Initiative for corporate responsibility in Nevada
Enron wannabes, watch out. An effort’s afloat to make sure that if you do business in Nevada, you’ll have to be responsible for your company’s actions.
Nevada law precludes corporate boards of directors from liability for the actions of their companies. The Committee to Restore Citizen’s Rights and Corporate Responsibility was recently founded to change Nevada Revised Statutes so that corporate boards of directors can be held directly financially responsible for all actions of their company. They’re collecting signatures on an initiative that also asks for a ban on the limits to lawsuit damages, which are presently capped in Nevada at $350,000 for both punitive and compensatory damages.
“Corporations do harmful things knowing they could have to pay this, but they can afford to,” says Russell Davis, founder of the group. “Right now, that kind of behavior is rewarded. All they get is a slap on the wrist.”
By making a board of directors personally responsible for the actions of corporations, Russell says, the individuals would be more careful about the actions taken by their companies.
This could have an impact on Nevada’s business climate, as the state is considered a “corporate haven” for many reasons. Statutes that prevent corporate boards of directors from being held liability for lawsuit damages is just one. Nevada has no income tax and no state corporate tax. It charges no franchise fees and has only nominal annual fees for corporations.
Smaller corporations could be especially hard hit if this initiative passes. But Russell says it is time for corporations to take personal responsibility for their actions, regardless of size. The problem with the present law, he says, is that it puts a “definite price” on the worth of a human life or an injury.
Russell has backing from several groups, including the Green Party and labor organizations.
“Corporations are set up to protect assets [rather than people],” explains Michael Bean, co-chairperson of the Washoe County Green Party.
Russell says he will be ready to start collecting signatures in September after he has submitted the initiative to the Secretary of State. He needs 62,518 signatures to put the initiative on the ballot in 2004. If it passes, it will appear on the ballot again in 2006. If approved by the voters a second time, it will be sent to the 2007 Nevada Legislative session for action.
The group expects opposition from big business, but Russell and Bean hope to earn the allegiance of workers.
“It has widespread support,” Bean says. “I don’t know if it has enough to carry.”