Explore the hidden world of corporate crime, its origins, and the challenges it poses. Uncover the secrets of white-collar wrongdoing.
Corporate Crime: Legal Penalties & Prevention Strategies
In the world of business, an ominous shadow often looms over the gleaming corporate towers—corporate crime. This intricate web of deceit, often concealed behind the veneer of respectability, continues to be a topic of fascination and concern. Join us on a journey through the annals of history and society as we explore the enigmatic realm of corporate crime, its origins, and the challenges it poses to our legal system.
The Concept of Corporate Crime
The concept of corporate crime, also known as organizational crime, finds its roots in the broader notion of white-collar crime. It was American criminologist Edwin Sutherland who first introduced this concept to the social sciences in 1939. He defined white-collar crime as "a crime committed by a person of respectability and high social status in the course of their occupation." This perspective represented a paradigm shift in our understanding of criminal behavior, as it encompassed not only street-level crime but also the misdeeds occurring in the corporate suites.
Sutherland's groundbreaking work led to his influential book, "White Collar Crime" (1949), which focused extensively on corporate crime. Through meticulous research, he revealed that over a 40-year period, all 70 of the corporations he examined had violated at least one law or faced adverse decisions. These infractions ranged from false advertising, patent abuse, and wartime trade violations to price-fixing, fraud, and the production and sale of faulty goods. Shockingly, many of these corporations were repeat offenders, with an average of eight negative decisions each. It was evident that "crime in the suites" often escaped the public eye, despite its staggering cost to society.
Corporations and Criminality
Within the realm of white-collar crime, two major types emerge: corporate crime and occupational crime. Corporate criminals, unlike their street-level counterparts, seldom perceive their actions as criminal. These individuals typically consider their unlawful activities as part and parcel of their occupational milieu. They remain firmly anchored within the boundaries of conventional society and do not identify with criminality. In some cases, their inappropriate conduct is tacitly accepted within the corporate subcultures they inhabit.
Despite Sutherland's pioneering research, white-collar crime, and corporate crime, in particular, remained largely overlooked until the groundbreaking work of American criminologists Marshall Clinard and Peter Yeager in "Illegal Corporate Behavior, 1975–1976" (1979). Their comprehensive investigation delved into administrative, civil, and criminal actions initiated against 477 of the largest wholesale, retail, and service organizations in the United States by 25 federal agencies. The findings revealed striking similarities to Sutherland's earlier observations. Approximately 60 percent of these large corporations faced legal action, with a mere 8 percent responsible for a staggering 52 percent of all offenses. Notably, industries such as oil, pharmaceuticals, and automobiles were significant contributors to these violations. The leniency shown toward corporate wrongdoers remained a disconcerting constant.
Corporate Crime in the United States
In the United States, the illegal aspects of business have been a concern since the 19th century. Practices such as deceptive advertising, restraint of trade, bank fraud, substandard manufacturing of hazardous products, fraudulent securities sales, patent infringements, and environmental pollution have all been subject to regulatory scrutiny. The Sherman Antitrust Act of 1890 marked the federal government's first attempt to curb price fixing and the formation of monopolies. Regulatory oversight of corporate violations is primarily the responsibility of federal and state agencies, including the Federal Trade Commission (FTC), the Environmental Protection Agency (EPA), the Federal Communications Commission (FCC), the Food and Drug Administration (FDA), the Interstate Commerce Commission (ICC), the Nuclear Regulatory Commission (NRC), the Securities and Exchange Commission (SEC), and the Occupational Safety and Health Administration (OSHA). These agencies employ various sanctions, including warnings, recalls, orders, injunctions, monetary penalties, and even criminal charges, to enforce their laws.
The United States took a significant step in combating international corporate corruption by passing the Foreign Corrupt Practices Act in 1977. This groundbreaking legislation prohibited the payment of bribes to secure business contracts. In 1996, the United States joined forces with 26 other nations to outlaw bribery altogether. Such unethical practices had tainted international commerce, jeopardizing fair trade and undermining public trust in governmental institutions.
The Challenge of Confronting Corporate Crime
While corporations often lament the burden of federal regulations, it's essential to acknowledge that guilty companies typically possess the resources, expertise, and time needed to mount a robust defense. Regulatory agencies are frequently criticized for their perceived ineffectiveness in prosecuting powerful corporations. The penalties for corporate law violations are often too insignificant to deter wrongdoing. Convictions are rare, and jail time is almost unheard of. Many corporations are allowed to plead "nolo contendere" (no contest), enabling them to avoid the stigma of a "guilty" or "criminal" label. Additionally, regulatory agencies often appoint directors from the very corporations they are tasked with regulating, creating potential conflicts of interest. It's worth noting that the funding allocated to combat corporate crime is often dwarfed by the resources dedicated to addressing street-level crime.
