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The concept of organizational crime refers to illegal acts by officers, employees or managers of legitimate formal organizations in furtherance of their conceptions, however farfetched or erroneous, of organizational interests and goals. The most distinctive feature of this type of crime is that it is organizational, not individualistic. This is not to say that organizational acts are not the product of individuals. The crucial point is that, individuals involved in organizational criminality are acting in behalf of the organization and not primarily for direct personal gain, although higher corporate profits, including those obtained illegally, may bring executives such personal benefits as promotions, bonuses, and salary increases.
They are potentially much more serious and the motivation for this kind of offenses is not to impose harm on others but rather to gain a financial advantage. They are not predatory crimes. Indeed the offenders would prefer that, no one be physically harmed because the lack of obvious physical harm makes it easier to conceal the offense. However, if the crimes come to light and brought into court, the offenders can reasonably claim that they never intended to harm anyone.
The criminal enforcement is rare especially for the white collar crimes committed in organizational settings. When legal actions do occur, they are usually initiated by administrative agencies which do not present a significant problem to the organizations. Even before the legal measures are taken, companies are usually given a considerable notice of their violations. For example, for food producers, they may be asked to modify their advertising claims or to withdraw their product. Court action is only taken as a last resort.
Organizations also hide their offenses within the businesses, making their discovery especially difficult. For instance, W. R. Grace Corporation dumped toxic wastes on land that it owned. The waste products eventually had filtered into the groundwater and from there into the homes and bodies of the people and caused leukemia on children. There were no obvious signs that the company appears to be doing something wrong from the outside. The offense is shielded from the scrutiny of outsiders. Unless and until something obviously bad happens, the only way in which the offense is going to be discovered is through either a regulatory inspection or a complaint by an inside whistleblowers. On the other hand, the victims of organizational white collar crime may be either powerless to do anything about it or, not aware that they are being exposed to a hazardous substance or workplace condition. Workers may be powerless simply because they have no other employment opportunities or a firm also may purposively keep knowledge about toxic exposure and its consequences from employees, in some cases referring workers to company doctors who dismiss illnesses.
In order to insure profits at a minimum of expense, corporations willfully engage in crime. Once these systematic crimes become normal operating procedure, they are not the responsibility of any one individual in the corporation. On the other hand, when crimes discovered by agencies, different from the traditional offenders, they show surprise and indignation, and try to prove that they are concerned about the problem. Can a murderer say that he was working on his problem or that he was making considerable progress in finding ways to control his behavior after committing his act? The violent offender has no right to show surprise that his conduct is being questioned. But the criminal corporation seems to have this right.
And it is also important to recognize that in the case of organizational crimes, the potential offenders have a great deal of influence over the nature of the oversight that is imposed on them. The system of enforcement is as a result of a negotiated political process between the business community and government. So the opportunity structure is shaped at least in part by the offenders themselves through their influence over the regulatory regime that governs their activities. Large and well established companies generally have great economic and political power that enables them to influence congress, community leaders, and other stake holders who make it more difficult for regulators to investigate and pursue offenders even if violations somehow come to light. Is it possible that state legislature inviting in burglars or robbers to comment on proposed changes in the law about increase in penalties of burglary or robbery? For sure this is impossible. Yet, something very similar to this happens whenever legislative authorities contemplate changing the laws or implementing new criminal laws regarding business activities. A lot of people from organizations give their input on how the law should be written and enforced.
On the other hand, organizations have the advantages of the organizational culture. It is a social force that controls the patterns of organizational behavior by shaping members' cognitions and perceptions of meanings and realities. It has a powerful influence throughout an organization. Similarly organizational culture contains techniques of neutralization, linguistic devices that serve as moral justification for crime and mix of symbolic definitions favorable to violation of law. Through interaction with other members of the organization, employees are socialized into the culture of organization that is, they learn the techniques, motivations and rationalizations of criminal behavior.
Neutralization techniques permit offenders to engage in illegal behavior while at the same time not thinking of themselves as criminals. For example in denying responsibility, person in leadership positions can simply deliberately avoid knowing what their subordinates are doing. They just set general goals and objectives for the organization and hold their subordinates accountable for achieving them. If someone in the organization breaks the law while pursuing a corporate goal, the leaders can claim that they never directly ordered or authorized law breaking. Hence, they should not be held responsible for somebody else's mind. Employees and subordinates on the other hand, can view themselves as simply subjects who have to obey any orders they receive from those above them. They are simply doing their jobs and if they do not do so the company will find others who will. In this way both the leaders and subordinates can still think of themselves as essentially law abiding and morally up standing people. Sometimes they can rationalize themselves by thinking that obedience to the law is not their most important moral obligation. They have obligations to their employees and customers. It is more important to make a profit and stay in the business in order to protect people's jobs than it is to obey some obscure and probably misguided government regulation. All of the techniques help make it morally acceptable to offenders to take advantage of opportunities. Organizations also receive considerable support from similar, even competing, individuals and businesses. When there is a monopoly, with few restrictions and little surveillance, group support is raised to the level of standard operating procedure that pervades the entire industry.
Large organizations can also normalize the deviance under certain circumstances. Normalized deviance arises out of a more profound process of collective self deception, in which actors, for complex reasons, really do not see their decisions as being potentially very risky with very harmful consequences. Normalization involves some factors. First hierarchy and the division of tasks among subunits make it more difficult for information to flow and be accurately interpreted throughout the organizational structure due to the structural secrecy. What happens in one part of an organization may be neither known nor fully understood in another part. On the other hand, all large organizations are accountable to external parties and forces. Being accountable to external parties influences how they interpret information. The more the organization is subject to accountability, the greater the likelihood that it will engage in crime. They shape the way that organizations evaluate information and make decisions. As a result, decision makers may downplay risks. For instance, both the Pinto case and the Challenger disaster involved in a combination of, complex and ambiguous information, external environmental pressures and structural secrecy.
PART B - QUESTION 2
The opportunity structure and techniques of many white collar crimes are dramatically different from those for ordinary street crimes. To understand the unique characteristics of white collar crime, it is better to work on a sample. Let's take burglars for example. First, burglars usually employ physical force to break into somewhere at a discrete point in time and space. Second, they enter the place, where they are not supposed to be and do something that is obviously illegal. Third, they come into direct contact with the victim or target of the offense. Here, the victim is specific identifiable individual. We can specify exactly where and when the event happened. Like burgling, most of the street crimes involve physical actions, there is a direct contact between the offender and target, and they are obviously illegal and occur at particular places and times.
Different from the traditional street crimes, in many of the white collar crimes, the offender has a legitimate access to the location in which crime occurs, he or she is spatially separated from the victim and his or her actions have a superficial appearance of legitimacy.
All predatory offenses have to solve the basic problem of gaining access to their crime target. White collar offenders have an advantage over street criminals in this regard, because due to their occupational position, they have legitimate right to be there and to be involved in the kinds of activities out of which their offense arise. So, blocking potential target strategy is not feasible for white collar crimes. Specialized access allows harms to victims in four ways. First, offenders can make illicit transfers of money, goods or other resources to the detriment of others. Second, they can abuse their access to misinform others. Third they can apply their specialized roles to manipulate others. Fourth, they can endanger the health and safety of others. For example in W. R. Grace Corporation case, the company had a legitimate right to use whatever chemicals or materials were involved and dispose of them properly. Thus it had specialized access.
Most of the white collar crimes depend on a superficial appearance of legitimacy. Embellishment, mimicking or hiding and deception help the offender maintain the superficial appearance of legitimacy. Unlike the most traditional street crimes, white collar crimes are not obvious. The offenses involve behaviors or activities that look normal or routine when viewed from the outside. They hide their illegal activities by mimicking the normal activities in a variety of ways. For example in health care frauds, a doctor submits a claim to the Medicare or insurance agencies. There is nothing unusual about this. So the idea that offenders will refrain from committing crimes if they think that they are under surveillance, does not work for white collar crimes. The problem is that, the offender is not doing physically anything illegal or suspicious and they often do not leave visible traces of their occurrence like in the case of W. R. Grace Corporation. The company appeared to be doing nothing wrong, at least as viewed from the outside. Families in Woburn first tried to show that there was a statistically improbable cluster of leukemia cases. Then, they had to prove that toxic waste from the plant could filter into the ground water and eventually into the drinking water of residents. In the final step, they had to show that employees and managers at Cryovac improperly disposed their toxic waste.
The white collar offenders are also often spatially separated from the actual victims. Spatial separation facilitates the invisibility of white collar crime and white collar offenders. It makes it difficult to see the crime, because the crime does not involve a visible interaction between an offender and a victim. Those who harmed by the hazardous damping in Woburn case were living miles away from the plant.
Health care fraud illustrates the perfection of defining the characteristics of white collar crime. All health care providers have a legitimate access to patients and government programs such as Medicare. The crime is committed within the office of doctors. Even though the offenders are stealing from the government and insurance agencies, they are spatially separated from them. So there is no physical contact between the offender and the victim. The offender simply sends in an electronic form with false information that looks routine and legitimate and then waits for his or her check. So their actions have the superficial appearance of legitimacy. There are usually so many claims, so it is impossible to review all of them carefully to make sure that they are legitimate.
So, white collar offenders carry out their offenses by deception, abuse of trust - concealment and conspiracy. Deception occurs when one person misleads another by making things appear other than as they really are. So there are two conditions to be met. First one person must deliberately mislead another about the nature of reality; second, the other person must misperceive the reality. For example, a businessman who needs a loan may deliberately overstate his financial assets and may understate financial liabilities on the loan application to make the bank loan officer approve it.
Abuse of trust occurs in agent client relationships. Agents provide clients with some sort of specialized service. The main trouble with agency relationship is that they are unbalanced. Agents usually have access to much more information than the client. For example we give our money to stockbrokers to invest in the market for us. Here the relationship solely base on trust. We hope that the broker will take care of our money and invest in wisely. But the fact is that, agents now have control on our money and they can use it to their advantage. They have their own self interest just like we have. They may simply take our money and run off with it.
Concealment and conspiracy are also used by the ordinary street offenders but for a different purpose than white collar offenders. For street crimes, concealment may be used to hide the offenders' identity but in white collar crime, it is used to hide the crime. For example, in the case of robbery, the robbers hide the true nature of their activities (checking out the place, the place of register, the number of people and etc.) until to the time of robbery, but when the robbery gets started; it becomes obvious that a crime is underway. In the case of white collar crimes, the conspiratorial activities are designed to hide the crime itself. They try to benefit from their crime without ever revealing that anything illegal has taken place. Victims usually do not know that they are victimized. So different from the traditional crimes, there is a hidden and diffused victimization here. If we look to the heavy electrical equipment antitrust cases of 1961, we can see that executives from a couple of major companies were getting together, deciding who is going to submit the lowest price for any given project. Rather than competing against one another by submitting their bids in isolation from one another, these executives decided in advance who was going to win each contract. Their conspiratorial activities were designed to hide the crime itself. If they didn't submit the identical bids in sealed envelopes, I mean if they behaved more carefully and cleverly, the price fixing would have gone undetected for longer periods.
Finally, as I mentioned in the first question, unlike ordinary street criminals, the people and organizations that commit white collar types of crimes play an active role in shaping the laws that govern their behavior. Corporations can influence both the way in which regulations are written and the way in which they are enforced. When legislative authorities contemplate changing the laws or implementing new criminal laws regarding business activities, CEO's, industry representatives, and lobbyists are invited or invite themselves to meet with legislators to give their input on how the new law should be written and enforced. On the other hand, unlike most street crimes, most white collar crimes are not driven by spontaneous emotions. Because of their complexity, they require careful planning. White collar crime is different also in the backgrounds and characteristics of its perpetrators; the poor and disreputable fodder routinely encountered in police stations and in studies of street crime are seldom in evidence here.