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Sociology Notes Week 19.docx

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Department
Sociology
Course
SOCY 122
Professor
Rob Beamish
Semester
Winter

Description
Sociology Notes Week 19 Corporate Crime o Coca-Cola – accused of hiring right-wing death squads to terrorize workers in Columbian bottling plant  Coca-Cola maintained that Colombian plants are run by business partners – absolved of alleged illegal activity  Unions in Colombia (Sinaltrainal) stated that they were no armed groups linked to their bottling plants  Complaints against Coca-Cola emerged – allegations that they were responsible for environmental problems / murder o Jean-Chretien testified looking into the use of funds his government had directed to advertising agencies in Quebec  Sponsorship program was designed to generate commissions for private companies while hiding sources of funding  Misuse of public funds o Martha Stewart / Chairman and Chief of Martha Stewart Living charged with securities fraud, conspiracy to obstruct justice, false statements and perjury  Stewart sold stocks in Im-Clone Systems Inc. before the value of the stock plunged – received a fine and prison sentence o Skilling – CEO of Enron was charged with insider trading, security fraud, wire fraud, false statements and conspiracy  Released on 5 million bail and had to surrender his passport with 4 months in prison  Required to pay 45 million to victims of Enron accounting o Conrad Black began corporate empire selling newspapers – launched Hollinger group  Shareholders questioned Black over non-compete feeds paid to executives he dismissed the accusations on two grounds:  Standard business practice that purchaser ensures the seller does not start up a competing company  Argued CEO’s were paid not shareholders  Tweedy Brown demanded a probe into the Hollinger files – Black had to step down  Black and other senior executives had received 32.15 million in unauthorized payments  Black was accused of racketeering – corporation could seek triple the damages  Class action suit was filed against Black as well as a civil fraud lawsuit for diverting millions from Hollinger International  Black was charged with 8 counts of mail fraud and wire fraud  Also charged with racketeering, money laundering and obstruction of justice  Charged with diverting 51.8 million dollars from the sale of papers to Can-West Global and 32 from others o Racketeer Influenced and Corrupt Organization Act – combat organized crime – has become main weapons in corporate crime prosecutions  Allow prosecutors to seek lengthy prison terms and heavy financial restitution  Total level of fraud in Black’s case was over 83 million dollars – restitution could have been up to 92 million o US Securities and Exchange Commission – former Chair Richard Breeden is a crucial figure – corporate regulator for hire  Produced 513 page report that cost Hollinger International almost 200 million dollars in fees  Stock fell to a value of $4 per share o All these figures have something in common – central in high level white- collar crime and are part of a new trend in the treatment of corporate crime  Very difficult to gain convictions in major instances of crime CEO’s enjoyed immunity from prosecution  Changed in 2002 when Sarbanes-Oxley Act was adopted o US prosecutors and regulators began to take corporate fraud very seriously o Corporate crime cases do not appear in court- out of court settlements are the norm o Few perpetrators of corporate crime are ever prosecuted Corporations and Crime o People seldom link crime to corporate – people do not think about corporate entities often  Corporations are seen as part of the structure in the economy and not as a social problem – low public perception o Studies in corporate crime grew out of studies concerning the invisible white collar crimes – committed by people of respectability and high social status o Corporate crime involves any acts of omission or commission by an individual or group of individuals in a legitimate formal organization  Must involve physical or economic impact on employees, consumers or the general public o Two areas of corporate crime:  Financial crimes: Hurt financial markets, shareholders or other corporate competitors / consumers  Insider trading  Stock market fraud  Illegal mergers and restraints of trade that contravene existing anti-
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