Crimes of the Powerful:White Collar, Corporate, and

Organized Crime

Understanding Criminology

10th March 2009

Lecture Outline

• White Collar Crime– Definitions– Typologies

• Corporate Crime– Definitions– Typologies

• Impact of White Collar Crime• (In)Adequacy of mainstream criminological

theories

White Collar Crime

• General sense:– A variety of offences committed by powerful

people or organizations – Offences are enabled by legitimate activities

• Specific Sense– Offences carried out by individual people in the

course of their employment, often against employers

Edwin Sutherland (1941) White Collar Crime

• “crime committed by persons of high social status and respectability”

• a critiques of criminology’s focus on low-status criminality: – ‘hidden’ / non-crime status of middle class criminality

• crime defined in terms of harm on victims / society

• Questions raised about criminal status and social class

Types of White Collar Crime

• Individual offences– Against employer

• Theft, fraud

– Against customer• Overcharging, fraud, identity theft, various “e-crimes”

– Against employee• Theft, embezzlement

– Against other companies• Insurance fraud

– Against the State• Tax evasion, benefit fraud

Corporate Crime

• Illegal actions, or omissions, resulting from deliberate decision making, or culpable negligence on the part of a company

• Organizational Goals central to understanding corporate crime

• Indifference to outcome of action often contributes

Jeffrey Reiman “The Rich Get Richer: The Poor get Prison”

• The Social Construction of Crime – The construction of ‘crime’ focuses attention

onto the social harm perpetrated by the poor, and away from those (more damaging) harms perpetrated by corporations

– “Typical” criminal: young, urban, poor and ethnic minority

– A distortion of harms: “a carnival mirror”

How is this social construction achieved?

1. Legislative definitions of crime2. Police and prosecutor priorities3. Judges and jury decisions4. Sentencing5. Media reporting of ‘crimes’ and

‘accidents’

Each of these stages are inter-related

Impact of corporate crime?Occupational Disease and Injury

Crime (x ½)

Death 54,928 8,250

Other Physical Harm 2,300,000 425,000

Source: Bureau of Labor Statistics 2003; National Crime Victimisation Survey

Note: Crime Rate halved to enable direct comparisons: workforce accounts for half the general population

Victims of Corporate Crime

• Employees• Customers• The Environment

Ford Pinto

Ford Motor Company internal memorandum: "Fatalities Associated with Crash-Induced Fuel Leakage and Fires"

BENEFITS (OF RECALLING AND RETRO-FITTING)

Savings: 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles.Unit Cost: $200,000 per death, $67,000 per injury, $700 per vehicle.

Total Benefit: 180 X ($200,000) + 180 X ($67,000) + $2,100 X ($700) = $49.5 million.

COSTS

Sales: 11 million cars, 1.5 million light trucks.Unit Cost: $11 per car, $11 per truck.

Total Cost: 11,000,000 X ($11) + 1,500,000 X ($11) = $137 million.

Variety of corporate crime

• Against consumers– Mis-selling: providing goods and services

– Car-clocking, counterfeiting, dangerous goods

• Health and safety offences– Employee, consumer and environment

• Financial Fraud

Impact of Corporate Crime

• Lethal Corporate Crime

5146 629011436

32910

5000

10000

15000

Acciden

ts

Occ. dise

ases

Acc. &

Dis.

Homicide

A ratio of 7:1 – seven times as many work-placed deaths than homicides (once figures adjusted for risk)

Injuries resulting from Corporate Crime

• Thalidomide– Chemie Grunenthal deliberately falsified test

data, and concealed the dangers of the drug

• Lung Cancer and Passive Smoking

• Asbestos

Financial Costs of Corporate Crime

Mirror Pensioners• £440 million missing from Daily Mirror pension

funds : 30,000 employees / former employees of Mirror Group affected

Levi (1987)- Cost of fraud reported to fraud squads: £2113

million - Twice the cost of theft, burglary and robbery that

year

Other Harms• Health Care

– negligence, injuries and deaths, drug reactions and interactions

• Chemical Warfare– pollution, toxic wastes, smoking, food additives, pesticides

• Poverty– Higher infant mortality, lower rates of health, shorter life

expectancy

• Consumer Safety– Defective Products

Problems with “Hidden” Corporate Crime

• Construction of Official Statistics• Media Constructions of the Criminal:

‘Respectable’ v ‘Criminal’• CJS focus on “conventional” crime

– Corporate crime largely outside control of Criminal Justice

– Most cases emerge from campaigning / whistle-blowing

– Crime is seen as individualistic, inter-personal, and finite: much corporate crime does not fit the model

Organized Crime

• The production, supply and financing of illegal markets in good and services

• Organizations established with criminal intent, though the divide from corporate crime is not always clear

• Much organized crime is “governmental”: threatening the State’s monopoly of coercion, protection and extraction

Range of Organized Criminality• Organized theft and sale of stolen goods

• Protection rackets

• Markets covering prohibited goods and services– Drugs, illegal drinking, illegal arms,

prostitution, people trafficking, gambling, pornography

• Money Lending

• Money laundering

Themes in the study of organized crime

• Globalization– Localised ‘firms’ replaced by globalized

enterprises

• Relationship to legitimate businesses– Legitimate business as a “front”– Provision of services to businesses– Legitimate businesses providing services to

organized crime (consciously or unconsciously)

• Opportunities provided by criminalization

Problems for Criminology• Conceptual

– Most of the ‘crimes of the powerful’ challenge mainstream assumptions of what crime is (e.g. victim/offender)

• Empirical– Evidence of these crimes are much harder to obtain

• Explanatory– Mainstream theories need adapting, though many can retain relevance– Direct and Indirect Causes

• Theoretical– Is ‘crime’ the model? Harm?