of its special tax breaks. [3]

The current system for taxing multinational corporations is complex and unfair. Coordination and reform of tax policies across countries is badly needed. The United Nations is working to establish a global tax standard that fairly taxes a multinational corporation’s economic activity and appropriately distributes taxes among the countries where the corporation does business.

The European Union court also ruled that Google had illegally used its search engine dominance to favor its own shopping service. Google was fined $2.65 billion.

[1]      Mettler, K., 9/19/24, “US: Ship that hit bridge deficient,” The Boston Globe from the Washington Post

[2]      Bloomberg, 9/13/24, “Navient banned from servicing federal student loans, to pay $120 million,” Business Talking Points, The Boston Globe

[3]      Carver, E., 9/10/24, “ ‘Long-overdue justice: EU court rules Ireland let Apple avoid $14.4 billion in taxes,” Common Dreams (https://www.commondreams.org/news/ireland-apple-tax)