CORPORATE CRIME

 

Hundreds of companies routinely commit crimes that injure the public much more than street crimes in many ways: economically, socially, physically and environmentally. Yet corporate crimes are generally dealt with by civil and administrative law, with penalties such as fines but not prison. In environmental law, e.g., many industries control themselves. The law is applied differently for different people.

White collar crimes are committed by individuals for themselves in the course of their occupations for personal gain. It is committed without the knowledge. The most common white collar crime is when an employee steals from the employer or who cheats customers and pockets the difference.

 

Corporate crimes are offenses committed by corporate officials for their corporation and the offenses of the corporation themselves for corporate gain. Typically a corporate criminal bribes a government, dumps toxic industrial waste into rivers. Corporate crimes are often called quiet acts because people not only donít know whom to blame but may not even know that they have been victimized. There are data collection problems also.

Types of corporate crimes:

 

CORPORATE VIOLENCE

 

Violence against workers: 6 million workers injured on the job in the US and 10,000 people die in the workplace from injuries and 10,000 from long term effects of occupational diseases. Corporate executives are responsible for the vast majority of deaths because they have violated occupational health and safety standards or have chose not to create adequate standards. So, workers are safer on the streets than on their job. For every person murdered by a stranger on the street, two are murdered by their employees.

 

Violence against consumers: thousands of unsafe products injure or kill consumers every year. 100,000 people are permanently disabled each year and 30,000 die.

Another important factor to take into account is dumping of products in the third world.

 

Corporate pollution: The general public also experiences violence in the form of pollution and other green crimes. There are many different green crimes but they are all committed for the sake of profit and they all harm the environment.

 

ECONOMIC CORPORATE CRIMES

 

Price fixing: tacit price fixing occurs when a limited number of controlling companies in a particular market follow the lead of their competitors in price increases. Overt price fixing involves secret meetings and subtle communications between competitors in given industries. Most common forms: (i) setting prices at predetermined, similar levels, (ii) dividing the market into regions, with each firm agreeing to stay out of the otherís territory, and (iii) agreeing to take turns submitting winning competitive bids for contracts, often from government agencies.

 

False advertising: when companies use false advertisements to entice consumers to buy products or services that offer few, if any, of the publicized benefits. Two forms: (i) blatantly false and (ii) puffery, which is a legal, more subtle form of false advertising that typically involves making exaggerated claims for a product or service. It does not violate criminal or civil laws, but it is designed to mislead consumers. Air Canada sale of seats would give it a $10,000 profit and the cost of one single ad in the Toronto Star cost $10,000. Criminal penalties are rarely used. Companies are ordered to refrain from using the advertising campaign.

 

Theories of corporate crime

 

Subcultural theory: Corporate crime is encouraged and justified by workplace subcultures. Criminal subcultures develop because the members share problems that require solutions not available or permitted by the law or general societal norms. Corporate executives have frequent and intimate contact with other executives who hold definitions favorable to violating laws. Thus, corporate crime, like any other crime is learned Ėdifferential association.

 

Structured action theory: junior male executives also learn executive conceptions of masculinity from their seniorcounterparts, one of which is to sacrifice personal principles to meet corporate goals, including the accumulation of profits through illegal or unethical means.

 

Anomie theory: Environmental uncertainties cause some corporate executives to experience strain, which often results in the use of innovative, illegitimate means to achieve their companiesí goals.

 

WHITE COLLAR CRIME

 

A crime committed by the rich and powerful in the course of their occupation. They are illegal acts committed by an individual of high social status during the course of legitimate occupational activity for personal Ėor organizational- gain or by employees against their employers.

The crimes include tax evasion, credit card fraud, and bankruptcy fraud. Some white collar criminals use their positions of trust in business or government to commit these crimes, which may also include pilfering, soliciting bribes or kickbacks, and embezzlement. Some engage in land swindles, securities theft, medical or health frauds, etc.

Persons of the wealthy classes use their position in commerce and industry for personal gain without regard to the law. All these actions were too often handled by civil courts, since injured parties are more concerned recovering their losses than seeing offenders punished criminally.

Employees may inflate personal accounts, make false invoices and use company supplies for themselves.

International white collar crime

It occurs in other countries, such as government corruption.

Types of white collar crimes

        Swindles (stealing through deception): financial swindles, religious swindles (Jim Bakker),

        chiseling, i.e., cheating an organization, its consumers or both on a regular basis, such as charging for bogus auto repairs, cheating customers on home repairs, short weighting or fraudulently selling securities at inflated prices.

        Securities fraud: insider trading includes employees of financial institutions, law or banking firms, who misappropriate confidential information on pending corporate actions to purchase stock or give the information to a third party so that that party may buy shares in the company. Insider trading: a disclose or abstain rule. It requires corporate officers or directors, outside counsel and others, to abstain from trading, provided that only omissions which are made in violation of a duty to disclose are actionable.

        Individual exploitation of institutional positions: government, industry.

        Embezzlement and employee fraud

        Client fraud: insurance, credit card and medical insurance frauds. Health care: (i) ping-ponging (referring clients to other physicians in the same office), (ii) gang visits (billing for multiple services) and steering (directing patients to particular pharmacies).

        Tax evasion: to underreport or not to report taxable income willfully.

Unlike lower class street criminals, white-collar criminals are rarely prosecuted and when convicted receive relatively light sentences.

Compliance strategies aim for law conformity without the necessity of detecting, processing or penalizing individual violators. They seek cooperation and self policing within the business community and attempt to create conformity by providing economic incentives to companies to obey the law.

Another method of compliance is to set up administrative agencies to oversee business activities, with legislation spelling out penalties for violating regulatory standards.

State-corporate crime is illegal or socially injurious actions resulting from cooperation between governmental and corporate institutions. Space Shuttle Challenger was the result of a state-corporate crime involving the cooperative and criminally negligent actions of NASA and Morton Thiokol, the shuttle builder.