Corporate crime

In criminology, corporate crime refers to crimes either committed by a corporation, i.e. a business entity having a separate legal personality from the natural persons that manage its activities, or by individuals that may be identified with a corporation or other business entity (see vicarious liability and corporate liability). This type of crime therefore overlaps with:

white-collar crime because the majority of individuals who may act as or represent the interests of the corporation will be employees or professionals of a higher social class;
organized crime because criminals can set up corporations either for the purposes of crime or as vehicles for laundering the proceeds of crime. Organized crime has become a branch of big business and is simply the illegal sector of capital. It has been estimated that, by the middle of the 1990s, the "gross criminal product" of organised crime made it the twentieth richest organisation in the world and richer than 150 sovereign states (Castells 1998: 169). The world’s gross criminal product has been estimated at 20 percent of world trade. (de Brie 2000); and
state-corporate crime because, in many contexts, the opportunity to commit crime emerges from the relationship between the corporation and the state.

Definitional issues

Legal person

The Fourteenth Amendment to the U.S. Constitution stipulates that,

"No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."

In Santa Clara County v. Southern Pacific Railroad, the United States Supreme Court declared that a corporation was a "person" as interpreted by the Fourteenth Amendment. In a preface to the Court's argument, Chief Justice Morrison R. Waite stated the unanimous opinion that the Fourteenth Amendment applied equally to persons and "applied to these corporations." In English law, this was matched the decision in Salomon v Salomon & Co ^* AC 22.

Function of law

History shows that laws have sometimes been used as instruments of repression, exclusion, and marginalisation; and that certain criminal justice policies may sometimes be intended to serve the interests of particular groups or to undermine other groups. Thus, the definition of crime and the nature of criminal justice policies in society usually reflect the structures of power in that society. Also, while mainstream criminologists tend to focus mostly on street crimes and crimes of marginalised groups, the less obvious crimes of states, corporate organisations, and powerful groups are often ignored or under-emphasised. Lea (2001) argues that whereas crime used to be the exceptional event, disrupting the otherwise normal socio-economic processes, as crime becomes more frequent it lost its status as an exceptional event and became "a standard, background feature of our lives—a taken for granted element of late modernity." (Garland 1996: 446)

Policy to enforce the law against corporations

Corporate crime has become politically sensitive in some countries. For example, in the United Kingdom following a number of fatal disasters on the rail network and at sea, the term is used to refer to corporate manslaughter and to involve a more general discussion about the technological hazards posed by business enterprises (see Wells: 2001) and consider incidents such as the 1985 Union Carbide accident in Bhopal, India (Pearce & Tombs: 1993) and the behaviour of the pharmaceutical industry (Braithwaite: 1984). The Law Reform Commission of New South Wales puts it thus:

Corporate crime poses a significant threat to the welfare of the community. Given the pervasive presence of corporations in a wide range of activities in our society, and the impact of their actions on a much wider group of people than are affected by individual action, the potential for both economic and physical harm caused by a corporation is great.

Similarly, Mokhiber and Weismann (1999) assert:

At one level, corporations develop new technologies and economies of scale. These may serve the economic interests of mass consumers by introducing new products and more efficient methods of mass production. On another level, given the absence of political control today, corporations serve to destroy the foundations of the civic community and the lives of people who reside in them.

Discussion

What behaviour to criminalise

Behaviour can be regulated by the civil law (including administrative law) or the criminal law. In deciding to criminalise particular behaviour, the legislature is making the political judgment that this behaviour is sufficiently culpable to deserve the stigma of being labelled as a crime. In law, corporations can commit the same offences as natural persons. Simpson (2002) avers that this process should be straightforward because a state should simply engage in victimology to identify which behaviour causes the most loss and damage to its citizens, and then represent the majority view that justice requires the intervention of the criminal law. But states depend on the business sector to deliver a stable economy, so the politics of regulating the individuals and corporations that supply that stability become more complex. For the views of Marxist criminology, see Snider (1993) and Snider & Pearce (1995), for Left realism, see Pearce & Tombs (1992) and Schulte-Bockholt (2001), and for Right Realism, see Reed & Yeager (1996). More specifically, the historical tradition of sovereign state control of prisons is ending through the process of privatisation. Corporate profitability in these areas therefore depends on building more prison facilities, managing their operations, and selling inmate labour. In turn, this requires a steady stream of prisoners able to work. (Kicenski: 2002)

The majority of crimes are committed because the offender has the "right" opportunity, i.e. where the offender simply sees the chance and thinks that he or she will be able to commit the crime and not be detected. For the most part, greed, rather than conceit, is the motive, and the rationalisation for choosing to break the law usually arises out of a form of contempt for the victim, namely that he, she or it will be powerless to prevent it, and has it coming for some reason. For these purposes, the corporation is the vehicle for the crime. This may be a short-term crime, i.e. the corporation is set up as a shell to open credit trading accounts with manufacturers and wholesalers, trades for a short period of time and then disappears with the revenue and without paying for the inventory. Alternatively and most commonly, the primary purpose of the corporation is as a legitimate business, but criminal activity is secretly intermixed with legal activity to escape detection. To achieve a suitable level of secrecy, senior managers will usually be involved. The explanations and exculpations may therefore centre around rogue individuals who acted outside the organisational structures, or there may be a serious examination of the occupational and organisational structures that facilitated the crime. and around the socio-economic system, gender, racism and age.

While bribery and corruption are problems in the developed world, the corruption of public officials is one of the main causes of crime in developing societies because it is a precondition for much of the state, corporate, and organised crime which occurs. Peèar (1996) discussing the implications for policing in Eastern Europe as it seeks to adapt its laws to match a capitalist model, pointing to the difficulty of distinguishing between lack of morality and criminality in economic crimes that tend to emerge from the structural relationships in modern commerce.

What penalties to impose

In part, this will be a function of the public perception of the degree of culpability involved. Weissman and Mokhiber (1999) catalogue the silence and indifference of the major media in the face of the widespread corporate corruption. Only in part is this justifiable. The news media find it difficult to respond to corporate crime both because reporting may compromise the trial by tainting the jury's perceptions, or because of the danger of defamation proceedings. Further, major corporate crime is often complicated and more difficult to explain to the lay public, as against street crime which may provide visuals of victims injured or of property damaged in spectacular fashion. But, more significantly, the news media are owned by large corporations which may also own prisons. Thus, the political decisions on the resources to allocate to investigate and prosecute will tend to match the electorate's understanding of the dangers posed by "crime". In sentencing, the fact that the convicted individuals may have had an impeccable character as presidents, CEOs, chairmen, directors and managers is likely to be a mitigating factor.

Examples of criminal behaviour in most jurisdictions include: insider trading, antitrust violations, fraud (usually involving the consumers), damage to the environment, exploitation of labour in violation of labour and health and safety laws, and the failure to maintain a fiduciary responsibility towards shareholders.

External links

References

Braithwaite, John. (1984). Corporate Crime in the Pharmaceutical Industry. London: Routledge & Kegan Paul Books. ISBN 0710200498
Castells, Manuel. (1996). The Rise of the Network Society (The Information Age: Economy Society and Culture. volume I.) Oxford: Blackwell. ISBN 0631221409
Clinard, Marshall B. & Yeager, Peter Cleary. (2005). Corporate Crime. Somerset, NJ: Transaction Publishers. ISBN 1412804930
de Brie, Christian (2000) ‘Thick as thieves’ Le Monde Diplomatique (April)^*
Ermann, M. David & Lundman, Richard J. (eds.) (2002). Corporate and Governmental Deviance: Problems of Organizational Behavior in Contemporary Society. (6th edition). Oxford: Oxford University Press. ISBN 0195135296
Friedrichs, David O. (2002). "Occupational crime, occupational deviance, and workplace crime: Sorting out the difference". Criminal Justice, 2, pp243-256.
Garland, David (1996), "The Limits of the Sovereign State: Strategies of Crime Control in Contemporary Society", British Journal of Criminology Vol 36 pp445-471.
Gobert, J & Punch, M. (2003). Rethinking Corporate Crime, London: Butterworths. ISBN 0406950067
Kicenski, Karyl K. (2002). The Corporate Prison: The Production of Crime & the Sale of Discipline. ^*
Law Reform Commission for New South Wales. Issues Paper 20 (2001) - Sentencing: Corporate Offenders. ^*
Lea, John. (2001). ''Crime as Governance: Reorienting Criminology. ^*
Mokhiber, Russell & Weismann, Robert. (1999). Corporate Predators : The Hunt for Mega-Profits and the Attack on Democracy. Common Courage Press. ISBN 1567511589
Pearce, Frank & Tombs, Steven. (1992). "Realism and Corporate Crime", in Issues in Realist Criminology. (R. Matthews & J. Young eds.). London: Sage.
Pearce, Frank & Tombs, Steven. (1993). "US Capital versus the Third World: Union Carbide and Bhopal" in Global Crime Connections: Dynamics and Control. (Frank Pearce & Michael Woodiwiss eds.).
Peèar, Janez (1996). "Corporate Wrongdoing Policing" College of Police and Security Studies, Slovenia. ^*
Reed, Gary E. & Yeager, Peter Cleary. (1996). "Organizational offending and neoclassical criminology: Challenging the reach of a general theory of crime". Criminology, 34, pp357-382.
Schulte-Bockholt, A. (2001). "A Neo-Marxist Explanation of Organized Crime". Critical Criminology, 10
Simpson, Sally S. (2002). Corporate Crime, Law, and Social Control. Cambridge: Cambridge University Press.
Snider, Laureen. (1993). Bad Business: Corporate Crime in Canada, Toronto: Nelson.
Snider, Laureen & Pearce, Frank (eds.). (1995). Corporate Crime: Contemporary Debates, Toronto: University of Toronto Press.
Vaughan, Diane. (1998). "Rational choice, situated action, and the social control of organizations". Law & Society Review, 32, pp23-61.
Wells, Celia. (2001). Corporations and Criminal Responsibility (Second Edition). Oxford: Oxford University Press. ISBN 0198267932

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