The wealthy white-collar criminals: corporations as offenders

Author:Tage Alalehto
Position:Department of Sociology, Umeå University, Umeå, Sweden

Purpose – The purpose of this paper is to map out the corporate criminality among the 70 top-ranked corporations in the Swedish business world. It aims to identify properties common for companies that get a decision by a regulatory agency and which kind of properties there are when the regulatory agency goes to a decision. Design/methodology/approach – Data on decisions taken... (see full summary)


The general character of the typical white-collar criminal given by register and self-report studies is the picture of a middle-class male, regularly employed and with a rather high income and good standard of financial asset. In those cases, when he is an employee, about one third of the samples, he is self-employed or a small businessman in a local market ( Wheeler et al., 1988 ; Croall, 1989 ; Weisburd et al., 2001 ; Weisburd, 1991 ; Alalehto and Larsson, 2008 ). A typical white-collar criminal in Sweden is a tax violator ( Korsell, 2003 ), compared with England and the USA were the most typical white-collar criminal is a fraudster ( Shover and Hochstetler, 2006 ; Croall, 1992 ). Despite the differences in criminal type, the common statistical character of the white-collar criminal is an individual offender ( Benson and Simpson, 2009 ). This type of offender does not make any sensational headers in newspapers and does not nauseate the public's reaction against white-collar crime. In fact, this offender is relatively neglected compared with a street-criminal offender by the media because of lacking the drama or “newsworthiness” ( Croall, 1992 ; Levi, 2008, 2006 ). The matter of white-collar criminality comes instead up to the official agenda when corporations, especially larger corporations, are accused or convicted for a crime belonging to the activity of the corporation in question. In situations like this, the media coverage give air to aspects, values, and norms representing discourses undo to the collective consciousness in the society ( Williams, 2008 ). The political reactions will then generally follow three discursive lines: those who relativise the criminality in question and defend a free market, those who demand more suitable government regulations for corporations, and those who want more and harsher criminal laws ( Unnever et al., 2008 ; Pontell, 2005 ; Levi, 2006 ). In particular, the two later opinions are the starting points of discussions on the vulnerability of the consumer and the impact of white-collar crime on society. The reaction generally ends in some kind of aversion to the “crimes of the powerful” ( Wibe, 2003 ; Cullen et al., 2009 ), which, in fact, has its similarities to the origin of the concept of white-collar crime in the criminological agenda ( Shover and Wright, 2000 ; Geis, 2006 ).

In his book White Collar Crime ( Sutherland, 1985 ), Edwin Sutherland describes in a pretty annoyed manner the criminality among 70 of the 200 highest ranked corporations in America during the 1930s. At that time, criminologists explained criminal activity by a person caused by the poverty the offender was suffering under. Sutherland beards his doubts about this explanation to the case of explaining white-collar crime. To date, criminological research has shown that poverty is still an important factor in explaining criminality in general, but it certainly is not sufficient to explain criminality in its entirety, especially not white-collar crime.

In fact, since the days of Sutherland's insightful study, criminologists has showed that wealthy people in their high-status occupations do criminal acts in the aim of self-interest or the corporation's best in mind or both ( Shover and Wright, 2000 ). Corporations are not any exception from criminal activities as any other entity in our society.

Sutherland found that the corporations had by criminal, civil, or administrative courts got a decision frequency of 14 per corporation over the period 1900-1944. In a follow-up study to Sutherland, Clinard (1980) presented a well-documented report of criminal, civil and administrative activities that led to penalties and fines for the 477 highest ranked American corporations during 1975-1976. Of the 477 corporations, 60 per cent had at least one federal action against them; on average, it was 2.7 decisions against each corporation who had done some kind of financial, trade, manufacturing, labour, or environment violation. Oil, pharmaceutical and motor vehicle industries were overrepresented in the violation structure compared with other industries such as paper refinement and metal manufacturing. The penalty structure for the violating corporations were rather lenient, where more than 80 per cent received warnings, consent order, or unilateral government orders; ‹15 per cent of the corporations received a monetary penalty, and ‹3 per cent of the corporation received an injunction.

These two classic studies in the field of white-collar crime research have not, in the best of my knowledge, been approached to the Swedish business world where the aim has been to study corporations as offenders. This is, in fact, quite surprising, considering that the Swedish agenda on white-collar crime study has been active for more than 30 years; this aspect of white-collar criminality has been “neglected” or at least not valued. My aim is then to map out the phenomena in the Swedish business world by following the broad lines of investigation given by Sutherlands and Clinards and Yeagers studies as a contribution to the agenda of white-collar crime studies in general. A more specific aim is to identify the kind of properties common to companies that get a decision against them, and the kind of properties there are when the regulatory agency goes to a decision from a Swedish horizon.

Previous research

The relevance of the topic and the argument behind the aim are quite familiar in criminology in general. First, the recidivism rate among the corporations was very high, with 97.1 per cent with two or more adverse decisions, or put another way, 60 per cent of the sample had at least four convictions in a criminal court, which means that the majority of the corporations were chronic in its criminal carrier ( Sutherland, 1985 ). Second, as well as in street criminality, a minor sample of the offenders (8 per cent) stood for a majority of the total violations (52 per cent) ( Clinard, 1980, p. 117 ). It indicates that prior violations is important, which also were confirmed by Baucus and Near (1991) in their longitudinal study of 88 Fortune 500 listed corporations during the period 1974-1983 as the best predictor of illegal activity. Third, Sutherland (1985) found that the distribution of the decision rate (more than 60 per cent) were concentrated to times of depression (1935-1944) or depressed industries. Clinard (1980) were, however, rather dubious about this correlation, but Staw and Szwajkowski (1975) , in their analysis of 105 Fortune 500 listed companies during the period 1968-1974. Keane (1993) , in his reanalysis of Clinards and Yeagers dataset, found a correlation between strained industrial and firm performance and illegal behaviour, which confirmed Sutherland's earlier observations. On the contrary, in a longitudinal study of 52 large corporations during the period 1927-1981 of antitrust violations, Simpson (1986) found that illegal financial performance was caused by a declining profit rate in the industry and/or in the market. Baucus and Near (1991) found similar results in their investigation. It was more likely that corporations with moderate to good performance behaved illegally than a corporation with poor performance. Fourth, there was no proof that big corporations acted more unethical or illegal than small businesses, but when a big corporation acted illegal, it was more involved in serious violations than small corporations ( Clinard, 1980 ). However, in contrast, Dalton and Kesner (1988) found, in their investigation of 384 listed corporations in Fortune 500 during the period 1980-1984, that organisational size (measured by total sale) was important. Large corporations, in contrast to small or medium corporations, had more than twice more engagement in illegal activities and more than three times engagement in multiple violations than smaller corporations. The findings of Dalton and Kesners were also supported by Baucus and Near (1991) in that larger corporation was almost twice likely to behave illegally than small corporations. As a complementary study to organisational size, Bilimoria (1995) found, in her investigation of 91 companies selected from the Fortune 500 1984-1986, that chief executive officer compensation through illegal activity was significantly more likely to happen in a management-controlled company than an owner-controlled one. Fifth, even if the majority of the big corporation had one or more decisions...

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