The extent and the nature of the corporates and whitecollar crimes:
• Criminal matters have become a routine part of business reporting. There are various form of white collars
crimes. The offence start from violation of criminal laws, security regulations, ethnical and regulatory
issues. Stock fraud is seen a lot.
• Churning: practice of making unnecessary trade to generate higher commissions.
• They have also become a routine part of sports reporting. Such as betting, using steroids and other
performance enhancing drugs. This is all about the pressure to win which leads executive and the athletes to
under go such unethical things.
• The sheer volume of these stories clearly shows that white collar and corporate crimes are a major
The nature of corporate and whitecollar crimes.
• There is warring degree of corporate crimes. Some are crimes against the public like price fixing , tax fraud
etc. while others are within organization like harassment of employee or employee stealing money from
Class crime and the corporations:
Occupation, organization, and crime.
• Whitecollar crime: “A crime committed by a person of respectability and high social status in the course
of his or her occupation” that causes social harms and for which there was a legal sanction (even if they go
unnoticed) The sanctions need not be criminal; it could be regulatory. As defined by Edwin Sutherland.
Since that time, criminologist have also included the illegal actions of executives or employees who commit
crimes against their employer or use organizational resources to gain personal benefits as a form of white
• Occupational crime: whitecollar crime committed by an individual or group of individuals exclusively
for personal gain. It refers to violations of laws [by the employee] in the course of practicing a legitimate
• Organizational crime or corporate crimes: whitecollar crimes committed with the support and
encouragement of a formal organization, and intended to advance the organization’s goals.
• BUT ▯ It may be difficult to separate the organizational and occupational components of many whitecollar
crimes. Many offenders benefit their companies as well as themselves.
• There is an element of social class since the power to commit major white collar crimes is often in the
hands of ownership and authority positions.
• Sutherland insisted that behavior of the organization should be regarded as criminal if it causes harm.
• Consider the issue of death and injuries: many are related to occupational hazards or employee negligence.
The penalties for this crime are often very light fines and such.
• For example the asbestos issues of john Maxville Company, many workers had breathing issues but they
were told of the dangers and the company did not do anything to prevent it and many died as a result.
• It goes for construction industry that also has high rates because of the failure to implement workplace
health and safety regulations. Then all they get is fines and exec never is accountable.
• Swartz argued that these deaths should be considered a form of murder what is often called a “corporate
Social class and crime:
• Small number of offenders account for large proportions of serious crimes in both stress and corporate
• Question arises: why do higher status people get involved in criminal behavior:
• Three cultural components of middleclass life may contribute:
• Competitive spirit: i.e. athletes who want to win will do any anything. Enron had a 15% cutting employee
and thus that increased a competitive pressure, which helped to foster a culture, which encourages
misconduct. In our culture our salaries determine how successful we are thus there is a pressure to make
more money. • Arrogance: people who are used to power authority can develop an arrogance that convinces them that the
rules that apply to the rest of us do not apply to them (i.e. Conrad black)
• Sense of entitlement: i.e. a doctor steals from health care system because he feels entitled to the money
since he a doctor.
Whitecollar crime and the social organization of work:
• Why would whitecollar crime be relation to class?
• Positions of ownership and authority in modern corporations carry with them a power, which frees us
from the kinds of constraints that many normally inhibit crimes.
Crime and the corporation: executive disengagement.
• Corporation (like a gun) is a tool to obtain money form the victims.
• Juristic person: the legal concept that corporations are liable to the same laws as natural persons. Treating
corporations as individuals raises practical difficulties for legal enforcement and punishment.
• One problem with this is that the corporate structure diffuses responsibility, so whitecollar criminals are
often not held accountable. Thus in this sense, corporate power remains unchecked and it is in this sense
• The problem is in part the absence of cultural belief that discourages corporate criminality. Even if they are
strong, there has been few other controlling mechanism to impose control effectively.
• Executive disengagement: the custom by which the lower level employees assume the executive are best
left uninformed of the certain decisions and the actions of employees or the assumptions that executives
cannot be legally expected to have complete control over their individual staffs specially in a multinational
company with thousands of employees. Example is a guy who worked for the baring led banks and use the
shareholder’s money to make illegal trades and gambler ( was illegal)
• Another example is YBM magnux a company that was owned by a Russian criminal. Didn’t tell any one of
its shareholders about the investigation that was happening. Was later shut down as a result.
The criminogenic market structure:
• Some industries have a criminogenic (Crime producing) market structure.
o This refers to the pressure on people in the organization to produce a level of profit that cannot be
achieved by acting legally and ethically. Also called the “forcing model” cell more for fewer prices.
o Industries with a high rate of violation include oil, auto, and pharmaceutical specially where franchise is
involved and forcing model is applied.
The large scale of corporations:
• Access to corporate resources makes it possible to commit very large scale crimes. These white collar
offenders a categorized into three groups that are individual offenders, occupational offenders, and those
who committed offences in which both organization and occupation were involved (organizational
• This violator, commit crimes that involve larger number of victims and broader spread.
• Thus the corporate form itself can be used effectively to commit bigger and better crime than can be
achieved by a individual working alone.
• Access to these corporate resources is a unique advantage of class positions involving ownership and
authority in business organization (i.e. someone is more likely to make false bank statement for a large
company then a small individual). Thus the world of Modern Corporation, the social organization of work
itself is criminogenic.
Corporate accounting scandals:
• Companies go bankrupt, stock market collapses again and again. Why is it that this keeps happening?
• the way in which the corporates executives are paid. Stock option (executive purchase a stock at an
guaranteed prize. So in future (long temr) if the growth of company increase ( suppose to be based on
your hard work)▯prize increase ▯ you keep the difference when you sell these stock
• The problem is when execs look for short term methods and screw up the whole company to increase
the value of the company▯prize of stock go up▯they sell the stocks and make a lot of money. • Also the large bonuses that exec receive when they supposedly show that the company is now doing
very well ▯ lead to ENRON and World Com bankruptcy.
The collapse of Enron:
• Enron 7 largest U.S. Company – primarily involved in trading gas and electricity – investors lost $63
billion under the CEO Kenneth Lay.
• Used a business model that involved trading future contracts that are bets on the future prizes of
commodities such as gas etc. Initially it was good but they lost a lot ▯ BUT Used illegal accounting
methods to make it appear profits increasing ( i.e. selling assets to itself and showing money as profit.
Transferring debts to outside partnership.
• Culture of greed within Enron. Took large payouts as company was failing
• It also used the help of other companies like the Arthur Anderson accounting firm, which ignored
violations of ENRON because it wanted Enron consulting contracts.
• Several Canadian banks among others financed Enron and were fined for this.
• Ooccupational and organizational crimes both seen.
• Largest U.S. Long distance phone company investors lost $175 billion
• Admitted earning of 3.8 billion more then it actually did in 1 year.
• Inflated profits by delaying the writing off of expenses
• Arthur Anderson again the accountants – Anderson went out of business after the scandals
• WorldCom founder Bennie Ebbers now serving 25yr jail term