Corporate culture and its relationship with crime
Introduction
Changes in the Criminal Code of Canada are designed to
discourage corporate crime by making it easier for prosecutors to
find corporate criminal liability through aggregation theory rather
than the directing mind theory.
Two serious obstacles may prevent success. First, if it becomes
easier to prosecute and convict corporations, the effect may be that
prosecutors will favour prosecution of corporations rather than the
often more difficult task of prosecuting directors and officers of the
corporation.
Secondly, law is most effective when members of society accept
its legitimacy, even when costs are incurred in conforming to it. It
is important too that law enforcers acknowledge that corporate
crime is immensely more costly to society than street crime. Such
recognition will encourage law makers and enforcers to focus more
than they have in the past on the damage to society caused by
corporate crime. It will be small comfort for a pensioner if the thief
who steals her purse containing $100 is jailed for the crime, while
the corporate officer whose unlawful activities led to the entire loss
of her pension avoids liability because the corporation, not he, is
prosecuted. Glasbeek (Chapter 8) provides some circumstantial
evidence that corporate criminals are often treated less seriously by
law enforcers than are street criminals in spite of the substantially
greater cost imposed on society by corporate criminals.
The DVD The Corporation lists a substantial number of
corporations convicted and fined for breaking the law. Notably,
many of the prosecuted corporations failed to admit guilt, and reoffended, sometimes resulting in further fines. Glasbeek lists and
discusses in chapters 8 and 9 further examples of corporate
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criminality and recidivism, as does the website “The Ten Worst
Corporations”.
It is not clear that corporate leaders, law enforcement agencies, and
the public at large view corporate activities as socially harmful and
worthy of criminal sanctions.
Underlying assumptions of criminal law
A fundamental pillar of criminal law in liberal societies is the
notion of individual responsibility for one’s actions. This allows us
to prosecute those who choose to engage in criminal behaviour and
to excuse those who do not have the capacity to make free choices.
We may also withhold or mitigate penalties on those with reduced
capacity to take responsibility for their actions. This might be due
to such circumstances as self-defence, provocation or necessity.
In liberal democracies, particularly Canada, U.K., and USA,
corporate misbehaviour is fitted into the model of individualism.
The fictitious personhood of the corporation, which is really a
collective not an individual, means that it is often difficult to apply
traditional criminal law principles to corporations. This lack of
“fit” has also left the door open for defenders of the status quo to
argue that application of the criminal law to corporations is
aberrational and always requiring justification.
In earlier times, the persons controlling corporations argued that a
corporation could not be a criminal because, as a creature of the
state, it could not act with evil intention, because the state would
never empower its creatures to act with evil intent. When this did
not work, the argument raised was that, as a non-human, a
corporation could not have a state of mind or carry out an act. The
objections of corporate supporters have turned a full circle with the
argument that corporations ARE the proper body to prosecute
rather than the individuals in control of the corporations.
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Glasbeek notes (p.130) that the identification and aggregation
models have enabled the state to more easily charge criminally
corporations and their guiding minds. This has involved legal
distortion of the corporate form to make it amenable to the
traditional criminal process. Nevertheless, what have not changed
are the actual legal structure of corporations and the corporate
culture that continues to encourage behaviour that is anti-social
and evades legal responsibility for many acts.
Glasbeek reflects that, while the corporate hand may have been
twisted into shape to fit inside the criminal glove, it still seeks to
revert to its original ill-fitting shape. That is, the controllers and
supporters of corporation seek immunity from the criminal law.
Corporate and other crime
Virtually all political parties in liberal democracies campaign on
the issue of fighting crime. As we speak, Alberta’s government is
introducing measures to fight street prostitution by empowering the
authorities to seize the vehicle of a “john” who uses it to assist in
obtaining the services of a prostitute. In the war against illegal
drugs, the federal government introduced legislation that required
an individual found in possession of an illegal drug to prove that he
or she was not trafficking in the drug. This was found by the
Supreme Court of Canada to be in breach of the Charter of Rights
and Freedoms [s.11(d)] – the presumption of innocence. Some
communities are resorting to curfews against minors as a method
of reducing violent street crime. Vast expenditures are made to
combat terrorism within Canada, and in the USA. Ant-terrorism
laws have suspended many of the democratic freedoms fought for
in Canada at the cost of huge loss of life in two world wars. In the
Maher Arar case, Canadian authorities even resorted to the
deportation of an innocent Canadian citizen overseas, in the
knowledge that he would face torture, which he did. Such action
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was so important to the authorities that the federal government still
refuses to apologize to Mr. Arar.
A substantial number of “criminals” in Canadian prisons are there
for non-payment of fines. Such non-payment is often due to
poverty.
It is not denied that societal attention to such criminal matters is
warranted. However, the question raised here is whether the cost
(both financial and social) of seeking to reduce street crime is
commensurate with the relatively low social costs of such crime
compared to the high social and financial costs of corporate crime.
Indeed, the historic official disregard for corporate crime has been
such that no systematic collection of data on corporate crime has
been collected. Naturally, this makes it difficult to determine both
how much corporate crime occurs and what its cost is to society.
(See the respective works of Bequai; Ellis; Michalowski; Clinard
& Yeager; Snider; and McMullan – posted on the class website.
Glasbeek makes the point that the extent of corporate crime is
clouded too by the absence of official consensus on the definition
of corporate crime.
Corporate crime is by no means the only type of crime that has
been largely ignored by social policy makers and law enforcers.
For many years, domestic violence was effectively not treated as
criminal by police forces and prosecutors. In Canada, a paradigm
shift in official views of domestic violence appears to have
occurred. While the incidence of domestic violence in Alberta
remains high, many more resources are allocated to its detection,
reporting and prosecution. Similar changes have occurred over two
generations to crimes of drunk driving, aided by intensive social
marketing by such agencies as MADD and police authorities. Such
examples suggest that a similar paradigm shift is possible with
respect to corporate crime.
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Evidence of corporate crime and its impact
While it is difficult to determine the full extent of corporate crime,
some attempts have been made to do so. Most studies have been
conducted in the USA. However, given the extensive presence of
US corporations in Canada, the American results are likely to
resemble those in Canada. Clinard & Yeager (Corporate Crime)
found in a 1980 study that 40% of the 582 largest industrial
corporations had not been held culpable for an illegal act. 60% had
engaged in an illegal activity that year and around 25% of those
had more than five violations that year.
Glasbeek observes that individual violators on such a scale would
be in prison, yet corporate violators appear to be held in high
regard. This sort of study does not measure the seriousness of the
law breaking. However, chemical spills, mercury poisoning,
financial fraud can impose serious harm on society. Arguably these
are more serious than street crime.
In a 1987 study of FBI statistics, J. E. Conklin in Illegal but not
Criminal conservatively estimated the economic costs of corporate
crime to be ten times that of street crime. This ratio does not
include the anti-trust violations of such companies as Hoffman
Laroche, and of General Electric and Westinghouse in the Heavy
Electrical conspiracy. The oil price fixing in Canada from 19581978 removed $12 billion from consumers.
The Savings and Loans scandal of the 1980s cost the US economy
a minimum of $352 billion and a maximum of $1.4 trillion
according to the General Accounting Agency of the US Congress,
more than entire US defence budget at that time (1989). See Enron
and Bre-X more recently.
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If banned from Canada or US, they take their activities abroad. See
Occidental Petroleum when product found to cause sterility among
workers.
See recidivism. Three strikes and you’re out would halve the
number of Fortune 500 companies and Financial Post 1000.
Drug peddling on the streets is not tolerated. The activities of drug
companies
. Hoffman-LaRoche gave away free samples to get doctors and
patients hooked.
Stanley Adams blew whistle to EEC that HLR systematically
falsified transfer pricing documents, in collusive market-sharing
with competitors and giving illicit rebates to customers. EEC gave
name to HLR and Adams was charged with treason in Switzerland
and later jailed in Italy for ill-defined crimes. EEC paid
compensation.
Adams case illustrates power of corporations to enlist the power of
the state.
Causes of Crime
Biological factors
Sociological/Psychological Low self esteem; release of emotional
drive; anomie; influence of other criminals;
But E.H. Sutherland:
No reason to believe GM has inferiority complex, Aluminium Co
of America has a frustration aggression complex; or that US Steel
has an Oedipus Complex or that Armour Co. has a death wish or
the Duponts want to return to the womb.
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Corps are criminal because it suits their agenda. Maximization of
profit. Created to do that and constructed to facilitate.
Incentives for shareholder and managerial passiveness due to
limited financial risk and immunity from responsibility. Moral
restraints are gone.
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