What is Corporate Crime?
DEFINITION
Corporate crime or organizational crime refers to illicit activity performed by employees in order to benefit their employing organization (monetarily or otherwise). Others at the company do not need to know about, or condone, the illicit activity for it to be considered a corporate crime.
With the definition of corporate crime out of the way, let’s see how it occurs:
- Individuals establish a corporation for the express purpose of committing white-collar crimes. Usually, this form of corporate crime involves a short-term approach wherein the ‘corporation’ acts as if it conducts legitimate business.
- Individuals working for an established corporation conceal their illicit activity by blending it in with their legitimate business duties.
Believe it or not, particularly in the second instance, offenders may not even realize or view their actions as criminal. Why? Because corporate subcultures often normalize and even valorize such practices.
“Business as usual,” as they say. You should do everything you need to do to ensure your employing organization’s success.
Corporate crime comes in many different forms: price fixing, worker exploitation, illegally dumping toxic waste, false advertisement, and so on.
The Zero Theft Movement, along with our growing community, works to eliminate the rigged parts of the economy in order to protect the ethical parts. For you, the public, and companies. Corporate crime is one example where companies profit at the expense of the economy and even our physical health. Read on to discover how you can best fight bad actors to help achieve an ethical economy.
The Internal Revenue Service (IRS) estimated that tax evasion cost the federal government an average of $458 billion per year between 2008 and 2010. See what the ZT community has uncovered about corporate tax evasion…
Theories of Corporate Crime
Academics, particularly psychologists and criminologists, have researched cases of corporate crime to come up with theories on what leads to toxic corporate subcultures. We should mention that these theories aren’t mutually exclusive, rather they operate together to help create a fuller picture of how crime becomes normal for a corporation.
Subcultural theory
Subcultural theory emerged in criminology circles through the work of the Chicago School. This theory, in short, argues that the values and attitudes of certain groups/subcultures encourage crime and violence.
Some workplace cultures (or subcultures within the larger community) may promote or even expect one another to commit corporate crimes in order to benefit their shared employer. Often a special understanding between employees on the same level in the corporate hierarchy can develop, as they experience the same difficulties and share similar responsibilities.
A company’s C-Suite represents a subculture of its own. Here we have a social group whose actions have significant repercussions for the company as a whole. If executives normalize criminal solutions to the company’s problems, corporate crime can easily permeate the entire organization. From the top-down, through executive directives.
These subcultures can even be formed through collusion between supposed rivals, as Dr. Gilbert Geis found in his landmark study on price-fixing in the heavy electrical equipment industry.
Structured Action Theory
Structured action theory proposes that understanding crime involves appreciating the social structures (gender, race, class) at play in a community. While the numbers suggest that more women hold leadership positions now than ever before, that has not been the case historically. Therefore, there’s much more data and research about relationships between male executives.
J.W. Messerschmidt, sociology and criminology professor at the University of Maine, has extensively studied how masculinity is viewed in the corporate workplace. Male executives share the same gender, as well as the authority (perhaps among other things). Consider the commonplace situation where the new company hotshot has become a junior executive. He’s brought into the fold, where the all-male executive suite advises him on how he should best perform his role.
Now imagine they tell him to always prioritize the company’s bottom line at all costs. Over his personal values, beliefs, principles. Even at the risk of breaking the law. They might even show him how he can commit crimes to further generate profits for the company. Fitting in, looking up to one’s senior colleagues, trying to live up to their expectations. These are all social pressures that can perpetuate criminal practices for generations.
Anomie theory
Sociologist Robert K. Merton’s anomie theory proposes that a community enters into a state of anomie (the lack of the usual social or ethical standards) when its shared goals (e.g. company’s success) experience friction or some kind of blockage. There are different models of behavior, but the one that applies to corporate crime (and crime, in general) is called innovation. This refers to when the community continues to share the same goals but will resort to illegal means to achieve them.
Corporate Crimes vs. White-Collar Crimes
Although people use the terms interchangeably, there’s a key difference between corporate crime and white-collar crime.
To return to the definition of corporate crime, employees commit them so their employers benefit.
In contrast, white-collar crimes usually involve employees embezzling or defrauding their employing organization for their own benefit.
The two crimes differ, therefore, in who or what profits from the illicit activity. In fact, white-collar crimes clearly hurt rather than help the employing organization.
For a known example of white-collar crime, NPR reported, “Convicted swindler Bernard Madoff was sentenced Monday to 150 years in prison for stealing billions of dollars from hundreds of investors over decades in one of the largest Ponzi schemes in history.” The news outlet discusses how Madoff, rather than investing his clients’ money into stocks, misappropriated the capital to pay off old investors.
Unite with your fellow citizens and fight crony capitalists and corrupt officials! Our crowdsourced, crowd-approved Total Theft Report shows you just how much is being stolen from the American public.
Corporate Crime Examples
Corporate crime comes in many different forms: price-fixing, worker exploitation, illegally dumping toxic waste, false advertising, and so on.
Credit Suisse and tax evasion
Credit Suisse Group AG, CC BY-SA 3.0, via Wikimedia Commons
In 2014, the Department of Justice released the following report after Credit Suisse “plead[ed] guilty to Conspiracy to Aid and Assist U.S. Taxpayers in Filing False Returns.”
The DOJ’s report states, “[…]Credit Suisse acknowledged that for decades prior to and through 2009, it operated an illegal cross-border banking business that knowingly and willfully aided and assisted thousands of U.S. clients in opening and maintaining undeclared accounts and concealing their offshore assets and income from the IRS.”
As you will find with many instances of corporate crime, illicit activity occurs throughout the business. That is to say, prosecutors often can’t pinpoint single actors who have, unlike their colleagues, broken the law. The standard defense, oftentimes, is that the employee, especially the many involved in the day-to-day operations, had no knowledge that what they were doing was illegal. The crime, to them, was just ‘standard procedure.’
Wells Fargo customer treatment scandal
In recent years, Wells Fargo has come under fire from alleged and proven customer maltreatment.
Reuters reported Wells Fargo paid “customers at least $386 million to settle class-action claims that the bank signed them up for auto insurance they did not want or need when they took out car loans.”
The news outlet, in a different article, stated, “[…] Wells Fargo admitted that between 2002 and 206 it pressured employees to meet ‘unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent […]’”
The reported issues have piled on for Wells Fargo, but you should note how, like with Credit Suisse, individual executives did not receive any sanctions.
From @ewarren on Twitter: “I’ve fought for years for real accountability for Wells Fargo and its executives. This is a small step in the right direction, but it’s not a substitute for holding senior executives individually accountable—and bringing criminal charges against them if the evidence justifies it.”
Elizabeth Warren pointed out that in response to an NBC tweet reporting the Wells Fargo $3 billion fine, writing: “This is a small step in the right direction, but it’s not a substitute for holding senior executives individually accountable–and bringing criminal charges against them if the evidence justifies it.”
DuPont and Chemours
Corporate crimes don’t always result in monetary damage alone. They can also seriously harm your health.
According to a Reuters article, DuPont Industries and Chemours recently “settled about 3,550 personal injury claims arising from the leak of perfluorooctanoic acid, which is also known as PFOA or C-8, from its plant in Parkersburg, West Virginia.”
PFOA was used in the manufacturing of, amongst other things, Teflon.
99% of Americans will have that harmful chemical in their bloodstreams for life.
Difficulties in Eradicating Corporate Crime
As you have probably realized, even with admissions of guilt, the massive corporations receive an admittedly sizable fine. The executives, though, don’t face any charges, despite their potential role in enabling, and even rewarding, corporate crimes.
But for the few cases that bring (some) justice, too many never see the light of day.
For one, corporations often have elite legal teams and massive war chests to outcompete any government agency. Their capacity to defend themselves impedes and often prevents public prosecutors from establishing guilt beyond a reasonable doubt.
Furthermore, it’s often hard to pin a crime on an executive or management group when they do not involve themselves so much with the day-to-day operations of the business. This, for example, applies with Wells Fargo unwanted accounts and insurance.
Thirdly, colossal fines and/or imprisoning high-level executives can ruin a cornerstone business, likely leading to ripple effects that harm innocents (employees, citizens/customers, and communities).
Finally, those appointed to head government agencies often come from the industry which they now need to regulate. Or retiring government officials get hired by the industry they once regulated. These ‘incestuous’ relations can lead to undue protections for the industry and/or potent lobbying influence that, either way, helps corporations unethically optimize profits.
Wage stagnation appears to have been an issue since the 70s, with the end of the Bretton-Woods Agreement. Do you think workers are receiving less than they perhaps should?
Is Corporate Crime Rigging the Economy?
While street crimes dominate the news cycle, corporate crimes cause far more damage to our society. Physically. Economically. Environmentally. A robbery by gunpoint does not, in reality, will never affect 99% of a nation. Unless you believe in the butterfly effect…
DID YOU KNOW?
According to Psychology Today, street crimes cost the public an estimated $15 billion annually. White collar crimes, on the other hand, cost $1 trillion.
All in all, we need to focus our efforts on combating corporate crime. Street crimes, although deeply troubling and problematic, just do not compare in scale to the damages caused by corporate crime.
Do NOT let anyone trick you into thinking that corporate crime is anything less than an illicit act. Crony capitalists can claim that their criminal acts were performed unknowingly, for the best of the business. We should not downplay this behavior as an ‘honest mistake.’ That’s exactly how executives can avoid imprisonment and deserved sanctions.
So what can you do immediately?
The Zero Theft Movement strives to eradicate the rigged parts of the U.S. economy and protect the ethical parts.
On our voting app, citizens author theft proposals, and the community decides whether that investigation has convincingly proven (1) theft is or isn’t occurring in a specific area of the economy, and (2) how much is being stolen or possibly saved. Through direct democracy, we can collectively decide where the problem areas are and start working on addressing them systematically.
The ZTM community knows that many businesses, including some corporations, act ethically. We are trying to hold the bad actors accountable. The corrupt corporations, lobbyists, and government officials. That way, good people and good businesses can flourish.
Standard Disclaimer
The Zero Theft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.
Terms like ‘steal,’ ‘theft,’ and ‘crime’ will frequently appear throughout the article. Zero Theft will NOT adhere strictly to the legal definitions of these terms (since congress sells out). We have broadly and openly defined terms like ‘steal’ and ‘theft’ to refer to the rigged economy and other debated unethical acts that can cause citizens to lose out on money they deserve to keep.