WHEN CORPORATIONS BREAK THE LAW, WHO IS REALLY PUNISHED?
Corporate power and the cost of justice
Legal misconduct at a company level is often punished in a frustratingly mild, almost abstract way. Fines are paid, apology statements are rolled out, yet those most affected by court verdicts are not the senior managers who call the shots and make important decisions — but the invisible employees, shareholders, and local communities that bear the burden of the financial, social, and environmental costs. The disparate share of punition within businesses raises a pressing question: who is truly held accountable for corporate rulebreaking? This article explores the inconsistency of legal liability within private organisations, exposing the reality of punishment and who ultimately suffers when companies cross the lines.
The Enron scandal of the early 2000s is a striking example of how ordinary employees bear the cost of corporate crime. The Enron Corporation was a successful American energy and services company based in Houston, Texas, and collapsed almost overnight when the truth surfaced in 2001 that it had been engaging in widespread accounting fraud. The founder (Kenneth Lay) has developed a staff of executives that — by the use of accounting loopholes and poor financial reporting — had managed to hide billions of dollars in debt from failed deals and projects. As a result, the responsible executives (including former CEO Jeffrey Skilling and CEO and chairman Kenneth Lay), were indicted for a variety of charges. Skilling was convicted and sentenced to prison, and Lay was convicted but passed away before his sentencing. These punishments confirm that accountability was appropriately enforced to the perpetrators.
However, the detrimental consequences to members of the Enron corporation did not stop there. Enron’s shareholders — who played no part in the accounting fraud — faced severe repercussions, losing $74 billion in the four years before the company’s bankruptcy. According to Wikipedia, more than 20,000 of Enron's former employees won a suit of $85 million for compensation of the $2 billion that had been lost from their pensions in May 2004. From the settlement, each employee received only about $3,100, a fraction of what they had lost. That sharp gap between expectation and reality made clear just how unevenly retribution had been handled, leaving employees who had invested their livelihood and savings into the company without economic stability, long-term security, and retirement plans. The lawsuit, therefore, serves as an example of the systemic imbalance in corporate accountability: the legal system can deliver symbolic victories, but the individuals most affected by corporate wrongdoing often remain undercompensated and economically vulnerable.
In conclusion, the Enron scandal and the subsequent 2004 pension lawsuit illustrate the stark imbalance in corporate accountability. While executives may face legal consequences, the individuals most affected— in this case Enron’s employees and shareholders — often bear the heaviest economic and personal costs. The limited compensation awarded to former employees highlights how the legal system can provide recognition of wrongdoing without fully addressing its real-world impacts. True justice in cases of corporate crime requires mechanisms that ensure those responsible face meaningful consequences, while the victims are adequately restored, rather than left to shoulder the fallout of decisions they never made.
BIBLIOGRAPHY
Wikipedia Contributors. 2025. “Enron Scandal.” Wikipedia. Wikimedia Foundation. May 24, 2025.
Conick, Hal. 2020. “Corporate Crime and Non-Punishment.” Knowable Magazine, June. https://doi.org/10.1146/knowable-061820-1.
Rich, Sylvia. 2016. “Corporate Criminals and Punishment Theory.” Canadian Journal of Law & Jurisprudence 29 (1): 97–118. https://doi.org/10.1017/cjlj.2016.4.
“How Law Protects and Promotes Corporate Misconduct.” 2025. Stanford GSB Corporations and Society Initiative. Stanford University. October 22, 2025. https://casi.stanford.edu/news/how-law-protects-and-promotes-corporate-misconduct.