State-Corporate Crime Your starter for 10….. Why would war-torn Iraq give $190,000 to Toys R Us? • Iraq had paid nearly $20 billion in reparations from Saddam’s 1990 invasion of Kuwait… • Even after Saddam was overthrown, the payments from Iraq have continued. • Money is paid out through the United Nations Compensation Commission (UNCC) • Payments have gone to Kuwaitis who have lost loved ones, limbs, and property to Saddam's forces ….. And also to …the BIG CORPORATIONS • • • • • Halliburton ($18m), Bechtel ($7m), Mobil ($2.3m), Shell ($1.6m), Nestlé ($2.6m), • Pepsi ($3.8m), • Philip Morris ($1.3m), • Sheraton ($11m), • Kentucky Fried Chicken ($321,000) • Toys R Us ($189,449). • So we know something about corporate crime….. • We know rather more about state crime (though this class) • Although a certain amount of work has been done on both corporate and state crime, until 1990 there was no work conducted which highlighted that corporations and government agencies can act together to produce serious criminality. • Key authors of note and architects of the definitions and theoretical development of statecorporate crime as a concept are Kramer and Michalowski Definition of State-Corporate Crime • Understanding the crimes and social harms of the political and economic elite; • “State-corporate crime is defined as an illegal or socially injurious social action that is the collective product of the interaction between a business corporation and a state agency engaged in a joint endeavor. These crimes involve the active participation of two or more organizations, at least one of which is private and one of which is public. They are the harmful result of an interorganizational relationship between business and government” (Kramer, 1990: 1) • Two main types: State initiated corporate crime & State facilitated corporate crime • “The concept is primarily concerned with two aspects of the state-corporate relation: • First, that the intersection of corporate and state interests encourages the production of largescale social harms. • Second, that this intersection of interests decreases the likelihood that those harms will be criminalized and punished by the state”. • See (Whyte, 2003: 582) State initiated corporate crime • Corporations, employed by the government, engage in deviant behaviour with the approval of, or through the direction of, the government. State facilitated corporate crime • When the government regulatory institutions fail to restrain deviant business activities because of a degree of collusion between the business and the government, or because of some shared goals which would be undermined if the government were to adhere too stringently to the regulations. Decreasing likelihood of criminalization &(non) violations of law • Most state corporate crimes do not actually violate criminal law • Rather they violate regulatory law • The importance of this is that from a legal standpoint violations of regulatory law are not necessarily seen as ‘crimes’. Theoretical Approaches to the Study of State-Corporate Crime • Differential association theory (Sutherland) - looks at the individual level of action • Organisational theory (the anomie perspective) - looks at specific institutional factors • Political economic theory (Capitalism) -looks at the broad pre-existing social characteristics What are the catalysts for action? 1. Motivation or performance pressure 2. Opportunity structure 3. Operationality of control • See the developed framework of analysis TABLE 1: An Integrated Theoretical Model of State-Corporate Crime Catalyst for Motivation Action Opportunity Operationality Structure of Control Level of Analysis Interaction (face to face) Socialization Social meaning Individual goals Competitive individualism Material Definitions of situation Perceptions of availability & attractiveness of illegal means Personal morality Rationalizations & techniques of neutralisation Separation from consequences Obey authority Group think Diffusion of resp. TABLE 1: An Integrated Theoretical Model of State-Corporate Crime Catalyst for Motivation Action Opportunity Operationality Structure of Control Level of Analysis Organisationa Corporate culture Instrumental Operative goals rationality l (structure Internal Subunit goals and process Managerial pressure Culture of compliance Subcultures of constraints resistance Defective SOPs Codes of Creation of illegal conduct means Reward structure Role Safety & quality specialization control Task segregation procedures TABLE 1: An Integrated Theoretical Model of State-Corporate Crime Catalyst for Motivation Action Level of Analysis Institutional environment (history, political economy, culture) Culture of competition Economic pressure Organizational goals Performance emphasis Opportunity Operationality Structure of Control Availability of legal means Obstacles & constraints Blocked goals/strain Availability of illegal means Access to resources International reactions Political pressure Legal sanctions Media scrutiny Public opinion Social movements • See pg 274 of the Ronald C. Kramer, Raymond J. Michalowski & David Kauzlarich article in your weekly reading folder for full theoretical framework… • SOURCE: From Crimes of the American Nuclear State: At Home and Abroad, by David Kauzlarich and Ronald C. Kramer. Copyright 1998 by David Kauzlarich and Ronald C. Kramer. Commonly cited case studies on state-corporate crime • Challenger disaster (NASA & Morton Thiokol) • Imperial Food Products chicken processing plant, North Carolina • Valujet Flight 592 • But what of more recent examples? See your reading on the UK and the Congo. • What about Iraq (again)??? • The US and UK banking scandals and government bailouts of the banks in crisis??? Case Study: War and State-Corporate Crime • Governments rely on private sector industry to produce the weapons of war. • Chrysler, Ford, Chevrolet all retooled during WWII to produce tanks and guns. • Executives from military making corporations come into government fuses the interests of the state and previous corporate allegiances. • Eg US Vice President Dick Cheney and Halliburton • Halliburton well known for ‘corporate crimes’ – overcharging, bribery etc but we are interested in the applicability of the label of ‘state corporate Halliburton-Cheney connections • Early 1990s – Cheney: Reagan’s secretary of defence. • Cheney awards subsidiary of Halliburton contract to survey how private corporations could provide logistical support for US military forces around the world. • Halliburton employs Cheney in 1993 and Halliburton enjoys an increase in government contracts from 93-99. • In 2000, Cheney resigns from Halliburton to become Bush’s running mate in the 2000 presidential elections after divesting himself of 100,000 Halliburton shares worth $5.1 million. Then sells another 600,000 ($36million) shares once he’s declared his running mate BUT keeps After invasion of Iraq… • A no-bid contract awarded by the Army Corp of Engineers to put out oil fires ($15.6 billion) • Other contracts awarded included cooking meals, delivering mail, building bases, delivering supplies in competitive processes. • All are ‘cost-plus’ contracts: Halliburton will be paid for whatever it charges for its services plus an additional ‘fee’ for profit • Motto was aid to be ‘Don’t worry about it – it’s cost plus’ • Can this be called ‘state initiated war profiteering’? • Arguably, yes because of the relationship After invasion of Iraq…. • Over billing and lack of accountability by government amounts to state facilitated corporate crimes • Best explained not by me but by Panorama: ‘Iraq’s Lost Billions’ which investigates claims that as much as $23bn (£11.75bn) may have been lost, stolen or not properly accounted for in Iraq. http://news.bbc.co.uk/player/nol/newsid_7480000/newsid_7484100/748411 4.stm?bw=bb&mp=wm&news=1&bbcws=1# • Now more than 70 whistleblower cases threaten to reveal the scandals behind billions of dollars worth of waste, theft and corruption during the Iraq war by companies with links to the White House. Consider again… • Firstly, the idea that the intersection of corporate and state interests encourages the production of large-scale social harms. Does this apply in the context of ‘Iraq’s Lost Millions’? • Second, the idea that this intersection of interests decreases the likelihood that those harms will be criminalized and punished by the state. Does this idea hold applicability in the context of ‘Iraq’s Lost Millions’? • Is Iraq’s Lost Millions an example of state initiated corporate crime or state facilitated corporate crime? Why?