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?