White Collar Crime and Corporate Crime - Essay Example

White Collar Crime and Corporate Crime To what extent are the regulatory regimes for White Collar Crime (WCC) and Corporate Crime (C C) working Dated: _________________________ Professor Name: ________________ WCC and CC has always been in comparison with other types of crime especially conventional property and violent crimes. Even in situations when corporate criminals go to prison, there is a concern for how long and in which institutions the criminals would remain in comparison with conventional criminals. The reason behind these concerns is simple, regulations have always prioritized street crimes over WCC and when it comes to corporations, regulations take these offences lightly. It seems governmental regulations seek their benefit in every 'large scale' crime. Apart from the legislator concern, public uphold the opinion in the following words: "There is always a lingering suspicion that the white-collar criminal is getting off leniently in our justice system". (Poveda, 1994, p. 4) In this respect, an awareness of white collar and corporate crime officially encourages us to think critically about the nature of crime and how regulations deal with it. One of the defining characteristics of white-collar crime is their conflicting characteristic both on the one hand of upstanding citizen, in terms of their contribution to voluntary civic activities for example, and on the other criminal, displayed through the harm they caused through their illegal activities (Benson, 1984). Economic or white-collar crimes are performed on a large scale, sophistically such as fraud committed on behalf of organization or against any corporation, and antitrust violations are notoriously difficult to quantify because victims often do not know they have been subject to a criminal offense. Since they are committed on a broader spectrum, therefore government is not much concerned about them as compared to other crimes. Therefore, there is no central regulation or survey application or reporting mechanism to combat with these sorts of crimes or the losses occurred by their frauds. Apart from the critics if we analyse regulatory efforts, it is clear that Government regulatory agencies after crime occurrence collect the original figure of fraud thereby reporting them as they see fit. However, it is often difficult to verify their methodology of reckoning accurate figures that can be compared in any meaningful way. Behind the continuous growth of such crimes, is the organised criminality left over from the operation of licit markets and their regulation to suggest that governmental interventions are having the unintended consequence of generating organised criminal activity within and without national boundaries. (Edwards & Gill, 2003, p. 143) Therefore, unlike violent or street crime, WCC and CC is not analysed or measured through investigations like victim surveys, or comprehensive surveys of the incidence or cost of white-collar crimes. Similarly there is no sampling methodology like fingerprints and crime definitions are seldom transparent, making comparability across crime particularly difficult. However, if the estimates are to be believed, white-collar crime causes tangible losses far in excess of tangible losses associated with street crimes. The regulatory regimes of such broad offences first determine what counts as crime in a particular society. 'Crime and Punishment' gets this right; 'Crime and Society' doesn't. Yet law, a commodity with which the state is endowed, defines and shapes not only spheres of 'outright illegality' like WCC and CC crime, but also certain 'zones of ambiguity'. The ambiguity in the state's relation to law may be evoked by saying that the state has for ages been favoring illegality directly or indirectly. This is nowhere clearer than in the way that state exaction, regulations, and prohibition influence and even determine the incidence of criminal and organized criminal activity (Farer 1999, p. 251). More than any other form of state intervention, it is prohibition that has a particularly destabilizing effect upon the whole sphere of the 'illegal act'. The best example is the trade ban which when imposed not only created illegal pathways to market but also abrogated the enforcement of many other regulatory laws. In other words, by banning these activities and transactions, the state renounces many of its own regulatory powers. The extent to which regulatory regimes are responsible highlights an important definitional issue when it comes to white collar and corporate crimes. Unlike street crime, oftentimes fraud and regulatory violations can be classified as civil, regulatory, or criminal-and the decision about how to label the incident is largely up to the prosecutor. The dilemma which remains with us are those large corporate scandals which instead of taking action are settled by the government in the civil arena even though they might have been prosecuted criminally. (Cohen, 2005, p. 68) The only criteria for which a prosecutor might determine whether to charge with a criminal violation is not limited to laws and conditions. Other factors that might come into play include the burden or cost of proving criminal intent and the willingness of corporate officials to 'settle' the case if criminal charges are not pursued. In addition, the standards of corporate criminal liability in the U.S. and UK are such that 'intent' does not necessarily have to be shown as it does in most criminal charges filed against an individual. Therefore, officials often take deep consideration upon the matters whether or not to prosecute a corporation as opposed to an individual or a corporation. There are several other issues beside governmental backup that goes along with WCC and CC. Despite attempts to quantify the intangible costs of fraud the studies have assumed that the tangible losses are limited to the dollar or pound value of the fraud. Nevertheless, there is unreliable evidence that losses can be significantly greater in certain cases. For example, some frauds prey on the elderly and uneducated poor. Similarly, some crimes with very large intangible costs, like treason or crimes that betray the public trust, may never be monitored. Nevertheless, we can conceptualize the "social cost" of these crimes immediately settle down by regulatory officials. For example, betrayal occurred by a corporation uphold the social cost of treason which might be thought of as the risk of harm to our national security. However, quantifying that risk and the possible harm is another matter. Cohen (1989) after analyzing official crime's social costs associate them with various types of WCC and CC, including fraud, environmental, food and drug, safety, and export violations and other regulatory offenses. According to Cohen, no doubt it is difficult to estimate social costs for WCC and CC, the vast majority of corporate crimes are frauds that can be easily measured, and techniques exist for estimating the harm in many other instances. (Cohen, 2005, p. 71) But they are not even attempted by the officials to measure! On the other hand, WCC has been more attractive than CC because it creates problems of legal jurisdiction and investigation (Levi, 1981). EU liberalization makes no difference to this, except in providing new pretexts for criminals to use to obtain credit or investment, and inasmuch as it changes the structures of control by, for example, reducing customs paperwork. Therefore the scope of WCC is far wide than that of CC. One reason for the development of such crimes is the lack of research-based evidence based on the grounds of 'criminal relationships' in most European countries. Such relationships between criminals and officials are based on mutual trust in an environment where betrayal can have serious consequences. In fact it would be better to state that most officials and individuals are 'Euro-criminals' which are either WCC entrepreneurs who already exploit international trade for the purposes of fraud or smuggling, or CC money launderers who put their clients in touch with each other. Beyond that, in the area of financial crime there is only modest information, including that in the 'annual reports' compiled for the Council of Europe, which is run largely on the basis of official police and intelligence sources. There is only serious debate about the operational or even strategic value of these sources, no implementation or actions! Despite the attempts of authors from Sutherland (1983) to Ruggiero (1996) to argue that "white-collar crime is organised crime, " the UK enforcement agencies have been far more reluctant than their U. S. counterparts to treat white-collar and organised crime as related phenomena (Levi, 1995). Even in the United States, RICO-type indictments (racketeer-influenced criminal organisation) are used significantly less against white-collar crime than against 'family' or even street-gang operations. But such indictments are on the enforcement map in the United States, and their use is growing as traditional organised crime families diversify into securities fraud. Yet differences between the "performance indicators" of police and customs, as well as bureaucratic rivalries, inhibit cooperation. (Berdal & Serrano, 2002, p. 61) The role of disruption, rather than traditional criminal justice tactics, becomes important to consider, given such factors. No doubt regulatory regimes reduces some forms of crime, such as exchange-control violations, while generating less need for concealment of legitimate cross border income but in principle, this has no effect on illegal-source income, which has to be concealed anyway. It would also not be wrong to admit that funds generated from fraudulent instruments are much easier to conceal than those from drugs, it may make their transfer slightly easier. These issues are vital to every official representative of the corporation or company as a major plank of anti organised crime activity involves greater scrutiny of people and transactions. The regulation of financial institutions for purposes other than financial prudence embodies an intriguing political paradox. On the one hand, those interested in the political anatomy of Britain take it for granted that it is 'finance capital' that dominates the political economic landscape. On the other hand, bankers and financialists are already ready and determined to support money launderers. A large range of other financial media in most advanced and many third world and former communist countries being pressured into accepting an open-ended set of commitments to cooperate in searching out money launderers. Even those who are unable to open and operate accounts can easily support the transfer of large quantities of cash in the form of wire transfers or other modes of payment such as in the United States and Australia. In almost every case of serious fraud, funds are transferred easily from the apparently legitimate corporations through a series of jurisdictions, at least some of which will offer some levels of non-transparency. Being a part of the 'regulatory regime', the main notion is not the choices of location, but a safer place to get the money where it will be hard to discover. Hence the use of devices such as the 'walking trust', in which the trust moves to another jurisdiction whenever inquiries are made about it. Such devices are rarely employed outside financial crime. Another reason behind growing concern of corporate crime comes with the financial markets, where bankers are no longer so important as intermediaries between deposits and loans: they have increasingly become investors, trading on their own accounts. Increased competition has brought other institutions, such as insurance companies, into the same business, and cozy profits have disappeared as business has become more cutthroat. Nevertheless, the effect of this is not necessarily a 'crime'. What about exchange and other regulatory control that generates the development of the offshore finance industry, thereby stimulating the development of bearer shares, the smuggling of gold and diamonds, and other means of bypassing controls on the rich. The regulatory regime does not favors total financial liberalism: the inconsistency between competing regulators notwithstanding, regulation of offshore finance centers proceeds apace, to deal with issues of corruption, drugs, fraud, and 'harmful tax competition', as well as with the huge financial risks for the world economic system created by nontransparent derivatives funds, such as those of long-term capital management. Criminal actions by 'legally created entities' display several peculiarities. Sometimes it is difficult to penetrate the inner workings of the organisation to know who did what in bringing about the criminal harm. Often it is found that a joint group is responsible for a corporate offence like it might be the case that one person possesses the relevant information, another makes the decision to act, and still another carries out the action. In this situation, the diffusion of function makes it impossible to hold a single individual responsible for the crime. Such hardships along with the general sense that organised action has an increasing impact on the lives of ordinary individuals, have generated pressure toward the prosecution and appropriate punishment of 'legally created entities' that bring about criminally proscribed harms. (Fletcher, 1998, p. 201) The argument against the criminal responsibility of organisations is that groups of individuals do not possess the attributes that make criminal action possible. Such groups do not act like culprits. Examples can be seen from German-speaking countries that have taken a conservative stand against the worldwide trend in favor of the criminal liability of legal entities. Germans recognise the liability of legal persons for administrative violations that include the argument against the criminal responsibility of organisations that groups of individuals do not possess the attributes that make criminal action possible. Therefore, German-speaking countries have taken a conservative stand against the worldwide trend in favor of the criminal liability of legal entities. Germans in this context recognise the liability of legal persons for administrative violations, but they are not prepared for the next step of holding these entities liable for criminal actions. Criminal punishment, they insist as a matter of principle, must be reserved for those who are personally blameworthy for bringing about criminal harm. (Fletcher, 1998, p. 201) Of course, groups cannot be put in prison, but a range of remedies applies nonetheless. These include fines, the forfeiture of profits from illegal activities, prohibitions against the commercial activities that led to criminal harms, and even dissolution of the corporation. Also, as the Federal Sentencing Guidelines suggest, corporations in violation of the law can be induced to adopt compliance programs that will lead to better guidance of employee behavior. There is no such rule that every member of the firm is individually responsible for the harm. The corporation has its own personality and must stand apart from its members. This is the difference between corporate and collective responsibility. Corporate responsibility means that the corporation, an entity greater than the sum of its members, must stand responsible for what it as an entity does in the world. Collective responsibility puts the onus on every individual's shoulder to accept the blame, which simply is not true. This is the better way, to think of the responsibility of nations. The German nation is responsible for the Holocaust, but it surely does not follow that each German living at the time or born thereafter is also responsible. It is not clear, however, that responsibility in the sense of vicarious liability makes corporations actually guilty for the criminal harms they cause. Some lawyers, particularly in English-speaking countries, respond that if the only threat is a monetary sanction, then strict liability poses a lesser injustice than if applied to individual actors. An alternative line of argument, developed recently in Germany, is that a particular form of guilt or culpability attaches to corporate entities. They often cause harm as a result of a flaw in the structure of management. But the analogy is strained. The management faults of corporations are generally faults of omission not of a choice to do evil. It might be appropriate to punish them for these faults for if they choose to do business and receive the protection of the legal order, they must take steps to avoid causing criminal harm. They have a duty to manage themselves in the interests of society, but this duty departs from the moral foundations of the criminal law. The movement toward corporate criminal liability reflects a tendency to blur the lines between criminal and civil legal liability. Modern societies may be losing their sense for criminal punishment as an imperative of justice. The tendency at the close of the twentieth century is to focus not on the necessity that the guilty atone but on the pragmatic utility of using criminal sanctions to influence social behavior. Therefore, the argument that corporations are not really guilty of crime carries less and less weight. The more convincing consideration is the social utility of disciplining corporate behavior with the tools of the criminal law. References Benson M. L. (1984) "The Fall from Grace: Loss of Occupational Status as a Consequence of Conviction for a White Collar Crime" In: Criminology 22:4:573-93 Berdal Mats & Serrano Monica, (2002) Transnational Organized Crime and International Security: Business as Usual Lynne Rienner: Boulder, CO. Cohen A. Mark, (2005) The Costs of Crime and Justice: Routledge: New York. Edwards Adam & Gill Peter, (2003) Transnational Organised Crime: Perspectives on Global Security: Routledge: New York. Farer, T. (1999). "Conclusion: Fighting Transnational Organized Crime Measures Short of War". In T. Farer (ed.), Transnational Crime in the Americas. New York: Routledge Fletcher P. George, (1998) Basic Concepts of Criminal Law: Oxford University Press: New York. Haines Fiona, (1997) Corporate Regulation: Beyond 'Punish or Persuade': Clarendon Press: Oxford. Levi, M. (1981). The Phantom Capitalists. London: Heinemann. Levi, M. (1995). "Covert Policing and the Investigation of Organized Fraud: The English Experience in International Context". In C. Fijnaut and G. Marx (eds.), Police Surveillance in Comparative Perspective. The Hague: Kluwer Poveda G. Tony, (1994) Rethinking White-Collar Crime: Praeger Publishers: Westport, CT. Read More