Part VI
Chapter 36
 Deviant formal organizations share bond of
membership in large-scale, highly-structured
associations that extend over time & space
 They entail more highly sophisticated
relationships than less-structured or
committed crews, where a division of labor
exists & members learn specific skills &
pursue specialized tasks within the group
 Since WWII organized crime has carried out
a wide range of domestic activities, using
violence, extortion, bribery & murder to
advance its interest
Part 6: Ch. 36
Part 6: Ch. 36
 While organized crime is growing, there is no
integrated centrally directed criminal
conspiracy
 The first business of criminal organizations
is usually business, its protection &
promotion
 Like legitimate enterprises, the activities of
separate “corporations” can be cooperative
or competitive
Part 6: Ch. 36
 Activities must be criminal;
 individuals engaged in such activities must be
organized; profit-oriented; use of violence &
bribery to advance causes;
 Forms of entrepreneurial activity that are
classified illegitimate if they do not meet the
state’s test for permits, licenses, etc.
 These organizations account for significant
proportion of all meaningful economic
activity
 For example, in Italy, Peru, Columbia,
Russia, Mexico, etc
Part 6: Ch. 36
 Most major crime organizations have a
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family or ethnic base
Operate out of small, tight-knit communities
Rituals, codes of allegiance, ethnic bonds &
quasi-religious ceremonies help to engage
compliance & loyalty
Involvement places individuals outside of
law & subject to arrest helps reinforce ties
that bind
Murder is usually the final sanction to
ensure loyal silence
Part 6: Ch. 36
 First, the broader, global canvas of
traditional criminal activity
 Second, the growth of transnational links
between criminal organizations & other
groups
 Third, growing ability & power of
international criminal organizations (ICOs)
to threaten stability of states, undermine
democratic institutions, hinder economic
development & undermine alliance
relationships
Part 6: Ch. 36
Part 6: Ch. 36
 ICOs transnational scale & ability to
challenge national & international authority
sets them apart from other major criminal
organizations
 Disposing of large quantities of ready cash,
diversified into a wide range of activities, &
employing a workforce spread around the
globe, the ICOs represent a different order of
magnitude in criminal operations
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 America Mafia or La Cosa Nostra (LCN)
 Hells Angels motorcycle gang
 Chinese Triads
 Columbian cartels
 Mexican cartels
Part 6: Ch. 36
Part 6: Ch. 36
 It’s more economical, for example, for a
farmer to grow drug-related crops given the
profitable nature of these products
 Example: Poppy in Afghanistan
 Large markets, such as the US & Europe
make them the world’s most lucrative
markets for illegal as well as legal
enterprises
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 Growth of international crime parallels
global trend of ungovernability – the
declining ability of governments to manage
or govern a modern state & to provide
adequate or effective services
 Example: The Andes & Amazon of Latin
America, regions in Afghanistan & Pakistan,
Burma, Peru, Southern China
Part 6: Ch. 36
Part 6: Ch. 36
 Ethnic criminal organizations likely to
follow immigration patterns – not always but
there’s a strong correlation
 Economic pressures & ethnic turmoil
generate refugees & immigrants from
regions where international criminal groups
are based
 Example: Chinese, Mexicans, Middle-
Easterners, Russians, etc
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 US’s long open borders with Mexico &
Canada provide ready access for criminals &
illegal goods & tens of thousands of miles of
coastline
 The North American Free Trade Agreement
(NAFTA) & EC lowers many existing
safeguards
 (However, after 9/11 a lot more scrutiny &
security does exist)
Part 6: Ch. 36
 Continued advances & international
transportation will facilitate growth in ICOs
 The movement of trillions of dollars in wire
transfers make it difficult for law
enforcement to track every transaction
down
 (The use of the internet, which cannot be
controlled or monitored adequately,
reinforces this)
Part 6: Ch. 36
 Preventing, disrupting & successfully
prosecuting organized crime in most parts of
the world is difficult
 Criminal organizations have survived the
onslaught of law enforcement for decades
 Now, ICOs pose a bigger threat and are more
powerful than their predecessors
 Enforcement of law globally poses
jurisdictional issues as well
Part 6: Ch. 36
 In a post-9/11 world, what challenges do ICOs
face that they would otherwise not
experience?
 With a focus on terrorism & terrorists, have
ICOs been able to operate under the radar of
law enforcement?
Part 6: Ch. 36
Part VI
Chapter 37
 Intersection of state & corporate interests
during war is basic part of war-making
 Every capitalist country must rely on private
sector production to make weapons
 With a permanent wartime economy in US
after the end of World War II, major
providers of weapons and logistical support
such as General Electric, Lockheed and
Boeing became regular recipients of
government contracts
Part 6: Ch. 37
 These companies also were at center
controversies regarding cost overruns and
questionable charges
 Much of this situation had been described by
C. Wright Mills (1956) in Power Elite which
also noted the “revolving door” between
corporate, military and political
organizations as leaders from each move
from one to the other
Part 6: Ch. 37
Part 6: Ch. 37
 Examines current controversy about former
VP Dick Cheney & Halliburton:
 Claims that Halliburton was awarded no-bid,
cost-plus contracts point to the potential for
state-corporate crime and war profiteering
becoming a legitimate practice
 This study examines the relationship
between Halliburton, the Bush
administration, the War on Terror, and war
profiteering
Part 6: Ch. 37
 First established in 1919, Halliburton has
had a history since the 1990s and Cheney’s
tenure as CEO prior to the 2003 invasion and
occupation of Iraq, of what can be classified
as corporate crime
 Many of its actions have come under the
scrutiny of the Securities & Exchange
Commission (SEC), US General
Accountability Office (GAO), and Congress
Part 6: Ch. 37
 These include:
 Overcharging the US government for
contracted work
 Utilizing bribes to attain foreign contracts
 Using subsidiaries and foreign joint ventures
to bypass US law restricting trade embargoes
 In 2001 the Treasury Department began an
inquiry into whether Halliburton had used
transnational trade loopholes to circumvent
sanctions on Iran by doing business with it
through foreign subsidiaries
Part 6: Ch. 37
 In another case, Halliburton’s subsidiary
Dressler, Inc. did substantial business with
Iraq
 from 1997 to 2000, $73 million worth of deals
with Saddam Hussein
 Such business was prohibited by
international trade sanctions at the time &
carried out under the guise of the UN’s oilfor-food program
 In 2004 Halliburton came under
investigation by the French government, the
US Dept of Justice & SEC for international
bribery
Part 6: Ch. 37
 For example the DoJ and France conducted
a criminal investigation into an alleged $180
million bribe paid by Halliburton & three
other companies to Nigerian government in
exchange for a $4 billion contract to build a
natural gas plant
 In 1997 the GAO charged Halliburton with
billing the US Army for excessive charges
related to ” cleaning” the same offices up to
four time a day
Part 6: Ch. 37
 A 2000 follow-up GAO report found systematic
overcharges via inflated costs
 Halliburton paid $2 million in fines to resolve the
fraudulent overcharges
 Separately the Defense Department inspector
general and a federal grand jury investigated
charges that Halliburton’s subsidiary KBR
defrauded the government millions of dollars
through inflated repair prices at Fort Ord in
California
 Halliburton again paid $2 million in fines to
resolve the fraud charges
Part 6: Ch. 37
 The relation between Halliburton and
Cheney date back to 1990s when Cheney,
then Reagan’s secretary of defense, assigned
Halliburton the task of conducting a
classified survey detailing how private
corporations could do logistical support for
US military
 Paid $3.9 million for this work, and another
$5 million for a follow-up study, this led to
Halliburton receiving a 5 year contract to be
the US Army’s on-call private logistics arm
Part 6: Ch. 37
 It held this contract until 1997 when it was
beat out by DynCorp in competitive bidding
 Dick Cheney, along with David Gribbin his
deputy secretary of defense, was hired by
Halliburton as its CEO in 1993 providing the
company with invaluable level of access to
government
 The connection paid off:
 Between 1995 and 2000 Halliburton doubled
the value of its government contracts,
obtaining $1 billion in defense contracts in
1999-2000
Part 6: Ch. 37
 Cheney himself after becoming Bush’s Vice
President continued to directly hold
Halliburton stock until 2002
 He had a direct financial interest in the
company during his first two years as VP
 A number of Bush family members have
direct and indirect financial connections
with Halliburton in various roles and
capacities
Part 6: Ch. 37
 While serving as VP, Cheney continued to
draw income from both the US government
and Halliburton
 Since Cheney returned to government
service, Halliburton has paid far less for
lobbying for defense contracts while
receiving greater, even bigger awards
Part 6: Ch. 37
 For example, in the two years prior to Cheney’s
election as VP, Halliburton spent $1.2 million
lobbying & attained about $900 million a year
 In 2001-2002, it spent half the previous amount,
$600,000 lobbying;
 by 2003 it halved that amount again to just
$300,000 lobbying for over $6 billion in contracts
 The VP’s office apparently coordinated in March
2003 some $7 billion of defense contracts for
Halliburton in connection with the Iraqi War as
well as future options
Part 6: Ch. 37
 Many of these contracts were noncompetitive,
cost-plus
 Essentially blank checks that ensured Halliburton
would be reimbursed for whatever it bills for
cost, plus its profit
 As a result, Halliburton’s stock nearly doubled
from $12.62 a share in 2002 to $23.90 in 2004
 Halliburton’s “insider” advantage for war
contracts is further demonstrated by the fact that
very few other corporations, domestic or foreign,
received government contracts
Part 6: Ch. 37
 Halliburton companies have engaged in
systematic, significant overcharging for its
Iraq contracts
 On April 1, 2001, the Bush administration
revoked strict regulations(no. 65 FR 80255)
that would have made Halliburton et al.’s
overcharging as well as other violations a
basis for a period of ineligibility for future
government contracts
Part 6: Ch. 37
 Some overcharging by Halliburton involved
huge amounts of money
 A Pentagon audit found in 2003 that it had
overcharged $61 million for gasoline
deliveries to Iraqi citizens
 Another audit found that it overcharged $67
million for military dining services or 3
times the number of dinners it provided
Part 6: Ch. 37
 The Pentagon warned Halliburton in 2003 of
“serious repercussions” for poor food &
dining service quality although nothing ever
happened
 In addition Halliburton billed for labor
never performed as well as charges for
delivery & transportation costs of empty
trucks and trailers
 All of the above clearly fall into the category
of state-facilitated corporate crime
Part 6: Ch. 37
 Why was Halliburton able to get away with
its unethical practices even after Dick
Cheney left office?
 What would other government contractors
(without such a connection to the White
House) experience if they would have
implemented the same practices as
Halliburton?
Part 6: Ch. 37