An In-Depth Exploration of Corporate Crimes
Abstract
This
exhaustive article also investigates and makes analysis on the specifications,
reach and the effects of white-collar and corporate crimes in the world. It
identifies these offences, discusses them in terms of categories that include
fraud, bribery, and environmental, and explorative theoretical approaches to
the offenders’ reasoning. Examples of cases from various regions are provided
to illustrate a range of mechanical styles.
The
article also discusses various issues arising from corporate wrongdoing and
shows how they affect the economy, erode people’s confidence, and even lead to
destruction of the environment. In this paper, a focus is placed on analyzing
legal and regulatory measures designed by both domestic legislation and
international actors to tackle these crimes. Preventive and realistic methods
are adopted here, like improving the standards of the corporate governance
structures, encouraging compliance and ethical behaviors, consciousness
raising, and cooperation skills enhancement. The article underscores the moral
imperative of addressing corporate criminality to uphold justice, integrity,
and safeguard societal well-being worldwide.
1. Introduction
White-collar
or corporate crimes represent significant areas of concern within the fields of
criminology and criminal justice, impacting both the economy and society on a
global scale. These crimes, typically associated with individuals in positions
of power and organizations, can have far-reaching and devastating consequences.
The concept of white-collar crime was first articulated by Edwin H. Sutherland
in 1939, who emphasized the need to study the criminal behaviors of those in
high-status occupations. Over the decades, the understanding and scope of
white-collar and corporate crimes have expanded, reflecting their complexity
and the diverse ways in which they can manifest.
2. Definitions and Scope
White-collar
crime, in general, is a type of crime that is carried out without violence and
for the purpose of making money by individuals and companies when they are
engaged in their occupations. Trying to give a definition of white-collar
crimes, the FBI offers the following definition: “White-collar crime is defined
as those Illegal acts that are characterized by deceit, concealment, and trust
and involves non-violent techniques” (USDOJ, 1989). These crimes include fraud,
embezzlement, bribery, money laundering, insider trading, and various forms of
deception and misrepresentation (Barnett, 2000).
White
collar crime is a category of criminal activities that are non-violent but are
committed fraudulently for financial gains, and corporate crime is a form of
white-collar crime, which is defined as criminal actions by organizations or
their agents. It can be financial, accounting fraud, securities violations,
environmental, human rights, and labor laws violations or any other forms of
corporate crimes. Corporate crimes effects are far and wide affecting several
facets of society in terms of social, economic, political, and environmental
outcomes (Snider, 2003).
3. Types of White-Collar and Corporate Crimes
1.
Fraud: Accommodating a wide range of frauds aimed at
manipulating people or other organizations for monetary or any other profit. It
also covers securities fraud, mortgage fraud, frauds in healthcare industry,
Insurance Fraud and Consumer fraud.
2.
Embezzlement: Often it involves the failure to report,
or reporting falsely, the condition of the business or financial situation to
deceive the owners or others who are entitled to the information of the
company, financial position, or funds by employees, executives or others who
are managing the business or the company’s funds.
3.
Bribery and Corruption: A practice that involves providing
or offering something with the intention of getting some favor from a person in
authority, this often involves offering gifts to political administrative,
judicial, or other enforcement officers or bodies.
4.
Insider Trading: It is the purchase or sale of shares in a
company or any of its securities by individuals who possess some inside or
otherwise private information that may not be available to the general public.
5.
Money Laundering: The act of laundering the proceeds of
crime and corruption and converting the same into assets with a seemingly legal
base and ferreting other related transactions and techniques that obscure the
actual source of the funds.
6.
Environmental Crimes: Offenses against the environment that
cause pollution or otherwise affect the environment in a negative manner such
as discharging hazardous waste materials, killing or destroying wildlife, and
non-compliance with the set environmental laws.
7.
Antitrust Violations: Illegitimate business conduct that
restricts free competition on the market, for example, through the regulation
of prices, collusion, and monopolistic behavior that leads to negative impacts
on consumers and the economy.
8.
Intellectual Property Theft: The employment of
copyrighted or patented products, trade secrets, or any other properties which
belong to other organizations, companies or individuals through a breach on the
mist stepped security either through rivalry or by means of hackers.
9.
Tax Evasion: A willful attempt to reduce, minimize or
avoid paying taxes owed to the government by, for instance, declaring lower
income, taking false deductions or keeping other assets and incomes untold to
the taxman.
10.
Labor Law Violations: Violations of labor rights and
failures to protect labor standards: including not providing employees with
safe working environments and the risks associated with labor, a lack of
remunerations for workers or exploitation of human labor, and actively preventing
employees from exercising their legal rights and obtaining the benefits which
the law promises them.
4. Theoretical Perspectives
Several
theories provide frameworks for understanding why white-collar and corporate
crimes occur and offer insights into their underlying motivations and
contributing factors: Several theories provide frameworks for understanding why
white-collar and corporate crimes occur and offer insights into their
underlying motivations and contributing factors:
1.
Subcultural Theory: “The intuition is to suggest that some subcultures
within the workplace may foster and rationalize criminality.” This theory
postulates that in some organizations, it is all right to engage in unethical
or even unlawful actions in the interest of serving corporate objectives; such
organizations, therefore, cultivate a perversive subculture that supports such
behaviors (Clinard & Yeager, 1980).
2.
Structured Action Theory: With reference to this, junior
executives are trained to focus on objective accomplishment at the expense of
ethics; developing unlawful approaches of attaining these ends. This theory
also address how organizational culture largely influences organizational
behavior and the possibility of inept ‘slippery slope’ in which minor
compromising can influence more serious compromising (Messerschmidt, 1993).
3.
Anomie Theory: Consequently, they suggest that
expectations from society that play the game and get to a superior level
without providing chances for a person to procure a legitimate means enables
one to engage in criminal activities. This is especially the case especially in
very competitive sectors where organizations experience a lot of pressure in
their operations and the individuals working in these organizations may feel
stressed and may even be said to be disengaged from the societies norms as
pointed by Merton in 1938.
4.
Rational Choice Theory: Suggests that people commit a crime
because they calculate the risks or the costs against the advantages that are
likely to be accrued and conclude that the advantages are more than the
original price. This theory posits that managers and businessmen who engage in
fraud might consider their actions as acceptable risks or chances to gain for
the firms or for them.
5.
Differential Association Theory: There is an implication
that criminal conduct is acquired through interactions with others who involve
themselves in criminal activities or who support such acts. In consideration of
white-collar and corporate crimes, this theory defined the process where one
may be influenced to emulate the improper behavior he or she may come across
from subordinates, colleagues, superiors or even others in the same field.
5. Global Perspectives
White-collar
and corporate crimes and their consequences and the measures taken to prevent
or control these crimes also differ from country to country or may be at the
regional level because of varying legal frameworks, culture, and priority given
to enforcement of crime control legislation. Studying examples with legal
provisions about these crimes and their implications allows considering these
offences as international ones and understanding that regulating them is
intricate.
United States
White-collar crimes have emerged as a key concern in the
United States since both federal and state laws recognize the existence of such
crimes. The Sarbanes Oxley Act of 2002 was passed in the USA as a legislative
measure following cases of corporate fraud like Enron and WorldCom to enhance
good corporate practices and financial reporting. SEC has a primary mandate of
overseeing the laws governing securities with a view of preventing investors
from fraudulent persons or firms (Coffee, 2003).
The Fight Against White-collar and Corporate Crime: The U. S.
Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) have
committed resources and task forces that specialize in white-collar and
corporate crimes, as well as other task forces and specialized units such as
the National Securities Fraud Task Force and the Health Care Fraud Strike
Force.
European Union
Efforts
to curtail white-collar and corporate crimes in the European Union (EU) has
however been informed by different regulatory authorities and directives. This
is the OLAF, the European Anti-Fraud Office specializing in the investigation
of fraud on the EU budget and safeguarding of the financial interests of the
European Union. Another measure that has been taken by the EU has been to come
up with directives that deal with issues of money-laundering, corporate bribery
and insider dealing, intending to provide for shared polices as well as
co-operation by members.
An
unforgettable example in the European Union is Volkswagen scandal, where a
carmaker was involved in a scandal of installing a device in the diesel engines
to cheat emissions testing and thus, the company faced not only heft penalties
in various legal proceedings, but legal actions were taken against the company
by several countries.
Latin America
In
Latin America political instability and economic, white-collar crimes and
corruption have been known to flow hand in hand with political and economic
systems instabilities. The region has experienced a surge in embezzlement,
bribery, money laundering schemes, and other related white-collar crimes
involving government officers, businesspeople, and syndicates.
‘Operation
Car Wash’ or (Lava Jato) in Brazil unveiled a massive corruption scandal that
included Petrobras, an oil and gas company of Brazil, construction giants and
politicians, with thousands of arrests including identities among them which
creates a demand for further implementation of anti-corruption measures.
Asia
White-collar
and corporate crimes in Asian countries have differing effects and
reinforcement relying on legal frameworks and the distinct setting of the
region. Modernized Japanese Corporate standards of governance: Japanese
Corporate governance scandals have prompted reforms and stricter rules,
especially after the demoralizing scandal of Olympus account fraud.
Finally,
in China, the government has paid keen attention in dealing with corruption and
economic crimes hence launched campaigns like the “Anti-Graft” and has coming
up with courts that deal with financial crimes. Yet, there are weaknesses in
the compliance and implementation of laws and fighting state enterprises’
corruption.
Africa
In
many of the African nations, the white-collar and corporate crimes, crimes of
corruption, exploitation of resources, are aligned to the troubles of political
instability. The participants acknowledged the existence of the African Union
Convention for Preventing and Combating Corruption, information &
negotiation but complained that, in practice, the issue’s enforcement is tough
when it comes to implementation again due to lack of resources, and
interference from individual politics.
Through
the “Luanda Leaks”, serious cases of embezzlement and money laundering by
Angola’s ex-first family have been exposed and more efforts should be made in
the African continent to enhance probe on the controversial issues.
6. Impact and Consequences
The
consequences of white-collar and corporate crimes are extensive and
multifaceted, with far-reaching implications for individuals, businesses,
governments, and society as a whole: The consequences of white-collar and
corporate crimes are extensive and multifaceted, with far-reaching implications
for individuals, businesses, governments, and society as a whole:
Economic Impact
They
can lead to tremendous and devastating monetary loss for the affected
individuals, companies, and countries. For instance, financial fraud cases,
pyramidal systems, and accounting scams can severely hurt the investors and
cost them their money, decrease public trust in markets and even trigger shifts
in the economic world. Some white-collar crimes include but are not limited to;
antitrust crimes which undermine innovations and competition, and infringements
of property rights which may affect consumers by providing them with expensive
and scarce products.
Social Impact
The
impact of white-collar and corporate crimes asserts negative social
implications that are pervasive, these include: Loss of confidence in
institutional structures; skepticism on the existing societal norms on the
fairness of the economic structure; A social contract risk. Incidents involving
some large companies and major business individuals such as fraud, bribery and
corruption, can sometimes cause tension among masses, erode credibility of
legal systems and enhance social injustice.
Environmental Impact
It
can cite that most corporate crimes are environmental in that they lead to
long-term, irreversible environmental degradation, health hazards to the
public, loss of skin biological diversity, sustainability of natural resources.
Such activities as the spilling of crude oil by the ‘Exxon Valdez’ and the
emission of toxic gases by the ‘Volkswagen’, in addition to the disposal of
hazardous materials in the environment by various organizations, act in concert
to exemplify the drastic consequences of corporate crime (Geis, 1996). Not only
does it remain a threat to present society, but it also poses a significant
threat to humanity in the coming decades.
Political Impact
White-collar
and corporate crimes can undermine the integrity of political systems and
democratic processes. Bribery, corruption, and illicit financing of political
campaigns can distort the democratic process, erode public trust in
institutions, and perpetuate undue influence and cronyism.
Ethical and Moral Impact
The
prevalence of white-collar and corporate crimes can have a corrosive effect on
societal values and ethical standards. When unethical or illegal practices are
perceived as widespread or accepted within certain industries or organizations,
it can contribute to a normalization of such behavior, blurring the lines
between right and wrong.
7. Case Studies
Historical
and contemporary examples illustrate the varied nature of white-collar and
corporate crimes and their far-reaching consequences:
Al Capone's Tax Evasion
He
was finally convicted for tax evasion in one of the early and well-known cases
of this infamous criminal endeavors and was finally restrained. This case
showed that despite failure to pin some other charges, financial crimes may be
prosecuted as evidenced in the case of Geis (1967).
Enron Scandal
A
well-known instance of mega corporate fraud, whose officials of Enron
Corporation used an elaborate system of accounting fraud and deceit in
concealing the company’s calamitous financial losses and in manipulating the
stock price. It reached tragic proportions when the company disappeared from
the business scene, employees were laid off and many individual investors were
financially crippled. It led to radical transformations in the rules and
regulations controlling the corporate world, managerial systems of business
organizations, and over the public oversight of business organization’s
accounting practices (McLean & Elkind, 2004).
Volkswagen Emissions Scandal
The
Volkswagen cheat or scandal erupted in September 2015 when the automaker was
caught installing software in diesel engines to enable cars pass the emissions
tests but in real-world conditions, the cars released up to 40 times the legal
limit of NOx emissions. This created tensions which saw corporates face severe
penalties, imprisonment of executives, a recall of millions of cars and the
erosion of the public trust. They described the effects of corporate misconduct
and greed, and how big corporations were more interested in creating wealth for
themselves at the detriment of the environment (Ewing, 2017).
1Malaysia Development Berhad (1MDB) Scandal
Charge
involving the Malaysians state fund 1MDB, involving government officials and
business executives stolen billions of dollar and use it to make money through
certain transactions. The corporate crime had significant political
consequences as resulted in the emergence of new political player and give way
to corrupt government (Wright & Hope, 2018).
The Panama Papers and Paradise Papers Leaks
Massive
leaks of confidential documents from law firms and financial institutions
exposed a global network of offshore tax havens and shell companies used by
wealthy individuals and corporations to evade taxes and conceal illicit
activities. These leaks shed light on the intricate methods employed by the
rich and powerful to hide their wealth and avoid accountability (Obermayer
& Obermaier, 2016; Fitzgibbon, 2017).
8.
Regulatory and Legal Frameworks
To
combat these crimes, various laws, regulations, and enforcement mechanisms have
been enacted globally, reflecting the evolving nature of white-collar and
corporate crimes and the need for stronger deterrence and accountability
measures: To combat these crimes, various laws, regulations, and enforcement
mechanisms have been enacted globally, reflecting the evolving nature of
white-collar and corporate crimes and the need for stronger deterrence and
accountability measures:
In
the United States: Taking the above accounting scandals into
consideration, other stringent laws enacted in the United States include the
laws stated below; Further legislation includes the Foreign Corrupt Practices
Act that prohibits bribery of foreign officials and the Dodd-Frank Wall Street
Reform and Consumer Protection Act that brought new reforms for the financial
institutions and established the Consumer Financial Protection Bureau.
In
the United Kingdom: The Bribery Act 2010 is acknowledged as
one of the strongest and complete codes in the world against bribery with
severe criminal sanctions for the companies and individuals committing acts of
bribery in both the UK and overseas. The most recent legislation that received
the Government’s approval is the Criminal Finances Act 2017 that has extended
the provisions on corporate criminal liability and introduced several measures
aimed at combating money laundering and tax evasion.
In
the European Union: There are several related directives and
regulations enacted by the EU in order to address white-collar and corporate
crimes, such as a) The Anti-Money Laundering Directive; b) The Market Abuse
Regulation, to address insider trading and market manipulation; c) The
Whistleblowing Directive in order to encourage reporting of all kinds of
corporate crime.
Global
Efforts: White-collar and corporate crimes are worldwide
issues, and therefore there is a need for worldwide strategies when dealing
with such a menace. Intergovernmental organizations such as Financial Action
Task Force (FATF), the United Nations Office on Drugs and Crime (UNODC), and
the Organization for Economic Co-operation and Development (OECD) exist to
facilitate adoption of best practices, exchange information, and support
improvement of legal frameworks against financial crimes and corruption, and
corporate misconduct.
Nevertheless,
there still remain issues with the protection, identification, and punishment
of white-collar and corporate offenders. Users of commercial banks, MNCs, and
others including the complexity of financial transactions, the utilization of
offshore havens, the participation of organized crime groups, and the resources
and legal defense mechanisms at the disposal of large companies and wealthy
individuals still present the law enforcers and the regulatory bodies with
tough challenges.
9. Prevention and Deterrence Strategies
Addressing
white-collar and corporate crimes requires a multi-faceted approach that
combines legal and regulatory measures with preventive strategies and efforts
to promote ethical corporate cultures: Addressing white-collar and corporate
crimes requires a multi-faceted approach that combines legal and regulatory
measures with preventive strategies and efforts to promote ethical corporate
cultures:
Strengthening Corporate Governance
This
paper argues that corporate governance frameworks if properly created and
efficiently practiced, transparency and accountability if encouraged, and
ethical business leadership if advanced can greatly assist in the fight against
white-collar and corporate crimes as follows. This includes policies like
having independent boards of directors, having policies that protect
whistleblower information, and has to undergo auditing on regular basis.
Enhancing Regulatory Oversight
First,
enhancement of resources and human capital of the regulatory agencies, as well
as providing them with necessary enforcement tools to monitor and conduct
investigations on such probable irregularities are essential. This means effort
by the regulatory agencies, the law enforcing bodies, and other private
organizations to enhance their detection abilities and information sharing.
Promoting Ethical Business Practices
Encouraging
and incentivizing ethical business practices through industry self-regulation,
codes of conduct, and corporate social responsibility initiatives can help
create a culture of integrity and discourage unethical or illegal behavior.
Public Awareness and Education
Making
people aware of the implications and impacts of white-collar and corporate
crimes, working together with advocacy groups, as well as creating awareness
among the public regarding the rights and duties of an average consumer,
investor, and employee can go a long way in preventing misuse and in helping
others report such crimes.
International Cooperation
White-collar
crimes and corporate crimes, by their nature, cut across international
boundaries; therefore, there is a need to intensify international relations and
policy coordination in a bid to standardize legal systems across the world. It
means that improvements in joint investigations, information sharing, and extradition
arrangements could increase effectiveness in pursuing the perpetrators,
irrespective of their geographical location.
Addressing Root Causes
More
the need to focus on orientational and systematic approach towards
identification of the causative factors that breed white-collar and corporate
crime in the society, economy, and culture should be taken in the long run.
This may include attempting to reverse the trend of rising income disparity,
encouraging adherence to moral standards, and facilitating a spirited
governance culture that embodies corporate responsibility and integrity.
10. Conclusion
They
are complex and sophisticated crimes that affect and have ripple effects on the
society, economies, and even the environment in relation to organizations and
white-collar workers. It is for this reason that knowledge and understanding of
these crimes are important in order to prevent falling victim to them, and in
order to find improved ways of dealing with the perpetrators of such criminal
activities. Hence, there is a need to strive for performing ceaseless research
and policy formulation and sustaining intergovernmental collaboration to
alleviate the effects of such unlawful activities and preserve the sanctity of
economic, political, and social entities.
On
the future of white-collar and corporate crimes, it is essential to stress the
importance of continued work which affects not only the criminal legal plane
but also the cultural, ethical, and systemic planes that define the instances
of the crimes. Tackling and preventing fraud thus requires looking beyond mere
punitive measures and extend to introducing or enhancing organizational and
societal values as well as legal, regulatory, and cultural reforms within the
business communities.
Eradicating
white collar and corporate fraud call for multi sectorial and multi-agency
approaches; chiefly involving governments, law enforcement agencies, quasi
legal bodies, corporate entities, civil society organizations, and individuals.
With better corporate governance, more regulatory checks, ethical business
conduct and awareness drives, better co-operations and diplomatic cooperation,
the path towards better economic and social justice for the world is set.
It
is worth emphasizing the fact that often, people tend to forget that
white-collar and corporate crimes are not crimes without a victim. Their
effects are not only felt within the multiple spheres of people’s lives via
depredation of trust, erosion of the authority and independence of the
judiciary as well as social injustices. This fight is not only about ensuring
the economic wellbeing of the country due to the mentioned losses but is also a
moral and ethical responsibility belonging to the world, meaning that it is our
responsibility to prevent and stop these crimes given the amount of injustice,
dishonesty, and violation of human rights and the rights of communities and the
planet.
The
war against white-collar and corporate fraud thus remains a lifelong campaign
that needs no sleep, complacency, or losing sight of the noble goal that seeks
to see the end of vices that run counter to honesty, integrity, and corporate
governance in all activities throughout the universe.
11. References
- Barnett, C. (2000). “The Measurement of White-Collar Crime Using Uniform Crime Reporting (UCR) Data”. U.S. Department of Justice.
- Clinard, M.B., & Yeager, P.C. (1980). “Corporate Crime”. New York: Free Press.
- Coffee, J. C. (2003). “Gatekeepers: The Professions and Corporate Governance”. Oxford University Press.
- Ewing, J. (2017). “Faster, Higher, Farther: The Inside Story of the Volkswagen Scandal”. Norton.
- Fitzgibbon, W. (2017). “Paradise Papers: The data leak uncovering the secrets of the global elite”. The Guardian.
- Geis, G. (1967). “White-Collar and Corporate Crime”. Englewood Cliffs, NJ: Prentice-Hall.
- Geis, G. (1996). “White-Collar Crime: Classic and Contemporary Views”. New York: Free Press.
- McLean, B., & Elkind, P. (2004). “The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron”. New York: Portfolio.
- Merton, R.K. (1938). “Social Structure and Anomie”. American Sociological Review, 3(5), 672-682.
- Messerschmidt, J. (1993). “Masculinities and Crime: Critique and Reconceptualization of Theory”. Lanham, MD: Rowman & Littlefield.
- Obermayer, B., & Obermaier, F. (2016). “The Panama Papers: Breaking the Story of How the Rich and Powerful Hide Their Money”. Oneworld Publications.
- Ryder, N. (2011). “Financial Crime in the 21st Century: Law and Policy”. Edward Elgar Publishing.
- Snider, L. (2003). “Corporate Crime: Contemporary Debates”. University of Toronto Press.
- Wells, C. (2001). “Corporations and Criminal Responsibility”. Oxford University Press.
- Wickramasinghe, N. (2017). “Sri Lanka's central bank bond scandal: The making of a political crisis”. The Diplomat.
- Wright, T., & Hope, B. (2018). “Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World”. Hachette Books.
Thevindu Bandara
LL. B (Sri Lanka), Reading for LL.M in International Business (UK), P. Dip in Business Law, Certification in Cyber Law, AML & CFT
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