Corporate Crimes in an Organization

Abstract

Corporate crimes in most organizations today have become a common trend. These are unlawful activities conducted by corporations or individuals representing corporations. Most corporate crimes originate for unreasonable goals set by organization within a specified period. Apart from unreasonable goals, the motives behind corporate crime originate from greed. Such cases have no hard evidence resulting to most of them going unpunished. For organizations, corporate crimes occur in departments that deal with critical information resulting to misappropriation of funds. Today, there are claims that corporate crimes should face the same forms of punishments other crimes face like long-term jail and high fines. Most analysis of corporate crimes point back to the goals of organizations and the role most corporate executives play in committing the crimes.

Introduction

Corporate crimes are those committed by firms or corporations and sometimes by individuals who may be acting on behalf of a firm or any other business. Also known as white-collar crimes, they occur at the time of business activities that are legit. A majority of such crimes are non-violent since they involve insider trading, money laundering, and fraud. Such crimes are handled by administrative and civil laws, which come with fines as penalties. This paper discusses trends in corporate crimes, the different types and motivations of corporate crime and the punishment debates.

Trends in Corporate Crimes

The firm’s environment in this context consists of competitors, the state, customers, investors, the environment, and the company’s employees. Most corporate offenders target immediate environment of the company. To competitors, an offense would be stealing of customers through dirty tricks, bribery, and defamation of their products and services. For the state, a corporate crime would be evasion of taxes, contract overpricing, and false claims when it comes to subsidies. Investors would be offended by siphoning of their money for individual benefit and involvement in insider trading. For employees, corporate crimes occur when there are safety and health violations and denial of employee benefits such as pension schemes. Most crimes concern the company’s customers and this may be through high or fixed pricing and distribution of counterfeit products. In an environmental context, crimes may be in the form of pollution and release of toxic products into water bodies and the land.

Many corporations are known to commit crimes against environment and humans because of their heavy dependence on firms. Reports on corporate crimes worldwide show that business organizations rely on covering up crimes rather than preventing them. With this comes a list of some of the most wanted firms that engage in corporate crimes such as environmental pollution. Some of the most notorious corporations are, Alpha Natural Resources, Bayer, Carnival Corporation, and Koch Industries among others. All these examples have one major characteristic. They all engage in environmental pollution through release of toxic waste products.

Corporate crimes have grown and expanded through all segments of business worldwide. There has been a continuous research on motives behind corporate crime. Some studies bring out psychological conditions and situations that push one to commit crimes. The focus here is on relationships of offenders in the corporate and social context and life situations. Others claim that biological features and human personalities come with such traits. In most cases, the most successful and brilliant people are the ones engaging in corporate crimes. While others do this for individual benefit, a majority of offenders use this to measure their capabilities and usefulness in the company. Based on organizational situations, others may use this to hurt the company for injustices committed to them by the management or company owners. Approximately 50% do this for financial gain due to low wages. Most individuals are driven by greed and A desire to have more wealth and power and they work to achieve this by all means.

 

Types of Corporate Crime

Corporate crimes fall into two categories that are corporate violence and economic corporate crimes. Corporate violence encompasses all crimes committed against employees, consumers, suppliers, and the environment. Economic corporate crimes are those involved in prices of goods and services, false advertising, and fraud. These types of crimes develop from specific corporate theories that explain why corporations or individuals engage in corporate crimes. Sub-cultural theory explains justification of corporate crimes by workplace cultures that require members to use any means available to solve their problems, including the unlawful ones. This requires frequent contact with executives who get away with violating the law, resulting in such behavior becoming a culture. The other theory that explains this is the structured action theory. This expects new employees to sacrifice their individual principals with the aim of meeting corporate goals that entail profit accumulation. In most cause, methods used in the context are unethical or illegal. Anomie theory blames uncertainties of the business environment that force the corporation to use unlawful means to achieve its goals. In the USA, some common types of corporate crime have been reported throughout the state. These are fraudulent securities handling, records and their improper use, and technological fraud. Securities handling and fraud occur when there is stock manipulation and insider trading. In the USA, the Securities and Exchange Commission (SEC) charges companies at the federal level beginning with investigations. The category of improper use of records entails the use of confidential information for unlawful activities. The most common charge here is identity theft, which approximated to 9.8 million victims in 2008. Apart from the FBI (Federal Bureau Investigation), other federal agencies are also allowed to conduct investigations. The technological category entails internet and computer frauds.

Relationship between Corporate Crime and White-collar Crime

These two categories of crimes are closely related. They all involve clean jobs that result in the manipulation of company records, misappropriation of funds, and tax evasions. People with high profiles in the organization commit both forms of crimes and have access to information. In terms of white-collar crimes, offenders use their most trusted and high profile positions to commit crimes, thus failing to draw attention. This may also go international in the form of government corruption. White-collar crimes may include swindle (using deception to steal), chiseling (lying to the organization and its key players), and exploitation of institution positions by an individual. The other common type of crime is client fraud, which entails healthcare and insurance frauds and steering. All corporate criminals have low chances of being prosecuted, but end up paying high costs or sentences in case prosecution is successful. On a different level, corporate crime may be seen as a form of white-collar crime because of similarities among offenders and situations.

Effects of Corporate Crimes

As much as corporate offenders assume that they can steal and get away with it, consequences of their acts are severe as they tend to affect the organization in many ways. In an attempt of making up or paying for offenses such as fraud, the company ends up affecting the rest of stakeholders in the company, including customers. For most corporations, the best alternative would be raising prices of products and services to raise funds. In case of employees, this would mean low wages and poor working conditions that affect their performance at work. In most corporations, offenses such as insider trading and stock in fraud drives away investors who also end up losing faith in the stock market. This type of case happened in the US in the early 1980s. Many nations have failed to quantify effects corporate crimes have on surrounding societies, environment, and the government itself. This results from the lack of statistics and evidence to prove fraud and insider trade incidents among others. Most of the crimes arise from word of mouth and not facts or statistics. Such crimes go unreported, leaving key perpetrators free to continue their criminal activities.

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Corporate Crime Punishments

Globally, corporate crimes go unpunished despite the harm they cause to the society and the environment. For those who are prosecuted, there is always an easy way, which involves payment of fines. There exists a sense of biasness in the criminal justice system when it comes to punishment of corporate crimes. Those who engage in other forms of crime like robbery and theft get high penalties that tend to be harsh. Why is corporate crime any different? While less powerful individuals get harsh punishments, powerful offenders who engage in corporate crime can always pay their way out and continue with the habit. The question here is whether individuals found committing corporate crimes should be punished like any other criminal. Suggestions here are that punishment should be based on the type of crime. Although most corporate criminals have powerful influence and lawyers, the government should not allow them to pay their way out. Rather, they should face justice like any other person who commits a crime. Prosecution therefore should be based on the severity of crime and effects it has on the environment and society. At this level, most criminal justice systems are proposing imprisonment and real time jail for corporate criminals. This way, there will be a balance in the criminal justice system of all states and a reduction in the level of corporate crimes in organizations.

The Role of Organization in Eliminating Corporate Crime

It is evident that the structure and way of operation of organizations result in the existence of corporate crimes. Apart from perpetrators, the organization should also be blamed for creating a suitable environment for crimes to take place. The structure of the organization must be simple and straightforward when it comes to handling all important records such as accounting data. Working in a competitive environment has forced many organizations to adopt complex structures that are otherwise difficult to manage, hence leading to misappropriations. In this type of complexity, it is always difficult for the management to detect and punish unlawful behavior. Additionally, setting of unreasonable targets for employees results in their engagement in unlawful activities to meet organizations goals. Individuals are forced to work and deliver under pressure, hence explaining their involvement in criminal activities.

Conclusion

In conclusion, it is evident that corporate crimes are no different from other crimes, hence explaining the need for appropriate prosecutions. Offenders must face their punishments whether through fines or imprisonment without using the easiest way out. While most states ignore these requirements and let organizations get away with such crimes, effects are visible and inevitable. For instance, the largest percentage of environment today is polluted as a result of organizational activities. The ones who are paying for these crimes are customers who buy products and services at high costs. Investors and employees also suffer when it comes to paying for these crimes. It is, therefore, essential for states and organizations to come up with policies that discourage corporate crime. They should include harsh punishments to drive the point home by persecuting even the most powerful perpetrators. Greed is the most common driving force of corporate crimes and organizations should curb this by making employment environment comfortable for employees. Although the result is financial gain and high profitability, organizations should use legitimate means to achieve them. Organizations must set reasonable targets that allow employees to use legit means to achieve them.

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Nov 14, 2018 in Law
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