A company or a corporation is an artificial person or a legal entity created by the authority of laws of a country, and they are considered to be having a separate legal identity from that of its members, perpetual succession, and a common seal. This means that a company is an “artificial person” invisible, intangible and with a discrete legal entity created by law. So, can such “legal entities” without any physical form commit crimes? And if so, why do they commit crimes? Companies indeed commit crimes. Edwin Sutherland in 1949 presented a paper that said that corporations break the law and they get away with it. He studied in detail the derelictions of companies (70 large companies and 15 public utilities) and focused on antitrust violations, false advertising, theft of trade secrets and bribery. A company, if regarded as a person, can indeed incur liabilities like a natural person for its wrongdoings. This train of thought led to the development of the concept of corporate crime. Basically, corporate crime focuses on individual, collective and organizational wrongdoing in a business setting.
The scope for corporate crime has increased rapidly because of global capitalism, cyber cash, e-commerce, and rapidly shifting industrial infrastructure. In fact, corporate crimes are considered to be even more damaging to the society than the so called “common crimes” like burglary, theft etc. Moreover, experts speculate that the costs of corporate crimes are 10- 35 times more than the ‘common’ crimes. The range of crimes committed by companies is much wider than what was traditionally understood, it includes price fixing, stock market manipulation, insider trading, anti-competitive market manipulations, the formation of illegal cartels, manufacturing of highly dangerous products, environment pollution, violation of health and safety regulations in the workplace often leading to death or serious injuries, false or misleading advertising, consumer fraud, racial and gender discrimination, bribery, espionage, and other fiscal offences.
White collar crime is a social category or concept like juvenile delinquency, rather than a legal concept. Sutherland defined the term white collar crime as a “crime committed by a person of respectability and high social status in the course of his occupation and which involves a violation of delegated or implied trust”, in one form or another. The definition of white collar crime as per Herbert Edelhertz is as follows: “an illegal act or series of illegal acts committed by non-physical means and by concealment or guile, to obtain money or property, to avoid the payment or loss of money or property, or to obtain business or personal advantage.”
The American Bar Association in its report on economic offences defined white collar crime as “An economic offence is any non-violent illegal activity which principally involves deceit, misrepresentation, concealment, manipulation, breach of trust, subterfuge, or illegal circumvention.” And Gilbert Geis states that such crimes “deals death not deliberately but through inadvertence, omission and indifference.”
Traditionally almost all of the criminological theories dealt with crimes committed by humans that also especially focused on economically not so well-off people. Because of which these theories were inadequate to understand the phenomenon of white-collar crime and corporate crime. Edward Sutherland coined the term ‘white collar crime’ in 1939 after which the theories of criminality of the upper class and corporations grew with leaps and bounds.
The Scope for corporate crime has increased rapidly in the last two decades because of globalization and emergence of new ways of conducting business like cyber cash etc. The crimes committed by companies have also increased and includes criminogenic situations in every aspect of their operation from formation to dissolution. Thus, in this paper the criminal activities of corporations have been divided in to 8 categories which includes corporate fraud, corporate environment crimes etc.
Sutherland’s claim that the differential association theory as per which offenders learn criminogenic behavior from their peers is an all-encompassing theory to answer criminal behavior seems inadequate because of the following reasons.
- Companies are legal entities and do not have a physical form and they do not have peers with whom they associate on a regular basis. So, their behavior cannot be learned from friends etc.
- The theory itself seems incomplete because if indeed criminal behavior is learned from peers, then who did the original criminal learn it from? This question here could lead us on a ‘chicken or egg first?’ journey.
So, Sutherland’s claim that the theory of differential association is all encompassing is in fact not true.
Theories of strain, opportunity and chance might give a better perspective on corporate crime. In a competitive world like the corporate world there is a constant pressure to maintain and grow and in such instances the companies seek opportunities which are criminogenic, for the overall benefit of the company. However, in the end choice is what determines the outcome. The perceived utility may trump the costs of such illegal activities. So, it can be said that corporate crimes are a result of strain, opportunity and choice.
So, how are such problems to be removed from the society? The answer is deterrence. Specific deterrence could take the form of penalties, criminal fines, dissolution of the company etc. And in such cases even general deterrence would be more effective than in crimes of passion.
