Business, Legal & Accounting Glossary
In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals that may be identified with a corporation or other business entity (see vicarious liability and corporate liability).
Corporate crime overlaps with:
An 1886 decision of the United States Supreme Court, in Santa Clara County v. Southern Pacific Railroad, has been cited by various courts in the US as a precedent to maintain that a corporation can be defined legally as a ‘person’, as described in the Fourteenth Amendment to the U.S. Constitution. The Fourteenth Amendment stipulates that,
In English law, this was matched by the decision in Salomon v Salomon & Co  AC 22. In Australian law, under the Corporations Act 2001 (Cth), a corporation is legally a ‘person’.
This doctrine of corporate personhood has often impeded prosecution of corporate crime by allowing corporations to claim Bill of Rights protections in court, sometimes with success.
History shows that laws have always served as instruments of regulation. Lea (2001) argues that whereas crime used to be the exceptional event, disrupting the otherwise normal socio-economic processes, as crime becomes more frequent it lost its status as an exceptional event and became “a standard, background feature of our lives—a taken for granted element of late modernity.” (Garland 1996: 446)
Corporate crime has become politically sensitive in some countries. In the United Kingdom, for example, following a number of fatal disasters on the rail network and at sea, the term is commonly used in reference to corporate manslaughter and to involve a more general discussion about the technological hazards posed by business enterprises (see Wells: 2001). Similar incidents of corporate crime, such as the 1985 Union Carbide accident in Bhopal, India (Pearce & Tombs: 1993) and the behaviour of the pharmaceutical industry (Braithwaite: 1984).
The Law Reform Commission of New South Wales offers an explanation of such criminal activities:
Similarly, Russell Mokhiber and Robert Weissman (1999) assert:
Behaviour can be regulated by civil law (including administrative law) or the criminal law. In deciding to criminalize particular behaviour, the legislature is making the political judgment that this behaviour is sufficiently culpable to deserve the stigma of being labelled as a crime. In law, corporations can commit the same offences as natural persons. Simpson (2002) avers that this process should be straightforward because a state should simply engage in victimology to identify which behaviour causes the most loss and damage to its citizens, and then, represent the majority view that justice requires the intervention of the criminal law. But states depend on the business sector to deliver a stable economy, so the politics of regulating the individuals and corporations that supply that stability become more complex. For the views of Marxist criminology, see Snider (1993) and Snider & Pearce (1995), for Left realism, see Pearce & Tombs (1992) and Schulte-Bockholt (2001), and for Right Realism, see Reed & Yeager (1996). More specifically, the historical tradition of sovereign state control of prisons is ending through the process of privatisation. Corporate profitability in these areas, therefore, depends on building more prison facilities, managing their operations, and selling inmate labour. In turn, this requires a steady stream of prisoners able to work. (Kicenski: 2002)
The majority of crimes are committed because the offender has the ‘right opportunity’, i.e., where the offender simply sees the chance and thinks that he or she will be able to commit the crime and not be detected. For the most part, greed, rather than conceit, is the motive, and the rationalisation for choosing to break the law usually arises out of a form of contempt for the victim, namely that he, she or it will be powerless to prevent it, and has it coming for some reason. For these purposes, the corporation is the vehicle for the crime. This may be a short-term crime, i.e., the corporation is set up as a shell to open credit trading accounts with manufacturers and wholesalers, trades for a short period of time and then disappears with the revenue and without paying for the inventory. Alternatively and most commonly, the primary purpose of the corporation is as a legitimate business, but criminal activity is secretly intermixed with legal activity to escape detection. To achieve a suitable level of secrecy, senior managers will usually be involved. The explanations and exculpations may, therefore, centre around rogue individuals who acted outside the organizational structures, or there may be a serious examination of the occupational and organisational structures (often hinged on the socio-economic system, gender, racism and/or age) that facilitated the criminal conduct of a corporation
Bribery and corruption are problems in the developed world, and the corruption of public officials is thought to be a primary cause of crime in developing societies, where massive foreign debt often undermines the provision government services. Peèar (1996), in discussing the implications for policing in Eastern Europe as it seeks to adapt its laws to match a capitalist model, points to the difficulty of distinguishing between lack of morality and criminality in economic crimes that tend to emerge from the structural relationships in modern commerce.
In part, this will be a function of the public perception of the degrees of socialogy culpability involved. Weissman and Mokhiber (1999) catalogue the silence and indifference of the major media in the face of widespread corporate corruption. Only in part is this justifiable. The news media find it difficult to respond to corporate crime both because reporting may compromise the trial by tainting the jury’s perceptions, or because of the danger of defamation proceedings. Further, major corporate crime is often complicated and more difficult to explain to the lay public, as against street or property crimes, which may provide graphic visual evidence of harm to victims injured, or of property that has been damaged or vandalized in spectacular fashion. But, more significantly, the news media are owned by large corporations which may also own prisons. Thus, the political decisions on the resources to allocate to investigate and prosecute will tend to match the electorate’s understanding of the dangers posed by ‘crime’. In sentencing, the fact that the convicted individuals may have had an impeccable character as presidents, CEOs, chairmen, directors and managers is likely to be a mitigating factor.
Examples of criminal behaviour in most jurisdictions include: insider trading, antitrust violations, fraud (usually involving the consumers), damage to the environment, exploitation of labour in violation of labour and health and safety laws, and the failure to maintain a fiduciary responsibility towards stockholders.
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Definitions for Corporate Crime are sourced/syndicated and enhanced from:
This glossary post was last updated: 19th April, 2020 | 7 Views.