CSX Checkered Past
In 2002 the executives of CSX, a freight railway company whose origins lay in the early 1800s, received unexpected news: The company was being sued in a federal district court in New York as part of a class action lawsuit filed on behalf of all living descendants of enslaved people in the United States.
The lawsuit, which also included FleetBoston Financial (now part of Bank of America) and Aetna, sought unspecified damages, compensation for unpaid forced labor, and a portion of the profits resulting from that labor. The plaintiffs cited CSX’s use of enslaved people to construct its railways, FleetBoston’s connection to an earlier bank founded by a man who owned ships that transported enslaved people, and an Aetna predecessor’s practice of “[insuring] slave owners against the loss of their human chattel.”
The accusations were all accurate, and they raised an important legal and moral question: Should a long-established company be required to atone for the atrocities of a bygone era? John W. Snow, then the chairman and CEO of CSX (who later served as secretary of the treasury under George W. Bush), thought-not. The company issued a statement arguing that although slavery was tragic, the case was “wholly without merit.” A spokesperson, Kathleen A. Burns, chastised the plaintiffs for trying to hold today’s employees and shareholders accountable for ills more than a century old. The court dismissed the case without addressing the merits of the claim, arguing that the plaintiffs could not prove their direct personal connection to those affected.
Legally, the judge’s decision was unsurprising. U.S. courts tend to rule against plaintiffs seeking reparations from corporations for historical crimes, and the International Criminal Court does not try cases involving corporations. But the legal and reputational risks to companies from their long-past activities are growing, as large portions of society push for what they see as an overdue reckoning. Schools are being renamed, mascots are being discarded, and statues of historical figures that only a few years ago barely drew a glance are being toppled. Businesses face scrutiny over the origins of wealth and how they may have exploited people to enable their current profitability. Social media makes it easy for activists to publicize criticism, organize boycotts, and take other actions.
Ultimately, law follows public opinion, and legislatures are unlikely to keep laws on the books that ignore this moral turn. In a comprehensive study of corporate accountability claims for mass atrocities around the world, Oxford University’s Leigh Payne and colleagues found that although legal impunity prevails, calls for atonement from growing portions of civil society are likely to change the landscape in the coming years.
French Railway’s Checkered Past
In the late 1980s the French National Railways (SNCF) was a darling of French industry. France’s first high-speed rail line had opened in 1981 and, along with the Japanese rail system after which it was modeled, was the envy of the world. Among the French public, the SNCF had long enjoyed its role as a bright spot in the country’s mid-20th-century history. During World War II a small number of brave railway workers had sabotaged the country’s trains on D-Day as part of the Resistance, earning the SNCF France’s highest medal of honor in 1951. But many people in France and elsewhere knew another part of the SNCF story: During the war, French drivers and railway operators had transported Jews in packed cattle cars with barely any light, food, or water to the German border, where they were transferred onward, often to Auschwitz.
In the early 1990s the French Holocaust survivor Kurt Schaechter secretly photocopied thousands of documents from SNCF archives proving that the train company had played a material role in the deportation of 76,000 Jews from France to death camps. Though evidence of the SNCF’s participation in this crime against humanity was irrefutable, its executives spent years defending the company. Soon after he was appointed its chairman, in 2008, Guillaume Pepy echoed many of his predecessors when he told a radio interviewer that the SNCF’s job during the war was “simply to make the trains run”—the implication being that the company shouldn’t be held accountable for what they carried. Executives also highlighted material losses during the German occupation—painting the company as a victim.
Holocaust survivors turned to the courts and the media. Schaechter had filed the first lawsuit in 2003, asking a symbolic one euro in damages. But others followed with claims for larger amounts. The legal battle eventually spilled over to the United States, where survivor groups filed reparations lawsuits and lobbied for laws that would create barriers to the SNCF’s operations there.
For the railways, resisting accountability proved almost as expensive as accepting it. A multinational legal battle lasted almost two decades, running up enormous fees. From 2012 to 2014, at the height of the conflict, the SNCF spent roughly $1 million a year on lobbying in the United States. That dropped to $90,000 in 2018, after the conflict subsided. Throughout, executives faced bruising encounters with the press, angry plaintiffs, and their supporters. At one point they felt that the reputational damage in the United States was so bad that the SNCF should pull its business from that country entirely. Eventually the company took several steps to atone for wartime crimes and mend relations with much of the French Jewish community and some of its diaspora. But in 2015 an exhausted Alain Leray, who served as CEO of SNCF America during part of the conflict, told me that in retrospect, it probably would have been easier to settle and pay the victims when the lawsuits began.
It is a double tragedy when accusers and accused cause one another further damage following a historical atrocity. Some of the best ways that executives can offer a less-damaging and more restorative experience for everyone involved—the survivors, their descendants and the executives, employees, customers, and shareholders of today is by accepting responsibility and proactively trying to make amends.
Accept Responsibility
To appropriately respond to historical crimes, corporate leaders must accept that doing so is their fiduciary and moral duty. When confronted with what seem like antiquated claims, many become defensive: After all, they had no personal involvement in the crimes committed, and many companies profited from slavery, colonialism, and genocide. Why should only the few that remain from that bygone era carry the burden of atoning for those sins?
Courts have been sympathetic to that view. But lawsuits can be damaging even if the judge’s ruling is favorable. When she filed a class action lawsuit against the SNCF on behalf of 600 litigants in 2006, the New York lawyer Harriet Tamen knew that the company was protected by the Foreign Sovereign Immunities Act. But she used the doomed lawsuit to attract media attention. It worked: The scrutiny helped activists persuade U.S. legislators to draft bills creating barriers to the SNCF’s bids for rail projects.
Evasion almost always backfires for corporations. Refusing to address unatoned-for crimes looks like complicity. Denial of responsibility in the face of legitimate accusations may give executives the appearance of supporting the actions of their predecessors. Evasion also delegitimizes the emotional wounds of victims’ descendants, who in response often mobilize and rally public support against both the original crime and the contemporary dismissal. Finally, it can take a toll on employees, who are increasingly demanding that their employers live up to pledges of diversity and inclusion by acknowledging their role in historical oppression. In 2020, for instance, Lloyd’s of London, the 335-year-old insurance company, responded to long-standing pressure from Black employees to better understand and make amends for the company’s sale of insurance policies on enslaved people and the ships that transported them.
Investigate Your Past
Ideally, long-standing companies will engage in internal research to identify shameful historical episodes themselves—before survivors or descendants call for justice and set senior leaders on the defensive. SNCF executives undertook no such research and thus were unprepared when Schaechter’s documents became public. Once it was clear that the scandal wasn’t going away, the executives did what they should have done before Schaechter’s revelations: They hired a historian to sort through the company’s wartime archives and make the findings public. They also opened the archives to anyone interested in conducting research. They formed a commission for historians, archivists, company representatives, and some survivors to discuss a more accurate account of the SNCF’s past. The pivot to this understanding of its wartime history was at times poorly handled. For instance, the company invited only five survivors to the 50-person launch of the report. But it was a start.
Respond Meaningfully
In 2011, nearly two decades after the first Holocaust-related lawsuit against the SNCF, Guillaume Pepy delivered yet another apology on its behalf to an audience of Holocaust survivors: “I want to express the SNCF’s deep sorrow and regret…. In its name, I am humbled before the victims, the survivors, and the children of the deportees, and before the suffering, which lives on.” It was a moving statement, but not everyone was impressed. The plaintiffs’ attorney Harriet Tamen said, “Don’t bow down, write a check.” Lou Helwaser, whose mother had been deported, told me, “It sounded more like making excuses than taking real responsibility.”
Words without action are meaningless. Most executives are familiar with this basic tenet of service recovery, and it holds even for a major corporate atonement. Many are unsure how to respond to historical harm; they know it can’t be handled using the playbook of a routine service failure. So then how?
The scale of damage caused by historical crimes can seem overwhelming. Research has shown that the legacies of the Holocaust, slavery, genocide, and colonialism affect the descendants in myriad ways through transgenerational trauma. Some estimates for appropriate slavery reparations in the United States total about $14 trillion. Should companies pay some reparations? If so, how much?
The answer is that at some point corporations facing up to historical crimes will need to write a check. How much and whom to pay should be decided not by the company alone, behind closed doors, but with the input of affected communities—ideally before litigation. The SNCF waited too long, but it was still able to turn opponents into allies through ongoing engagement. Serge Klarsfeld, a leading French activist, chastised the SNCF early on for its participation in the Holocaust, but eventually he guided many of its atonement-related activities. He urged the company’s leadership to install plaques at important sites and encouraged the SNCF to contribute to other Holocaust-related programs. Today it cosponsors many commemoration activities in France, including the annual Reading of the Names. Klarsfeld also directed the company to contribute to his orphans’ fund, which provided material support and recognition to some survivors. The French Jewish leadership largely accepted the SNCF’s acts of contrition. Klarsfeld even began serving as a lawyer for the company when it faced lawsuits in the United States.
Historical Transparency
Historical transparency should extend even to materials traditionally used for marketing and promotion, such as About Us pages on company websites. Consider the differing approaches to slavery-related transgressions taken by two Alexander Brown & Sons legacy companies. Alexander Brown, a linen auctioneer from Ireland, emigrated to the United States in 1800 and soon transitioned to cotton. He and his sons expanded the company into banking. Alex. Brown spun out of Alexander Brown & Sons, merged with Bankers Trust in 1997, and was acquired by Deutsche Bank in 1999 and then Raymond James in 2016. Today its home page displays a timeline beginning in 1800, when the company became the world’s first investment bank. The timeline glosses over the fact that this form of banking was created to provide funds supporting the cotton industry and its enslaved labor. The banking firm Brown Brothers Harriman (BBH), another legacy company, offers a more robust account. Its timeline begins by acknowledging that “there are also aspects of our history that we are not proud of and reflect on with deep regret, among them Brown Brothers & Co.’s active participation in the global cotton trade of the early 19th century that relied on the abhorrent practice of slavery.”
Apologize and Make Public Statement
Apologies land best with affected communities when they are issued without prompting. Corporate sincerity will always be questioned, but proactive statements fare better.
JAB Holding Example:
Consider JAB Holding, which has controlling stakes in household names such as Krispy Kreme and Calvin Klein. The company is owned by the Reimanns, Germany’s second-richest family. In 2016 the economic historian Paul Erker started work to help the Reimanns better understand the family’s activities during the Nazi years. His discoveries were horrendous. The founders of JAB Holding had enthusiastically supported Hitler, and their company used forced labor during the war.
Shortly after learning of the findings, in 2019, Peter Harf, a managing partner of JAB Holding, told a German magazine, “We were speechless. We were ashamed…. These crimes are disgusting.” Harf then promised, “As soon as [the historian’s] book is finished, we will publish it. Unadorned. The whole truth must be on the table.” Without being prompted by lawsuits or pressured by advocacy groups, the family pledged 5 million euros in support of Holocaust survivors and 5 million euros to former forced laborers.
Greene King
In 2020 the British pub chain and brewer Greene King emerged as another model for proactively acknowledging historical wrongs when it addressed the company founder Benjamin Greene’s enthusiastic support for the practice of slavery and his ownership of 231 human beings during the 1820s and 1830s. Greene King’s CEO, Nick Mackenzie, called this behavior “inexcusable” and told media outlets, “We don’t have all the answers, so that is why we are taking time to listen and learn from all the voices, including our team members and charity partners as we strengthen our diversity and inclusion work.”
Georgetown University
For crimes without living survivors, companies can locate and support descendant communities. Georgetown University modeled one way to do that. Facing insolvency in 1838, Georgetown had sold 272 enslaved people to pay off its debts. In 2016 the university considered what support it could offer their descendants, the majority of whom were found to be living in a single town in Louisiana. It funded research to locate them and then offered them preferential admission and scholarships to study at the university. It also launched the Georgetown Slavery Archive, which provides a wealth of material on the institution’s slavery-related activities and information about those who were enslaved.
Georgetown students, through sit-ins and other forms of mobilization, advocated for even more action. In 2019 they voted to add $27 each to their student fees to support the Louisiana community. The institution now works with the community to identify useful investments. The students’ active participation demonstrates to companies that involving employees and shareholders builds internal support for contributions as it helps shape an organization’s ethos. Of course, not everyone will support engagement. More than a few vocal French Railways union members vehemently opposed any statement or activity that tarnished the SNCF’s image as a wartime hero. Executives must, as always, accept that their decisions will not please everyone.
For more information, checkout: Sarah Federman (2022) “How Companies Can Address Their Historical Transgressions Lessons from the slave trade and the Holocaust” Harvard Business Review.