Count me among those rooting for the two Google shareholders who separately are suing the search giant's board of directors and several executives, including chief executive Larry Page and chairman (and former CEO) Eric Schmidt, after the company reached a $500 million settlement with the U.S. Department of Justice (DoJ) to avoid charges related to facilitating the illegal importation of prescription drugs.
Google reached the deal with the DoJ in late August, but even back in May the company revised down earnings to reflect the anticipated settlement.
Why would Google prepare months ago to pay such a large settlement when it has an army of attorneys and lobbyists to defend itself and possibly avoid any charges or fines? How about because it was caught red-handed allowing unregulated Canadian online pharmacies to advertise prescription drugs to potential customers in the U.S.
Google allowed -- and profited from -- this practice for six years, stopping in 2009 only after federal and state investigations were under way.
And after the DoJ announced the settlement, all Google could offer was a bland statement of ... well, it's hardly an apology, and certainly not an admission of guilt: "It's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place."
So obvious now! But not so much when Google was raking in millions of dollars from the ads and thinking it was getting away with breaking the law. Money can cloud your judgment that way, making it hard to remember when "Don't be evil" was a cornerstone of your corporate philosophy.
So now that the DoJ has fulfilled its designated role of pretending to mete out justice to a corporation, it's left to investors to pursue the case in court. The two lawsuits were filed on behalf of the company and other shareholders on Aug. 29 in a federal court in San Jose.
From IDG News Service:
Both lawsuits charged Google's directors, including Page, Schmidt and co-founder Sergey Brin, with violating their duties as corporate officers and for wasting company money by allowing the pharmacies to purchase online advertisements via Google's AdWords program. ...
Only in 2009, when the DOJ began investigating Google and after warnings by a series of experts, did the company put practices in place to bar advertising of Canadian online pharmacies, the lawsuits claimed. The directors and executives could have acted much sooner and perhaps prevented the half-billion-dollar forfeiture."Google's quick response after learning about the [DOJ] investigation shows that the Individual Defendants could have, at any time of the six-year-long scheme, stopped the Company from assisting the online pharmacies," one of the two lawsuits said.
One would think. But why ruin a good thing by fretting about lawbreaking, especially when the worst-case scenario is a slap-on-the-wrist settlement and no chance of criminal charges for the executives allowing the illegal operation to continue?
According to the IDG article, the lawsuits demand that "the directors and executives make good the $500 million, and be required to pay damages to be decided by a jury to 'punish defendants and to make an example of defendants.'"
I'm all for making an example of corporate executives who condone illegal behavior for monetary gain. It'd be nice if the Department of Justice felt the same way. Instead the DoJ just "settles" with corporations accused of breaking the law. Which is settling for far less than justice, if you ask me.