corruption in management

8/3/2019 Corruption in Management

1/60

Corruption in Management

Contents

chapters title Page no.

1 introduction 2

2 Corruption 3

3 Types of corruption 4-9

4 Corporate crime 10-11

5 White collar crime 12-13

6 Blue collar crime 14-16

7 Organized crime 17

8 State corporate crime 18

9 Issues of coporate crime 19-20

10 Discussion 21-2411 Accounting scandals 25-26

12 Notable accounting

scandals

27-31

13 Major accounting

scandals

32

14 BCCI 33

15 Enron corporation 34

16 World com 35

17 Various companies scams 36-58

18 Corruption unethical

activity

59

19 Conclusion 60

20 bibliography 61

1


2/60


INTRODUCTION

People everywhere are more concerned than they ever have been about corruption

and business ethics. This represents social changes that are occurring everywhere, though

to different degrees. Corruption has entered the public sphere and dealing with corruption

must become a foremost issue in training business professionals.

Forms of corruption arise from a myriad of behaviors that are all lumped together

and called corruption. Confounding this problem are the subtle variations in how

corruption is defined. Complicating how we view corruption is the possibility that some

forms of corruption may allow us to accomplish goals in highly bureaucratic and

inefficient environments better than we can if we are strictly honest and ethical.

Corruption is a very complex issue, made no simpler by international production and

commerce.

Corruption has become an issue of major political and economic significance in

recent years and the necessity to take measures against it has become evident.

2


3/60


CORRUPTION

The word corrupt (Middle English, from Latin corruptus, past participle of

corrumpere, to destroy : com-, intensive pref. and rumpere, to break) when used as an

adjective literally means "utterly broken".

The word corruption means the destruction, ruining or the spoiling of a society or

a nation. A corrupt society stops valuing integrity, virtue or moral principles. It changes

for the worse. Such a society begins to decay and sets itself on the road to self

destruction. Corruption is an age old phenomena. Selfishness and greed are the two main

causes of corruption. Political corruption is the abuse of their powers by state officials for

their unlawful private gain.

Corruption cannot be divorced from economics. Inequality of wealth, low wages

and salaries are some of the economic causes of corruption. Employees often strike

corrupt deals to supplement their meager incomes. A license-permit regime or scarcity of

basic commodities promotes corruption.

Most of us have an idea of what corruption is. But we dont necessarily share the

same idea. That is why we need to ask the question about what corruption is. For

example, do you believe giving money to speed up the processing of an application is

corruption? Do you think awarding contracts to those who gave large campaigncontribution is corruption? Do you think bribing a doctor to ensure your gets the

medicine she needs is corruption? Do you think using government construction

equipment to build an addition on ones house is corruption?

Corruption is not just the clearly bad cases of government officials skimming

off money for their own benefit. It includes cases where the systems dont work well, and

ordinary people are left in a bind, needing to giv e a bribe for the medicine or the licenses

they need.

3
http://en.wikipedia.org/wiki/Intensivehttp://en.wikipedia.org/wiki/Intensivehttp://en.wikipedia.org/wiki/Intensive


4/60


TYPES OF CORRUPTION

Bribery

Bribery requires two participants: one to give the bribe, and one to take it. In

some countries the culture of corruption extends to every aspect of public life, making it

extremely difficult for individuals to stay in business without resorting to bribes. Bribes

may be demanded in order for an official to do something he is already paid to do. They

may also be demanded in order to bypass laws and regulations. In some developing

nations, up to half of the population has paid bribes during the past 12 months

In recent years, efforts have been made by the international community to

encourage countries to dissociate and incriminate as separate offences, active and passive

bribery. Active bribery can be defined for instance as the promising, offering or giving by

any person, directly or indirectly, of any undue advantage [to any public official], for

himself or herself or for anyone else, for him or her to act or refrain from acting in the

exercise of his or her functions. (article 2 ofthe Criminal Law Convention on Corruption

(ETS 173) of the Council of Europe). Passive bribery can be defined as the request or

receipt [by any public official], directly or indirectly, of any undue advantage, for himself

or herself or for anyone else, or the acceptance of an offer or a promise of such an

advantage, to act or refrain from acting in the exercise of his or her functions (article 3 of

the Criminal Law Convention on Corruption (ETS 173)).

Trading in influence

Trading in influence, or influence peddling in certain countries, refers to the

situation where a person is selling his/her influence over the decision process involving a

third party (person or institution). The difference with bribery is that this is a tri-lateral

relation.

But from a legal point of view, the role of the third party (who is the target of the

influence) does not really matter although he/she can be an accessory in some instances.

4
http://www.lawyersclubindia.com/wiki/Briberyhttp://conventions.coe.int/treaty/Commun/QueVoulezVous.asp?NT=173&CL=ENGhttp://conventions.coe.int/treaty/Commun/QueVoulezVous.asp?NT=173&CL=ENGhttp://www.lawyersclubindia.com/wiki/Council_of_Europehttp://conventions.coe.int/treaty/Commun/QueVoulezVous.asp?NT=173&CL=ENGhttp://www.lawyersclubindia.com/wiki/Influence_peddlinghttp://www.lawyersclubindia.com/wiki/Briberyhttp://conventions.coe.int/treaty/Commun/QueVoulezVous.asp?NT=173&CL=ENGhttp://conventions.coe.int/treaty/Commun/QueVoulezVous.asp?NT=173&CL=ENGhttp://www.lawyersclubindia.com/wiki/Council_of_Europehttp://conventions.coe.int/treaty/Commun/QueVoulezVous.asp?NT=173&CL=ENGhttp://www.lawyersclubindia.com/wiki/Influence_peddling


5/60


It can be difficult to make a distinction between this form of corruption and

certain forms of extreme and poorly regulated lobbying where for instance law- or

decision-makers can freely "sell" their vote, decision power or influence to those

lobbyists who offer the highest retribution, including where for instance the latter act on

behalf of powerful clients such as industrial groups who want to avoid the passing of

certain environmental, social or other regulations perceived as too stringent etc.). Where

lobbying is (sufficiently) regulated, it becomes possible to provide for a distinctive

criteria and to consider that trading in influence involves the use of "improper influence",

as in article 12 of the Criminal Law Convention.

Graft

While bribery includes an intent to influence or be influenced by another for

personal gain, which is often difficult to prove, graft only requires that the official gains

something of value, not part of his official pay, when doing his work. Large "gifts"

qualify as graft, and most countries have laws against it. (For example, any gift over $200

value made to the President of the United States is considered to be a gift to the Office of

the Presidency and not to the President himself. The outgoing President must buy it if he

or she wants to keep it.)

Another example of graft is a politician using his knowledge of zoning to

purchase land which he knows is planned for development, before this is publicly known,

and then selling it at a significant profit. This is comparable toinsider tradingin business.

Patronage

Patronage refers to favoring supporters, for example with government

employment. This may be legitimate, as when a newly elected government changes the

top officials in the administration in order to effectively implement its policy.

5
http://www.lawyersclubindia.com/wiki/Lobbyinghttp://www.lawyersclubindia.com/wiki/Zoninghttp://www.lawyersclubindia.com/wiki/Insider_tradinghttp://www.lawyersclubindia.com/wiki/Insider_tradinghttp://www.lawyersclubindia.com/wiki/Insider_tradinghttp://www.lawyersclubindia.com/wiki/Patronagehttp://www.lawyersclubindia.com/wiki/Lobbyinghttp://www.lawyersclubindia.com/wiki/Zoninghttp://www.lawyersclubindia.com/wiki/Insider_tradinghttp://www.lawyersclubindia.com/wiki/Patronage


6/60


It can be seen as corruption if this means that incompetent persons, as a payment for

supporting the regime, are selected before more able ones. In non-democracies many

government officials are often selected for loyalty rather than ability. They may be almost

exclusively selected from a particular group (for example,Sunni Arabs inSaddam

Hussein's Iraq, thenomenklatura in theSoviet Union, or the Junkers in Imperial

Germany) that support the regime in return for such favors.

Nepotism and cronyism

Favoring relatives (nepotism) or personal friends (cronyism) of an official is a

form of illegitimate private gain. This may be combined with bribery, for example

demanding that a business should employ a relative of an official controlling regulation

affecting the business. The most extreme example is when the entire state is inherited, as

inNorth Korea orSyria. A milder form of cronyism is an "old boy network", in which

appointees to official positions are selected only from a closed and exclusive social

network such as the alumni of particular universities instead of appointing the most

competent candidate.

Seeking to harm enemies becomes corruption when official powers are

illegitimately used as means to this end. For example, trumped-up charges are often

brought up against journalists or writers who bring up politically sensitive issues, such as

a politician's acceptance of bribes.

Embezzlement

Embezzlement is outright theft of entrusted funds. It is a misappropriation of

property.

Another common type of embezzlement is that of entrusted government

resources; for example, when a director of a public enterprise employs company workers

to build or renovate his own house.

6
http://www.lawyersclubindia.com/wiki/Sunnihttp://www.lawyersclubindia.com/wiki/Sunnihttp://www.lawyersclubindia.com/wiki/Saddam_Husseinhttp://www.lawyersclubindia.com/wiki/Saddam_Husseinhttp://www.lawyersclubindia.com/wiki/Saddam_Husseinhttp://www.lawyersclubindia.com/wiki/Saddam_Husseinhttp://www.lawyersclubindia.com/wiki/Nomenklaturahttp://www.lawyersclubindia.com/wiki/Nomenklaturahttp://www.lawyersclubindia.com/wiki/Soviet_Unionhttp://www.lawyersclubindia.com/wiki/Soviet_Unionhttp://www.lawyersclubindia.com/wiki/Junkerhttp://www.lawyersclubindia.com/wiki/Imperial_Germanyhttp://www.lawyersclubindia.com/wiki/Imperial_Germanyhttp://www.lawyersclubindia.com/wiki/Nepotismhttp://www.lawyersclubindia.com/wiki/Cronyismhttp://www.lawyersclubindia.com/wiki/Briberyhttp://www.lawyersclubindia.com/wiki/Briberyhttp://www.lawyersclubindia.com/wiki/Relativehttp://www.lawyersclubindia.com/wiki/North_Koreahttp://www.lawyersclubindia.com/wiki/North_Koreahttp://www.lawyersclubindia.com/wiki/Syriahttp://www.lawyersclubindia.com/wiki/Old_boy_networkhttp://www.lawyersclubindia.com/wiki/Embezzlementhttp://www.lawyersclubindia.com/wiki/Embezzlementhttp://www.lawyersclubindia.com/wiki/Sunnihttp://www.lawyersclubindia.com/wiki/Saddam_Husseinhttp://www.lawyersclubindia.com/wiki/Saddam_Husseinhttp://www.lawyersclubindia.com/wiki/Nomenklaturahttp://www.lawyersclubindia.com/wiki/Soviet_Unionhttp://www.lawyersclubindia.com/wiki/Junkerhttp://www.lawyersclubindia.com/wiki/Imperial_Germanyhttp://www.lawyersclubindia.com/wiki/Imperial_Germanyhttp://www.lawyersclubindia.com/wiki/Nepotismhttp://www.lawyersclubindia.com/wiki/Cronyismhttp://www.lawyersclubindia.com/wiki/Briberyhttp://www.lawyersclubindia.com/wiki/Relativehttp://www.lawyersclubindia.com/wiki/North_Koreahttp://www.lawyersclubindia.com/wiki/Syriahttp://www.lawyersclubindia.com/wiki/Old_boy_networkhttp://www.lawyersclubindia.com/wiki/Embezzlement


7/60


Kickbacks

A kickback is an official's share of misappropriated funds allocated from his or

her organization to an organization involved in corrupt bidding. For example, suppose

that a politician is in charge of choosing how to spend some public funds. He can give a

contract to a company that is not the best bidder, or allocate more than they deserve. In

this case, the company benefits, and in exchange for betraying the public, the official

receives a kickback payment, which is a portion of the sum the company received. This

sum itself may be all or a portion of the difference between the actual (inflated) payment

to the company and the (lower) market-based price that would have been paid had the

bidding been competitive. Kickbacks are not limited to government officials; any

situations in which people are entrusted to spend funds that do not belong to them are

susceptible to this kind of corruption. Kickbacks are also common in the Pharmaceutical

Industry, as many doctors and physicians receive pay in return for added promotion and

prescription of the drug these Pharmaceutical Companies are marketing. (See: Anti-

competitive practices,Bid rigging.)

Unholy alliance

An unholy alliance is a coalition among seemingly antagonistic groups, especially

if one is religious,[7] forad hoc or hidden gain. Like patronage, unholy alliances are not

necessarily illegal, but unlike patronage, by its deceptive nature and often great financial

resources, an unholy alliance can be much more dangerous to the public interest. An

early, well-known use of the term was byTheodore Roosevelt (TR):

"To destroy this invisible Government, to dissolve the unholy alliance between

corruptbusinessand corruptpolitics is the first task of the statesmanship of the day."

1912 Progressive Party Platform, attributed to TR[8] and quoted again in his

autobiography[9]where he connects trusts and monopolies (sugar interests, Standard Oil,

etc.) to Woodrow Wilson, Howard Taft, and consequently both majorpolitical parties.

7
http://www.lawyersclubindia.com/wiki/Biddinghttp://www.lawyersclubindia.com/wiki/Contracthttp://www.lawyersclubindia.com/wiki/General_contractorhttp://www.lawyersclubindia.com/wiki/Anti-competitive_practiceshttp://www.lawyersclubindia.com/wiki/Anti-competitive_practiceshttp://www.lawyersclubindia.com/wiki/Anti-competitive_practiceshttp://www.lawyersclubindia.com/wiki/Bid_rigginghttp://www.lawyersclubindia.com/wiki/Bid_rigginghttp://www.lawyersclubindia.com/wiki/Antagonistichttp://www.lawyersclubindia.com/wiki/Religioushttp://www.lawyersclubindia.com/fckeditor/editor/l%20cite_note-6http://www.lawyersclubindia.com/fckeditor/editor/l%20cite_note-6http://www.lawyersclubindia.com/wiki/Ad_hochttp://www.lawyersclubindia.com/wiki/Ad_hochttp://www.lawyersclubindia.com/wiki/Public_interesthttp://www.lawyersclubindia.com/wiki/Public_interesthttp://www.lawyersclubindia.com/wiki/Theodore_Roosevelthttp://www.lawyersclubindia.com/wiki/Theodore_Roosevelthttp://www.lawyersclubindia.com/wiki/Invisiblehttp://www.lawyersclubindia.com/wiki/Invisiblehttp://www.lawyersclubindia.com/wiki/Governmenthttp://www.lawyersclubindia.com/wiki/Businesshttp://www.lawyersclubindia.com/wiki/Businesshttp://www.lawyersclubindia.com/wiki/Politicshttp://www.lawyersclubindia.com/wiki/Statesmanshiphttp://www.lawyersclubindia.com/wiki/Progressive_Party_1912_(United_States)http://www.lawyersclubindia.com/fckeditor/editor/l%20cite_note-7http://www.lawyersclubindia.com/fckeditor/editor/l%20cite_note-7http://www.lawyersclubindia.com/fckeditor/editor/l%20cite_note-8http://www.lawyersclubindia.com/fckeditor/editor/l%20cite_note-8http://www.lawyersclubindia.com/wiki/Trust_(19th_century)http://www.lawyersclubindia.com/wiki/Monopolyhttp://www.lawyersclubindia.com/wiki/Standard_Oilhttp://www.lawyersclubindia.com/wiki/Woodrow_Wilsonhttp://www.lawyersclubindia.com/wiki/Howard_Tafthttp://www.lawyersclubindia.com/wiki/Political_partieshttp://www.lawyersclubindia.com/wiki/Political_partieshttp://www.lawyersclubindia.com/wiki/Biddinghttp://www.lawyersclubindia.com/wiki/Contracthttp://www.lawyersclubindia.com/wiki/General_contractorhttp://www.lawyersclubindia.com/wiki/Anti-competitive_practiceshttp://www.lawyersclubindia.com/wiki/Anti-competitive_practiceshttp://www.lawyersclubindia.com/wiki/Bid_rigginghttp://www.lawyersclubindia.com/wiki/Antagonistichttp://www.lawyersclubindia.com/wiki/Religioushttp://www.lawyersclubindia.com/fckeditor/editor/l%20cite_note-6http://www.lawyersclubindia.com/wiki/Ad_hochttp://www.lawyersclubindia.com/wiki/Public_interesthttp://www.lawyersclubindia.com/wiki/Theodore_Roosevelthttp://www.lawyersclubindia.com/wiki/Invisiblehttp://www.lawyersclubindia.com/wiki/Governmenthttp://www.lawyersclubindia.com/wiki/Businesshttp://www.lawyersclubindia.com/wiki/Politicshttp://www.lawyersclubindia.com/wiki/Statesmanshiphttp://www.lawyersclubindia.com/wiki/Progressive_Party_1912_(United_States)http://www.lawyersclubindia.com/fckeditor/editor/l%20cite_note-7http://www.lawyersclubindia.com/fckeditor/editor/l%20cite_note-8http://www.lawyersclubindia.com/wiki/Trust_(19th_century)http://www.lawyersclubindia.com/wiki/Monopolyhttp://www.lawyersclubindia.com/wiki/Standard_Oilhttp://www.lawyersclubindia.com/wiki/Woodrow_Wilsonhttp://www.lawyersclubindia.com/wiki/Howard_Tafthttp://www.lawyersclubindia.com/wiki/Political_parties


8/60


In modern English usage the words corruption and corrupt have many meanings:

Political corruption: the abuse of public power, office, or resources by

government officials or employees for personal gain, e.g. by extortion,soliciting or offering bribes.

Police corruption

Corporate corruption: corporate criminality and the abuse of power by

corporation officials, either internally or externally.

Putrefaction: the natural process of decomposition in the human and

animal body following death.

Data corruption: an unintended change to data in storage or in transit.

Linguistic corruption: the change in meaning to a language or a text

introduced by cumulative errors in transcription as changes in the

language speakers' comprehension.

Bribery in politics, business, or sport (including match fixing).

8
http://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Police_corruptionhttp://en.wikipedia.org/wiki/Corporate_corruptionhttp://en.wikipedia.org/wiki/Putrefactionhttp://en.wikipedia.org/wiki/Data_corruptionhttp://en.wikipedia.org/wiki/Corruption_(linguistics)http://en.wikipedia.org/wiki/Briberyhttp://en.wikipedia.org/wiki/Match_fixinghttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Police_corruptionhttp://en.wikipedia.org/wiki/Corporate_corruptionhttp://en.wikipedia.org/wiki/Putrefactionhttp://en.wikipedia.org/wiki/Data_corruptionhttp://en.wikipedia.org/wiki/Corruption_(linguistics)http://en.wikipedia.org/wiki/Briberyhttp://en.wikipedia.org/wiki/Match_fixing


9/60


Rule of law Governmental corruption of judiciary includes governmental

spending on the courts, which is completely financially controlled by the

executive in many transitional and developing countries. This undermines

the principle of checks and balances and creates a critical financial

dependence on the judiciary. It covers latent governmental spending on

the judiciary in the form of privileges cars, country houses,expenses.

Such a system is completely outside the realm of transparency and creates

a precedent for the corruption of the judiciary by executive authorities.

9
http://en.wikipedia.org/wiki/Rule_of_lawhttp://en.wikipedia.org/wiki/Rule_of_law


10/60


CORPORATE CRIME

In criminology, corporate crime refers to crimes committed either by a

corporation (i.e., a business entity having a separate legal personality from the natural

persons that manage its activities), or by individuals that may be identified with a

corporation or other business entity (see vicarious liability and corporate liability). Note

that some forms of corporate corruption may not actually be criminal if they are not

specifically illegal under a given system of laws. For example, some jurisdictions allow

insider trading.

Corporate crime overlaps with:

W hite-collar crime, because the majority of individuals who may act as or

represent the interests of the corporation are employees orprofessionals of a

highersocial class;

10
http://en.wikipedia.org/wiki/Criminologyhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Business_entityhttp://en.wikipedia.org/wiki/Business_entityhttp://en.wikipedia.org/wiki/Natural_personhttp://en.wikipedia.org/wiki/Natural_personhttp://en.wikipedia.org/wiki/Vicarious_liability_(criminal)http://en.wikipedia.org/wiki/Corporate_liabilityhttp://en.wikipedia.org/wiki/Insider_tradinghttp://en.wikipedia.org/wiki/White-collar_crimehttp://en.wikipedia.org/wiki/Professionhttp://en.wikipedia.org/wiki/Professionhttp://en.wikipedia.org/wiki/Social_classhttp://en.wikipedia.org/wiki/Criminologyhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Business_entityhttp://en.wikipedia.org/wiki/Natural_personhttp://en.wikipedia.org/wiki/Natural_personhttp://en.wikipedia.org/wiki/Vicarious_liability_(criminal)http://en.wikipedia.org/wiki/Corporate_liabilityhttp://en.wikipedia.org/wiki/Insider_tradinghttp://en.wikipedia.org/wiki/White-collar_crimehttp://en.wikipedia.org/wiki/Professionhttp://en.wikipedia.org/wiki/Social_class


11/60


Organized crime, because criminals can set up corporations either for the

purposes of crime or as vehicles forlaunderingthe proceeds of crime. Organized

crime has become a branch of big business and is simply the illegal sector of

capital. It has been estimated that, by the middle of the 1990s, the "gross criminal

product" of organized crime made it the twentieth richest organization in the

worldricher than 150 sovereign states (Castells 1998: 169). The worlds gross

criminal product has been estimated at 20 percent of world trade. (de Brie 2000);

and

State-corporate crimebecause, in many contexts, the opportunity to commit crime

emerges from the relationship between the corporation and thestate.

11
http://en.wikipedia.org/wiki/Organized_crimehttp://en.wikipedia.org/wiki/Money_launderinghttp://en.wikipedia.org/wiki/Money_launderinghttp://en.wikipedia.org/wiki/State-corporate_crimehttp://en.wikipedia.org/wiki/Sovereign_statehttp://en.wikipedia.org/wiki/Sovereign_statehttp://en.wikipedia.org/wiki/Organized_crimehttp://en.wikipedia.org/wiki/Money_launderinghttp://en.wikipedia.org/wiki/State-corporate_crimehttp://en.wikipedia.org/wiki/Sovereign_state


12/60


White collar crime

Within the field of criminology, white-collar crime has been defined by Edwin

Sutherland as "a crime committed by a person of respectability and high social status in

the course of his occupation" (1939). Sutherland was a proponent of Symbolic

Interactionism, and believed that criminal behavior was learned from interpersonal

interaction with others. White-collar crime, therefore, overlaps with corporate crime

because the opportunity forfraud, bribery, insider trading, embezzlement, computer

crime, copyright infringement, money laundering, identity theft, and forgery is more

available to white-collaremployees.

Historical background

The term white-collar crime only dates back to 1939. Professor Edwin Hardin Sutherland

was the first to coin the term, and hypothesize white-collar criminals attributed different

characteristics and motives than typical street criminals. Mr. Sutherland originally

presented his theory in an address to the American Sociological Society in attempt to

study two fields, crime and high society, which had no previous empirical correlation. He

defined his idea as "crime committed by a person of respectability and high social status

in the course of his occupation" (Sutherland, 1939). Many denote the invention of

Sutherland's idiom to the explosion of U.S business in the years following the Great

Depression. Sutherland noted that in his time, "less than two percent of the persons

committed to prisons in a year belong to the upper-class." His goal was to prove a

relation between money, social status, and likelihood of going to jail for a white-collar

crime, compared to more visible, typical crimes. Although the percentage is a bit higher

today, numbers still show a large majority of those in jail are poor, "blue-collar"

criminals, despite efforts to crack down on corporate crime.

Other fiscal laws were passed in the years prior to Sutherland's studies including antitrust

laws in the 1920's, and social welfare laws in the 1930's. After the Depression, people

went to great lengths to rebuild their financial security, and it is theorized this led many

hard workers, who felt they were underpaid, to take advantage of their positions.

12
http://en.wikipedia.org/wiki/Criminologyhttp://en.wikipedia.org/wiki/Criminologyhttp://en.wikipedia.org/wiki/Edwin_Sutherlandhttp://en.wikipedia.org/wiki/Edwin_Sutherlandhttp://en.wikipedia.org/wiki/Symbolic_interactionismhttp://en.wikipedia.org/wiki/Symbolic_interactionismhttp://en.wikipedia.org/wiki/Symbolic_interactionismhttp://en.wikipedia.org/wiki/Corporate_crimehttp://en.wikipedia.org/wiki/Fraudhttp://en.wikipedia.org/wiki/Fraudhttp://en.wikipedia.org/wiki/Briberyhttp://en.wikipedia.org/wiki/Insider_tradinghttp://en.wikipedia.org/wiki/Embezzlementhttp://en.wikipedia.org/wiki/Computer_crimehttp://en.wikipedia.org/wiki/Computer_crimehttp://en.wikipedia.org/wiki/Computer_crimehttp://en.wikipedia.org/wiki/Computer_crimehttp://en.wikipedia.org/wiki/Copyright_infringementhttp://en.wikipedia.org/wiki/Money_launderinghttp://en.wikipedia.org/wiki/Identity_thefthttp://en.wikipedia.org/wiki/Identity_thefthttp://en.wikipedia.org/wiki/Forgeryhttp://en.wikipedia.org/wiki/Forgeryhttp://en.wikipedia.org/wiki/White-collar_workerhttp://en.wikipedia.org/wiki/Upper-classhttp://en.wikipedia.org/wiki/Corporate_crimehttp://en.wikipedia.org/wiki/Criminologyhttp://en.wikipedia.org/wiki/Edwin_Sutherlandhttp://en.wikipedia.org/wiki/Edwin_Sutherlandhttp://en.wikipedia.org/wiki/Symbolic_interactionismhttp://en.wikipedia.org/wiki/Symbolic_interactionismhttp://en.wikipedia.org/wiki/Corporate_crimehttp://en.wikipedia.org/wiki/Fraudhttp://en.wikipedia.org/wiki/Briberyhttp://en.wikipedia.org/wiki/Insider_tradinghttp://en.wikipedia.org/wiki/Embezzlementhttp://en.wikipedia.org/wiki/Computer_crimehttp://en.wikipedia.org/wiki/Computer_crimehttp://en.wikipedia.org/wiki/Copyright_infringementhttp://en.wikipedia.org/wiki/Money_launderinghttp://en.wikipedia.org/wiki/Identity_thefthttp://en.wikipedia.org/wiki/Forgeryhttp://en.wikipedia.org/wiki/White-collar_workerhttp://en.wikipedia.org/wiki/Upper-classhttp://en.wikipedia.org/wiki/Corporate_crime


13/60


Much of Sutherland's work was to separate and define the differences inblue collarstreet

crimes, such as arson, burglary, theft, assault, rape and vandalism, which are often

blamed on psychological, associational, and structural factors. Instead, white-collar

criminals are opportunists, who over time learn they can take advantage of their

circumstances to accumulate financial gain. They are educated, intelligent, affluent,

confident individuals, who were qualified enough to get a job which allows them the

unmonitored access to often large sums of money. Many also use their intelligence to con

their victims into believing and trusting in their credentials. Many do not start out as

criminals, and in many cases never see themselves as such.

13
http://en.wikipedia.org/wiki/Blue_collarhttp://en.wikipedia.org/wiki/Arsonhttp://en.wikipedia.org/wiki/Arsonhttp://en.wikipedia.org/wiki/Burglaryhttp://en.wikipedia.org/wiki/Thefthttp://en.wikipedia.org/wiki/Assaulthttp://en.wikipedia.org/wiki/Rapehttp://en.wikipedia.org/wiki/Rapehttp://en.wikipedia.org/wiki/Vandalismhttp://en.wikipedia.org/wiki/Blue_collarhttp://en.wikipedia.org/wiki/Arsonhttp://en.wikipedia.org/wiki/Burglaryhttp://en.wikipedia.org/wiki/Thefthttp://en.wikipedia.org/wiki/Assaulthttp://en.wikipedia.org/wiki/Rapehttp://en.wikipedia.org/wiki/Vandalism


14/60


Blue-collar crime

Crime and unemployment

The International Conference of Labour Statisticians (ILO) defines the unemployed as

persons above a specified age who, during the reference period, were without work, were

currently available for work, and were seeking work. The process of industrialization

encouraged working-class incorporation into society with greater social mobility being

achieved during the twentieth century.

But the routine of policing tends to focus on the public places where the economically

marginal live out more of their lives, so regulation falls on those who are not integrated

into the mainstream institutions of economic and political life. A perennial source of

conflict has therefore involved working-class youth but, as long-term structural

unemployment emerged, an underclass was created. Ralf Dahrendorf argues that the

majority class did not need the unemployed to maintain and even increase its standard of

living, and so the condition of the underclass became hopeless. Box (1987) sums up the

research into crime and unemployment at pp967:

The relationship between overall unemployment and crime is inconsistent. On balance

the weight of existing research supports there being a weak but none-the-less significant

causal relationship. However, properly targeted research on young males, particularly

those from disadvantaged ethnic groups, which considers both the meaning and duration

of unemployment, has yet to be done. The significance of unemployment will vary

depending on its duration, social assessments of blame, previous experience of steady

employment, perception of future prospects, comparison with other groups, etc.

Hence, there is likely to be a causal relationship between relative deprivation and crime,

particularly where unemployment is perceived as unjust and hopeless by comparison withthe lot of other groups. Thornberry and Christenson (1984) analyzed data from a

longitudinal cohort study ofdelinquencyin Philadelphia and found (at p405):

Unemployment exerts a rather immediate effect on criminal involvement, while criminal

involvement exerts a more long-range effect on unemployment. What this and other

empiricalresearch demonstrates is that crime-rates, especially for property offences, were

14
http://en.wikipedia.org/wiki/Industrialisationhttp://en.wikipedia.org/wiki/Societyhttp://en.wikipedia.org/wiki/Ralf_Dahrendorfhttp://en.wikipedia.org/wiki/Delinquencyhttp://en.wikipedia.org/wiki/Delinquencyhttp://en.wikipedia.org/wiki/Philadelphiahttp://en.wikipedia.org/wiki/Empiricismhttp://en.wikipedia.org/wiki/Empiricismhttp://en.wikipedia.org/wiki/Industrialisationhttp://en.wikipedia.org/wiki/Societyhttp://en.wikipedia.org/wiki/Ralf_Dahrendorfhttp://en.wikipedia.org/wiki/Delinquencyhttp://en.wikipedia.org/wiki/Philadelphiahttp://en.wikipedia.org/wiki/Empiricism


15/60


higher during periods of unemployment than of employment. This suggests that holding

constant other variables, the same youths commit more crimes while unemployed. This is

not surprising since unemployment provides an incentive to commit offences and erodes

the social controls which would otherwise encourage conformity. But crime also rose

during the so-called period of affluence, prompting the Right Realism of James Q.

Wilson and his associates in the United Stateswho argued that the criminal justice system

was failing, and the Left Realism attributed to Jock Young, which argued for situational

changes to reduce the availability of criminal opportunities in the environment. More

generally, the growth ofanomie (see Durkheim and, more recently, the Strain Theory

proposed by Merton), predicted a strong correlation between unemployment and property

crime. But Cantor and Land (1985) found a negative association for unemployment and

property crime in the United States. They argued that unemployment decreases the

opportunity for property crime since it reflects a general slowdown in production and

consumption activities and it increases the ability to guard property due to a greater

concentration of time at home.

Conservatism alleges the failure ofstate agencies charged with the task ofsocialization to

instill self-discipline and moral values resulting in permissiveness, a lack of conformity,

and liberalization.

The "evidence" that there are new affluent criminals allows populist politicians to deny

any link between inner-city deprivation and crime. The Left avoids the issue of morality

and crime which denies earlier work in Marxist criminology linking crime and the culture

of egoism stimulated by economic advance under capitalism as a more amorally

materialistic culture emerges. As Durkheim asserted, moral education cannot be effective

in an economically unjust society. Thus, additional research is required, using a more

complex model of crime and control to include variables such as opportunities or

incentives relative to a country's standard of living, potential punishment, chance of being

caught, law enforcement efforts and expenditures on theft and property crime relative to

other crimes, size of the country's criminal population, education levels, and other socio-

economic factors. A further factor currently being researched is the role of the media in

the social construction of "hot spots" or dangerous places within a city. Crime is a

substantial element in media news reporting. Media research is now determining whether

15
http://en.wikipedia.org/wiki/Right_Realismhttp://en.wikipedia.org/wiki/James_Q._Wilsonhttp://en.wikipedia.org/wiki/James_Q._Wilsonhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Left_realismhttp://en.wikipedia.org/wiki/Anomiehttp://en.wikipedia.org/wiki/Anomiehttp://en.wikipedia.org/wiki/Durkheimhttp://en.wikipedia.org/wiki/Strain_theory_(sociology)http://en.wikipedia.org/wiki/Robert_King_Mertonhttp://en.wikipedia.org/wiki/Conservatismhttp://en.wikipedia.org/wiki/Sovereign_statehttp://en.wikipedia.org/wiki/Socialisationhttp://en.wikipedia.org/wiki/Moralityhttp://en.wikipedia.org/wiki/Marxist_criminologyhttp://en.wikipedia.org/wiki/Culturehttp://en.wikipedia.org/wiki/Egoismhttp://en.wikipedia.org/wiki/Capitalismhttp://en.wikipedia.org/wiki/Capitalismhttp://en.wikipedia.org/wiki/Right_Realismhttp://en.wikipedia.org/wiki/James_Q._Wilsonhttp://en.wikipedia.org/wiki/James_Q._Wilsonhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Left_realismhttp://en.wikipedia.org/wiki/Anomiehttp://en.wikipedia.org/wiki/Durkheimhttp://en.wikipedia.org/wiki/Strain_theory_(sociology)http://en.wikipedia.org/wiki/Robert_King_Mertonhttp://en.wikipedia.org/wiki/Conservatismhttp://en.wikipedia.org/wiki/Sovereign_statehttp://en.wikipedia.org/wiki/Socialisationhttp://en.wikipedia.org/wiki/Moralityhttp://en.wikipedia.org/wiki/Marxist_criminologyhttp://en.wikipedia.org/wiki/Culturehttp://en.wikipedia.org/wiki/Egoismhttp://en.wikipedia.org/wiki/Capitalism


16/60


the coverage of crime is spatially representative of where crime occurs, or

disproportionately presents crime as occurring in certain areas of a city, thereby skewing

public perceptions and the political response (see Paulsen: 2002).

Organized crime

Organized crime or criminal organizations is a transnational grouping of highly

centralized enterprises run by criminals for the purpose of engaging in illegal activity,

most commonly for monetaryprofit. The Organized Crime Control Act (U.S., 1970)

defines organized crime as "The unlawful activities of [...] a highly organized, disciplined

association [...]".Such crime is commonly referred to as the work of the Mob in the U.S.

Mafia is a term used to describe a number ofcriminal organizations around the world.

The first organization to bear the label was the Sicilian Mafia based in Sicily, known to

its members as Cosa Nostra. In the United States, "the Mafia" generally refers to the

16
http://en.wikipedia.org/wiki/Transnationalhttp://en.wikipedia.org/wiki/Crimehttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Profit_(economics)http://en.wikipedia.org/wiki/Profit_(economics)http://en.wikipedia.org/wiki/Organized_Crime_Control_Acthttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Criminalhttp://en.wikipedia.org/wiki/Mafiahttp://en.wikipedia.org/wiki/Sicilyhttp://en.wikipedia.org/wiki/Sicilyhttp://en.wikipedia.org/wiki/Cosa_Nostrahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Transnationalhttp://en.wikipedia.org/wiki/Crimehttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Profit_(economics)http://en.wikipedia.org/wiki/Organized_Crime_Control_Acthttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Criminalhttp://en.wikipedia.org/wiki/Mafiahttp://en.wikipedia.org/wiki/Sicilyhttp://en.wikipedia.org/wiki/Cosa_Nostrahttp://en.wikipedia.org/wiki/United_States


17/60


Italian American Mafia. Other powerful organizations described as mafias include the

Russian Mafia, the Irish Mob, the Chinese Triads, the Albanian Mafia, Bosnian mafia,

the Japanese Yakuza, the Neapolitan Camorra, the Calabrian 'Ndrangheta, the Apulian

Sacra Corona Unita, the Indian Mafia, the Unione Corse, Serbian Mafia, the Mexican

Mafia and the Bulgarian mafia. There are also a number of localized mafia organizations

around the world bearing no link to any specific ethnic background.

Some criminal organizations, such as terrorist organizations, are politically motivated

(see VNSA). Gangs may become "disciplined" enough to be considered "organized". An

organized gang or criminal set can also be referred to as a mob. The act of engaging in

criminal activity as a structured group is referred to in theUnited States as racketeering.

State-corporate crime

In criminology, the concept of state-corporate crime refers to crimes that result from

Public-private partnership and inherent distorted relations of the state and the policies and

practices of commercial corporations. The term was coined by Kramer and Michalowski

(1990), and redefined by Aulette and Michalowski (1993). These definitions were

intended to include all "socially injurious acts" and not merely those that are defined by

the local criminal jurisdiction as crime. This is not universally accepted as a valid

definition so a less contentious version has been adopted here. As an academic

classification, it is distinguished from:

17
http://en.wikipedia.org/wiki/American_Mafiahttp://en.wikipedia.org/wiki/Russian_Mafiahttp://en.wikipedia.org/wiki/Irish_Mobhttp://en.wikipedia.org/wiki/Irish_Mobhttp://en.wikipedia.org/wiki/Triad_(underground_society)http://en.wikipedia.org/wiki/Albanian_Mafiahttp://en.wikipedia.org/wiki/Bosnian_mafiahttp://en.wikipedia.org/wiki/Yakuzahttp://en.wikipedia.org/wiki/Camorrahttp://en.wikipedia.org/wiki/'Ndranghetahttp://en.wikipedia.org/wiki/'Ndranghetahttp://en.wikipedia.org/wiki/Sacra_Corona_Unitahttp://en.wikipedia.org/wiki/Sacra_Corona_Unitahttp://en.wikipedia.org/wiki/Indian_Mafiahttp://en.wikipedia.org/wiki/Indian_Mafiahttp://en.wikipedia.org/wiki/Unione_Corsehttp://en.wikipedia.org/wiki/Serbian_Mafiahttp://en.wikipedia.org/wiki/Serbian_Mafiahttp://en.wikipedia.org/wiki/Mexican_Mafiahttp://en.wikipedia.org/wiki/Mexican_Mafiahttp://en.wikipedia.org/wiki/Bulgarian_mafiahttp://en.wikipedia.org/wiki/Terrorismhttp://en.wikipedia.org/wiki/VNSAhttp://en.wikipedia.org/wiki/Ganghttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Racket_(crime)http://en.wikipedia.org/wiki/Racket_(crime)http://en.wikipedia.org/wiki/Criminologyhttp://en.wikipedia.org/wiki/Public-private_partnershiphttp://en.wikipedia.org/wiki/Sovereign_statehttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Criminal_jurisdictionhttp://en.wikipedia.org/wiki/American_Mafiahttp://en.wikipedia.org/wiki/Russian_Mafiahttp://en.wikipedia.org/wiki/Irish_Mobhttp://en.wikipedia.org/wiki/Triad_(underground_society)http://en.wikipedia.org/wiki/Albanian_Mafiahttp://en.wikipedia.org/wiki/Bosnian_mafiahttp://en.wikipedia.org/wiki/Yakuzahttp://en.wikipedia.org/wiki/Camorrahttp://en.wikipedia.org/wiki/'Ndranghetahttp://en.wikipedia.org/wiki/Sacra_Corona_Unitahttp://en.wikipedia.org/wiki/Indian_Mafiahttp://en.wikipedia.org/wiki/Unione_Corsehttp://en.wikipedia.org/wiki/Serbian_Mafiahttp://en.wikipedia.org/wiki/Mexican_Mafiahttp://en.wikipedia.org/wiki/Mexican_Mafiahttp://en.wikipedia.org/wiki/Bulgarian_mafiahttp://en.wikipedia.org/wiki/Terrorismhttp://en.wikipedia.org/wiki/VNSAhttp://en.wikipedia.org/wiki/Ganghttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Racket_(crime)http://en.wikipedia.org/wiki/Criminologyhttp://en.wikipedia.org/wiki/Public-private_partnershiphttp://en.wikipedia.org/wiki/Sovereign_statehttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Criminal_jurisdiction


18/60


corporate crime, which studies deviance within the context of a corporation and by a

corporation;

political crime, which is crime directed at the state; and

state crime or "state-organised crime", which studies crimes committed by government

organisations (Chambliss: 1989).

One of the assertions made by those involved in this work is that a focus on the actual

relationship between the state and corporations dependent on the state for their

profitability can expose a more complete range of criminal activity than might be

provided by independent analyses of corporate or state-organised crimes.

Definitional issues of Corporate Crime

Legal person

An 1886 decision of the United States Supreme Court, in Santa Clara County v. Southern

Pacific Railroad 118 U.S. 394 (1886), has been cited by various courts in the US asprecedent to maintain that a corporation can be defined legally as a 'person', as described

in the Fourteenth Amendment to the U.S. Constitution. The Fourteenth Amendment

stipulates that,

"No State shall make or enforce any law which shall abridge the privileges or immunities

of citizens of the United States; nor shall any State deprive any person of life, liberty, or

18
http://en.wikipedia.org/wiki/Corporate_crimehttp://en.wikipedia.org/wiki/Political_crimehttp://en.wikipedia.org/wiki/State_crimehttp://en.wikipedia.org/wiki/United_States_Supreme_Courthttp://en.wikipedia.org/wiki/United_States_Supreme_Courthttp://en.wikipedia.org/wiki/Santa_Clara_County_v._Southern_Pacific_Railroadhttp://en.wikipedia.org/wiki/Santa_Clara_County_v._Southern_Pacific_Railroadhttp://en.wikipedia.org/wiki/United_States_Reportshttp://supreme.justia.com/us/118/394/case.htmlhttp://en.wikipedia.org/wiki/Fourteenth_Amendment_to_the_U.S._Constitutionhttp://en.wikipedia.org/wiki/Corporate_crimehttp://en.wikipedia.org/wiki/Political_crimehttp://en.wikipedia.org/wiki/State_crimehttp://en.wikipedia.org/wiki/United_States_Supreme_Courthttp://en.wikipedia.org/wiki/Santa_Clara_County_v._Southern_Pacific_Railroadhttp://en.wikipedia.org/wiki/Santa_Clara_County_v._Southern_Pacific_Railroadhttp://en.wikipedia.org/wiki/United_States_Reportshttp://supreme.justia.com/us/118/394/case.htmlhttp://en.wikipedia.org/wiki/Fourteenth_Amendment_to_the_U.S._Constitution


19/60


property, without due process of law; nor deny to any person within its jurisdiction the

equal protection of the laws."

In English law, this was matched by the decision in Salomon v Salomon & Co[1897] AC

22. In Australian law, under the Corporations Act 2001 (Cth), a corporation is legally a

'person'.

This doctrine ofcorporate personhoodhas often impeded prosecution of corporate crime

by allowing corporations to claim Bill of Rightsprotections in court, sometimes with

success.

Function of law

History shows that laws have always served as instruments of regulation. Lea (2001)

argues that whereas crime used to be the exceptional event, disrupting the otherwise

normal socio-economic processes, as crime becomes more frequent it lost its status as an

exceptional event and became "a standard, background feature of our livesa taken for

granted element of late modernity." (Garland 1996: 446)

Enforcement policy

Corporate crime has become politically sensitive in some countries. In the United

Kingdom, for example, following a number of fatal disasters on the rail network and at

sea, the term is commonly used in reference to corporate manslaughterand to involve a

more general discussion about the technological hazards posed by business enterprises

(see Wells: 2001). Similar incidents of corporate crime, such as the 1985Union Carbide

accident in Bhopal, India (Pearce & Tombs: 1993) and the behaviour of the

pharmaceuticalindustry (Braithwaite: 1984).

The Law Reform Commission of New South Wales offers an explanation of such

criminal activities:

19
http://en.wikipedia.org/wiki/English_lawhttp://en.wikipedia.org/wiki/Salomon_v_Salomon_%26_Cohttp://en.wikipedia.org/wiki/Salomon_v_Salomon_%26_Cohttp://en.wikipedia.org/wiki/Australian_lawhttp://en.wikipedia.org/wiki/Australian_lawhttp://en.wikipedia.org/wiki/Corporate_personhoodhttp://en.wikipedia.org/wiki/Corporate_personhoodhttp://en.wikipedia.org/wiki/United_States_Bill_of_Rightshttp://en.wikipedia.org/wiki/United_States_Bill_of_Rightshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Corporate_manslaughterhttp://en.wikipedia.org/wiki/Union_Carbidehttp://en.wikipedia.org/wiki/Union_Carbidehttp://en.wikipedia.org/wiki/Bhopalhttp://en.wikipedia.org/wiki/Pharmaceuticalhttp://en.wikipedia.org/wiki/Pharmaceuticalhttp://en.wikipedia.org/wiki/English_lawhttp://en.wikipedia.org/wiki/Salomon_v_Salomon_%26_Cohttp://en.wikipedia.org/wiki/Australian_lawhttp://en.wikipedia.org/wiki/Corporate_personhoodhttp://en.wikipedia.org/wiki/United_States_Bill_of_Rightshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Corporate_manslaughterhttp://en.wikipedia.org/wiki/Union_Carbidehttp://en.wikipedia.org/wiki/Bhopalhttp://en.wikipedia.org/wiki/Pharmaceutical


20/60


"Corporate crime poses a significant threat to the welfare of the community. Given the

pervasive presence of corporations in a wide range of activities in our society, and the

impact of their actions on a much wider group of people than are affected by individual

action, the potential for both economic and physical harm caused by a corporation is

great."

Similarly, Russell Mokhiber and Robert Weissman (1999) assert:

"At one level, corporations develop new technologies and economies of scale. These may

serve the economic interests of mass consumers by introducing new products and more

efficient methods of mass production. On another level, given the absence of political

control today, corporations serve to destroy the foundations of the civic community and

the lives of people who reside in them."

Discussion

Criminalization

Behavior can be regulated by thecivil law (including administrative law) or the criminal

law. In deciding to criminalize particular behavior, thelegislature is making the political

judgment that this behavior is sufficiently culpable to deserve the stigma of being labeled

as a crime. In law, corporations can commit the same offences as natural persons.

Simpson (2002) avers that this process should be straight forward because a state should

simply engage in victimology to identify which behavior causes the most loss and

damage to its citizens, and then represent the majority view that justice requires the

intervention of the criminal law. But states depend on the business sector to deliver a

20
http://en.wikipedia.org/wiki/Civil_law_(common_law)http://en.wikipedia.org/wiki/Civil_law_(common_law)http://en.wikipedia.org/wiki/Administrative_lawhttp://en.wikipedia.org/wiki/Criminal_lawhttp://en.wikipedia.org/wiki/Criminal_lawhttp://en.wikipedia.org/wiki/Legislaturehttp://en.wikipedia.org/wiki/Legislaturehttp://en.wikipedia.org/wiki/Culpablehttp://en.wikipedia.org/wiki/Victimologyhttp://en.wikipedia.org/wiki/Citizenhttp://en.wikipedia.org/wiki/Citizenhttp://en.wikipedia.org/wiki/Justicehttp://en.wikipedia.org/wiki/Civil_law_(common_law)http://en.wikipedia.org/wiki/Administrative_lawhttp://en.wikipedia.org/wiki/Criminal_lawhttp://en.wikipedia.org/wiki/Criminal_lawhttp://en.wikipedia.org/wiki/Legislaturehttp://en.wikipedia.org/wiki/Culpablehttp://en.wikipedia.org/wiki/Victimologyhttp://en.wikipedia.org/wiki/Citizenhttp://en.wikipedia.org/wiki/Justice


21/60


stable economy, so the politics of regulating the individuals and corporations that supply

that stability become more complex. For the views of Marxist criminology, see Snider

(1993) and Snider & Pearce (1995), for Left realism, see Pearce & Tombs (1992) and

Schulte-Bockholt (2001), and for Right Realism, see Reed & Yeager (1996). More

specifically, the historical tradition ofsovereign state control ofprisons is ending through

the process ofprivatisation. Corporate profitability in these areas therefore depends on

building more prison facilities, managing their operations, and selling inmate labor. In

turn, this requires a steady stream ofprisonersable to work. (Kicenski: 2002)

The majority of crimes are committed because the offender has the 'right opportunity',

i.e., where the offender simply sees the chance and thinks that he or she will be able to

commit the crime and not be detected.[dubious discuss][citation needed]

For the most part,[ peacock term] greed, rather than conceit, is the motive, and the

rationalisation for choosing to break the law usually arises out of a form of contempt for

the victim, namely that he, she or it will be powerless to prevent it, and has it coming for

some reason. For these purposes, the corporation is the vehicle for the crime. This may be

a short-term crime, i.e., the corporation is set up as a shell to open credit trading accounts

with manufacturers and wholesalers, trades for a short period of time and then disappears

with the revenue and without paying for the inventory. Alternatively and most

commonly, the primary purpose of the corporation is as a legitimate business, but

criminal activity is secretly intermixed with legal activity to escape detection. To achieve

a suitable level of secrecy, senior managers will usually be involved. The explanations

and exculpations may therefore centre around rogue individuals who acted outside the

organizational structures, or there may be a serious examination of the occupational and

organisational structures (often hinged on the socio-economic system, gender, racism

and/or age) that facilitated the criminal conduct of a corporation

Bribery andcorruption are problems in the developed world, and the corruption of public

officials is thought[according to whom?] to be a large cause of crime in poor countries

that have large IMF debts and IMF sovereign obligations.

21
http://en.wikipedia.org/wiki/Marxist_criminologyhttp://en.wikipedia.org/wiki/Left_realismhttp://en.wikipedia.org/wiki/Right_Realismhttp://en.wikipedia.org/wiki/Sovereigntyhttp://en.wikipedia.org/wiki/Prisonhttp://en.wikipedia.org/wiki/Privatisationhttp://en.wikipedia.org/wiki/Privatisationhttp://en.wikipedia.org/wiki/Prisonhttp://en.wikipedia.org/wiki/Prisonhttp://en.wikipedia.org/wiki/Wikipedia:Disputed_statementhttp://en.wikipedia.org/wiki/Talk:Corporate_crime#Dubioushttp://en.wikipedia.org/wiki/Talk:Corporate_crime#Dubioushttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Avoid_peacock_termshttp://en.wikipedia.org/wiki/Conceithttp://en.wikipedia.org/wiki/Conceithttp://en.wikipedia.org/wiki/Conceithttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Briberyhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_viewhttp://en.wikipedia.org/wiki/International_Monetary_Fundhttp://en.wikipedia.org/wiki/Marxist_criminologyhttp://en.wikipedia.org/wiki/Left_realismhttp://en.wikipedia.org/wiki/Right_Realismhttp://en.wikipedia.org/wiki/Sovereigntyhttp://en.wikipedia.org/wiki/Prisonhttp://en.wikipedia.org/wiki/Privatisationhttp://en.wikipedia.org/wiki/Prisonhttp://en.wikipedia.org/wiki/Wikipedia:Disputed_statementhttp://en.wikipedia.org/wiki/Talk:Corporate_crime#Dubioushttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Avoid_peacock_termshttp://en.wikipedia.org/wiki/Conceithttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Briberyhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_viewhttp://en.wikipedia.org/wiki/International_Monetary_Fund


22/60


Penalties

In part, this will be a function of the public perception of the degrees of societal

culpabilityinvolved. Weissman and Mokhiber (1999) catalog the silence and

indifference of the major media in the face of the widespread corporate

corruption. Only in part is this justifiable. The news media find it difficult to

respond to corporate crime both because reporting may compromise the trialby

tainting thejury's perceptions, or because of the danger ofdefamation

proceedings. Further, major corporate crime is often complicated and more

difficult to explain to the lay public, as against street orproperty crimes, which

may provide graphic visual evidence of harm to victims injured, or of property

that has been damaged orvandalized in spectacular fashion. But, moresignificantly, the news media are owned by large corporations which may also

own prisons. Thus, the political decisions on the resources to allocate to

investigate and prosecute will tend to match the electorate's understanding of the

dangers posed by 'crime'. In sentencing, the fact that the convicted individuals

may have had an impeccable character as presidents, CEOs, chairmen,directors

and managers is likely to be a mitigating factor.

Examples of criminal behavior in most jurisdictions include: insider trading, antitrust

violations, fraud (usually involving the consumers), damage to the environment,

exploitationof labour in violation of labor andhealth and safetylaws, and the failure to

maintain a fiduciary responsibility towards stockholders.

Enforcement and legal or quasi-legal corrupt activities

One example, may be in the area of takeovers and top executive compensation:

It is fairly easy for a top executive to reduce the price of his/her company's stockdue to

information asymmetry. The executive can accelerate accounting of expected expenses,

delay accounting of expected revenue, engage in off balance sheettransactions to make

the company's profitability appear temporarily poorer, or simply promote and report

severely conservative (e.g. pessimistic) estimates of future earnings. Such seemingly

adverse earnings news will be likely to (at least temporarily) reduce share price. (This is

22
http://en.wikipedia.org/wiki/Culpabilityhttp://en.wikipedia.org/wiki/Culpabilityhttp://en.wikipedia.org/wiki/Trial_(law)http://en.wikipedia.org/wiki/Trial_(law)http://en.wikipedia.org/wiki/Juryhttp://en.wikipedia.org/wiki/Defamationhttp://en.wikipedia.org/wiki/Property_crimehttp://en.wikipedia.org/wiki/Vandalizehttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Chairman_of_the_boardhttp://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Insider_tradinghttp://en.wikipedia.org/wiki/Insider_tradinghttp://en.wikipedia.org/wiki/Antitrusthttp://en.wikipedia.org/wiki/Fraudhttp://en.wikipedia.org/wiki/Fraudhttp://en.wikipedia.org/wiki/Natural_environmenthttp://en.wikipedia.org/wiki/Exploitationhttp://en.wikipedia.org/wiki/Exploitationhttp://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Fiduciaryhttp://en.wikipedia.org/wiki/Stockholderhttp://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Off_balance_sheethttp://en.wikipedia.org/wiki/Off_balance_sheethttp://en.wikipedia.org/wiki/Culpabilityhttp://en.wikipedia.org/wiki/Trial_(law)http://en.wikipedia.org/wiki/Juryhttp://en.wikipedia.org/wiki/Defamationhttp://en.wikipedia.org/wiki/Property_crimehttp://en.wikipedia.org/wiki/Vandalizehttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Chairman_of_the_boardhttp://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Insider_tradinghttp://en.wikipedia.org/wiki/Antitrusthttp://en.wikipedia.org/wiki/Fraudhttp://en.wikipedia.org/wiki/Natural_environmenthttp://en.wikipedia.org/wiki/Exploitationhttp://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Fiduciaryhttp://en.wikipedia.org/wiki/Stockholderhttp://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Off_balance_sheet


23/60


again due to information asymmetries since it is more common for top executives to do

everything they can to window dress their company's earnings forecasts). There are

typically very few legal risks to being 'too conservative' in one's accounting and earnings

estimates.

A reduced share price makes a company an easier takeover target. When the company

gets bought out (or taken private)at a dramatically lower pricethe takeover artist

gains a windfall from the former top executive's actions to surreptitiously reduce share

price. This can represent 10s of billions of dollars (questionably) transferred from

previous shareholders to the takeover artist. The former top executive is then rewarded

with a golden handshake for presiding over the firesale that can sometimes be in the 100s

of millions of dollars for one or two years of work. (This is nevertheless an excellent

bargain for the takeover artist, who will tend to benefit from developing a reputation of

being very generous to parting top executives).

Similar issues occur when a publicly held asset ornon-profit organization undergoes

privatization. Top executives often reap tremendous monetary benefits when a

government owned or non-profit entity is sold to private hands. Just as in the example

above, they can facilitate this process by making the entity appear to be in financial crisis

this reduces the sale price (to the profit of the purchaser), and makes non-profits and

governments more likely to sell. Ironically, it can also contribute to a public perception

that private entities are more efficiently run, reinforcing the political will to sell off public

assets. Again, due toasymmetric information, policy makers and the general public see a

government owned firm that was a financial 'disaster'miraculously turned around by

the private sector (and typically resold) within a few years.

23
http://en.wikipedia.org/wiki/Information_asymmetrieshttp://en.wikipedia.org/wiki/Window_dresshttp://en.wikipedia.org/wiki/Takeoverhttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Firesalehttp://en.wikipedia.org/wiki/Reputationhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Privatizationhttp://en.wikipedia.org/wiki/Asymmetric_informationhttp://en.wikipedia.org/wiki/Asymmetric_informationhttp://en.wikipedia.org/wiki/Information_asymmetrieshttp://en.wikipedia.org/wiki/Window_dresshttp://en.wikipedia.org/wiki/Takeoverhttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Firesalehttp://en.wikipedia.org/wiki/Reputationhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Privatizationhttp://en.wikipedia.org/wiki/Asymmetric_information


24/60


Accounting Scandals

Accounting scandals, or corporate accounting scandals, arepolitical andbusiness

scandals which arise with the disclosure of misdeeds by trusted executives of large

public corporations. Such misdeeds typically involve complex methods for misusing or

misdirecting funds, overstating revenues, understating expenses, overstating the value ofcorporate assets or underreporting the existence of liabilities, sometimes with the

cooperation of officials in other corporations or affiliates.

In public companies, this type of "creative accounting" can amount to fraud and

investigations are typically launched by government oversight agencies, such as

the Securities and Exchange Commission(SEC) in the United States.

24
http://en.wikipedia.org/wiki/Political_scandalshttp://en.wikipedia.org/wiki/Corporate_abusehttp://en.wikipedia.org/wiki/Corporate_abusehttp://en.wikipedia.org/wiki/Corporate_abusehttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Creative_accountinghttp://en.wikipedia.org/wiki/Fraudhttp://en.wikipedia.org/wiki/Oversighthttp://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commissionhttp://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commissionhttp://en.wikipedia.org/wiki/Political_scandalshttp://en.wikipedia.org/wiki/Corporate_abusehttp://en.wikipedia.org/wiki/Corporate_abusehttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Creative_accountinghttp://en.wikipedia.org/wiki/Fraudhttp://en.wikipedia.org/wiki/Oversighthttp://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission


25/60


Scandals are often only the 'tip of the iceberg'. They represent the visible catastrophic

failures. Note that much abuse can be completely legal or quasi legal.

For example, in the domain ofprivatization and takeovers:

It is fairly easy for a top executive to reduce the price of his/her company's stock - due

toinformation asymmetry. The executive can accelerate accounting of expected

expenses, delay accounting of expected revenue, engage inoff balance sheet transactions

to make the company's profitability appear temporarily poorer, or simply promote and

report severely conservative (eg. pessimistic) estimates of future earnings. Such

seemingly adverse earnings news will be likely to (at least temporarily) reduce share

price. (This is again due to information asymmetries since it is more common for top

executives to do everything they can to window dress their company's earnings

forecasts). There are typically very few legal risks to being 'too conservative' in one's

accounting and earnings estimates.

A reduced share price makes a company an easiertakeovertarget. When the company

gets bought out (or taken private) - at a dramatically lower price - the takeover artist gains

a windfall from the former top executive's actions to surreptitiously reduce share price.

This can represent tens of billions of dollars (questionably) transferred from previous

shareholders to the takeover artist. The former top executive is then rewarded with

agolden handshakefor presiding over the firesale that can sometimes be in the hundreds

of millions of dollars for one or two years of work. (This is nevertheless an excellent

bargain for the takeover artist, who will tend to benefit from developing areputation of

being very generous to parting top executives).

Similar issues occur when a publicly held asset or non-profit

organization undergoesprivatization. Top executives often reap tremendous monetary

benefits when a government owned or non-profit entity is sold to private hands. Just as in

the example above, they can facilitate this process by making the entity appear to be in

financial crisis - this reduces the sale price (to the profit of the purchaser), and makes

non-profits and governments more likely to sell. Ironically, it can also contribute to a

public perception that private entities are more efficiently run reinforcing the political

will to sell off public assets. Again, due to asymmetric information, policy makers and

the general public see a government owned firm that was a financial 'disaster' -

25
http://en.wikipedia.org/wiki/Tip_of_the_iceberghttp://en.wikipedia.org/wiki/Tip_of_the_iceberghttp://en.wikipedia.org/wiki/Tip_of_the_iceberghttp://en.wikipedia.org/wiki/Privatizationhttp://en.wikipedia.org/wiki/Takeovershttp://en.wikipedia.org/wiki/Takeovershttp://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Off_balance_sheethttp://en.wikipedia.org/wiki/Off_balance_sheethttp://en.wikipedia.org/wiki/Information_asymmetrieshttp://en.wikipedia.org/wiki/Window_dresshttp://en.wikipedia.org/wiki/Takeoverhttp://en.wikipedia.org/wiki/Takeoverhttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Firesalehttp://en.wikipedia.org/wiki/Reputationhttp://en.wikipedia.org/wiki/Reputationhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Privatizationhttp://en.wikipedia.org/wiki/Asymmetric_informationhttp://en.wikipedia.org/wiki/Tip_of_the_iceberghttp://en.wikipedia.org/wiki/Privatizationhttp://en.wikipedia.org/wiki/Takeovershttp://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Off_balance_sheethttp://en.wikipedia.org/wiki/Information_asymmetrieshttp://en.wikipedia.org/wiki/Window_dresshttp://en.wikipedia.org/wiki/Takeoverhttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Firesalehttp://en.wikipedia.org/wiki/Reputationhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Privatizationhttp://en.wikipedia.org/wiki/Asymmetric_information


26/60


miraculously turned around by the private sector (and typically resold) within a few

years.

Notable accounting scandals

Company Year Audit Firm Country Notes

Nugan Hand

Bank1980[1] Australia

ZZZZ Best 1986[2] United StatesPonzi scheme run

by Barry Minkow

Barlow Clowes 1988[3]United

Kingdom

Gilts management

service. 1110

million missing

MiniScribe 1989[4] United States

Polly Peck 1990[5] United

26
http://en.wikipedia.org/wiki/Nugan_Hand_Bankhttp://en.wikipedia.org/wiki/Nugan_Hand_Bankhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-0http://en.wikipedia.org/wiki/ZZZZ_Besthttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-1http://en.wikipedia.org/wiki/Barry_Minkowhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-2http://en.wikipedia.org/wiki/MiniScribehttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-3http://en.wikipedia.org/wiki/Polly_Peckhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-4http://en.wikipedia.org/wiki/Accounting_scandalshttp://en.wikipedia.org/wiki/Accounting_scandalshttp://en.wikipedia.org/wiki/Accounting_scandalshttp://en.wikipedia.org/wiki/Accounting_scandalshttp://en.wikipedia.org/wiki/Accounting_scandalshttp://en.wikipedia.org/wiki/Nugan_Hand_Bankhttp://en.wikipedia.org/wiki/Nugan_Hand_Bankhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-0http://en.wikipedia.org/wiki/ZZZZ_Besthttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-1http://en.wikipedia.org/wiki/Barry_Minkowhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-2http://en.wikipedia.org/wiki/MiniScribehttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-3http://en.wikipedia.org/wiki/Polly_Peckhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-4


27/60


Kingdom

Bank of Credit

and Commerce

International

1991[6]United

Kingdom

Northern RockUnited

Kingdom

Clearstream Luxembourg

Phar-Mor 1992[7] United States

Informix 1996[8] United States

Cendant 1998[9] Ernst & Young United States

Waste

Management,

Inc.

1999[10] Arthur Andersen United StatesFinancial

mistatements

MicroStrategy 2000[11] PricewaterhouseCoopers United States Michael Saylor

Unify

Corporation2000[12] United States

Computer

Associates2000[13] KPMG United States Sanjay Kumar

Xerox 2000[14] KPMG United StatesFalsifying financial

resultsOne.Tel 2001[15] Ernst & Young Australia

Enron 2001[16] Arthur Andersen United States

Jeffrey

Skilling, Kenneth

Lay,Andrew

Fastow

Adelphia 2002[17] Deloitte & Touche United States John Rigas

AOL 2002[14] Ernst & Young United States Inflated sales

Bristol-Myers

Squibb2002[14][18] PricewaterhouseCoopers United States Inflated revenues

CMS Energy 2002[14][19] Arthur Andersen United States Round trip trades

Duke Energy 2002[14] Deloitte & Touche United States Round trip trades

Dynegy 2002[14] Arthur Andersen United States Round trip trades

27
http://en.wikipedia.org/wiki/Bank_of_Credit_and_Commerce_Internationalhttp://en.wikipedia.org/wiki/Bank_of_Credit_and_Commerce_Internationalhttp://en.wikipedia.org/wiki/Bank_of_Credit_and_Commerce_Internationalhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-5http://en.wikipedia.org/wiki/Nationalisation_of_Northern_Rockhttp://en.wikipedia.org/wiki/Clearstreamhttp://en.wikipedia.org/wiki/Phar-Morhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-6http://en.wikipedia.org/wiki/Informixhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-7http://en.wikipedia.org/wiki/Cendanthttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-8http://en.wikipedia.org/wiki/Ernst_%26_Younghttp://en.wikipedia.org/wiki/Waste_Management,_Inc.http://en.wikipedia.org/wiki/Waste_Management,_Inc.http://en.wikipedia.org/wiki/Waste_Management,_Inc.http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-9http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/MicroStrategyhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-10http://en.wikipedia.org/wiki/PricewaterhouseCoopershttp://en.wikipedia.org/wiki/Michael_Saylorhttp://en.wikipedia.org/wiki/Unify_Corporationhttp://en.wikipedia.org/wiki/Unify_Corporationhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-11http://en.wikipedia.org/wiki/CA,_Inc.http://en.wikipedia.org/wiki/CA,_Inc.http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-12http://en.wikipedia.org/wiki/KPMGhttp://en.wikipedia.org/wiki/Sanjay_Kumarhttp://en.wikipedia.org/wiki/Xeroxhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/KPMGhttp://en.wikipedia.org/wiki/One.Telhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-14http://en.wikipedia.org/wiki/Ernst_%26_Younghttp://en.wikipedia.org/wiki/Enronhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-15http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/Jeffrey_Skillinghttp://en.wikipedia.org/wiki/Jeffrey_Skillinghttp://en.wikipedia.org/wiki/Kenneth_Layhttp://en.wikipedia.org/wiki/Kenneth_Layhttp://en.wikipedia.org/wiki/Andrew_Fastowhttp://en.wikipedia.org/wiki/Andrew_Fastowhttp://en.wikipedia.org/wiki/Andrew_Fastowhttp://en.wikipedia.org/wiki/Adelphia_Communications_Corporationhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-16http://en.wikipedia.org/wiki/Deloitte_%26_Touchehttp://en.wikipedia.org/wiki/John_Rigashttp://en.wikipedia.org/wiki/AOLhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Ernst_%26_Younghttp://en.wikipedia.org/wiki/Bristol-Myers_Squibbhttp://en.wikipedia.org/wiki/Bristol-Myers_Squibbhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-17http://en.wikipedia.org/wiki/PricewaterhouseCoopershttp://en.wikipedia.org/wiki/CMS_Energyhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-18http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/Duke_Energyhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Deloitte_%26_Touchehttp://en.wikipedia.org/wiki/Dynegyhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/Bank_of_Credit_and_Commerce_Internationalhttp://en.wikipedia.org/wiki/Bank_of_Credit_and_Commerce_Internationalhttp://en.wikipedia.org/wiki/Bank_of_Credit_and_Commerce_Internationalhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-5http://en.wikipedia.org/wiki/Nationalisation_of_Northern_Rockhttp://en.wikipedia.org/wiki/Clearstreamhttp://en.wikipedia.org/wiki/Phar-Morhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-6http://en.wikipedia.org/wiki/Informixhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-7http://en.wikipedia.org/wiki/Cendanthttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-8http://en.wikipedia.org/wiki/Ernst_%26_Younghttp://en.wikipedia.org/wiki/Waste_Management,_Inc.http://en.wikipedia.org/wiki/Waste_Management,_Inc.http://en.wikipedia.org/wiki/Waste_Management,_Inc.http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-9http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/MicroStrategyhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-10http://en.wikipedia.org/wiki/PricewaterhouseCoopershttp://en.wikipedia.org/wiki/Michael_Saylorhttp://en.wikipedia.org/wiki/Unify_Corporationhttp://en.wikipedia.org/wiki/Unify_Corporationhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-11http://en.wikipedia.org/wiki/CA,_Inc.http://en.wikipedia.org/wiki/CA,_Inc.http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-12http://en.wikipedia.org/wiki/KPMGhttp://en.wikipedia.org/wiki/Sanjay_Kumarhttp://en.wikipedia.org/wiki/Xeroxhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/KPMGhttp://en.wikipedia.org/wiki/One.Telhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-14http://en.wikipedia.org/wiki/Ernst_%26_Younghttp://en.wikipedia.org/wiki/Enronhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-15http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/Jeffrey_Skillinghttp://en.wikipedia.org/wiki/Jeffrey_Skillinghttp://en.wikipedia.org/wiki/Kenneth_Layhttp://en.wikipedia.org/wiki/Kenneth_Layhttp://en.wikipedia.org/wiki/Andrew_Fastowhttp://en.wikipedia.org/wiki/Andrew_Fastowhttp://en.wikipedia.org/wiki/Adelphia_Communications_Corporationhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-16http://en.wikipedia.org/wiki/Deloitte_%26_Touchehttp://en.wikipedia.org/wiki/John_Rigashttp://en.wikipedia.org/wiki/AOLhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Ernst_%26_Younghttp://en.wikipedia.org/wiki/Bristol-Myers_Squibbhttp://en.wikipedia.org/wiki/Bristol-Myers_Squibbhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-17http://en.wikipedia.org/wiki/PricewaterhouseCoopershttp://en.wikipedia.org/wiki/CMS_Energyhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-18http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/Duke_Energyhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Deloitte_%26_Touchehttp://en.wikipedia.org/wiki/Dynegyhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Arthur_Andersen


28/60


El Paso

Corporation2002[14] Deloitte & Touche United States Round trip trades

Freddie Mac 2002[20] United StatesUnderstated

earnings

Global Crossing 2002[14] Arthur Andersen Bermuda

Network capacity

swaps to inflate

revenues

Halliburton 2002[14] Arthur Andersen United StatesImproper booking

of cost overruns

Homestore.com 2002[14][21] United StatesImproper booking

of sales

ImCloneSystems

2002[22] KPMG United States Samuel D. Waksal

Kmart 2002[14][23] PricewaterhouseCoopers United States

Misleading

accounting

practices

Merck & Co. 2002[14] United States

Recorded co-

payments that were

not collected

Merrill Lynch 2002[24] Deloitte & Touche United States Conflict of interest

Mirant 2002[14] United StatesOverstated assets

and liabilities

Nicor 2002[14] United States

Overstated assets,

understated

liabilities

Peregrine

Systems2002[14] KPMG United States Overstated sales

Qwest

Communications2002[14] United States Inflated revenues

Reliant Energy 2002[14] Deloitte & Touche United States Round trip trades

Sunbeam 2002[25] United States

Tyco 2002[14] PricewaterhouseCoopers Bermuda Improper

28
http://en.wikipedia.org/wiki/El_Paso_Corporationhttp://en.wikipedia.org/wiki/El_Paso_Corporationhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Deloitte_%26_Touchehttp://en.wikipedia.org/wiki/Freddie_Machttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-19http://en.wikipedia.org/wiki/Global_Crossinghttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/Halliburtonhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/Move.comhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-20http://en.wikipedia.org/wiki/ImClone_Systemshttp://en.wikipedia.org/wiki/ImClone_Systemshttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-21http://en.wikipedia.org/wiki/KPMGhttp://en.wikipedia.org/wiki/Samuel_D._Waksalhttp://en.wikipedia.org/wiki/Kmarthttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-22http://en.wikipedia.org/wiki/PricewaterhouseCoopershttp://en.wikipedia.org/wiki/Merck_%26_Co.http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Merrill_Lynchhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-23http://en.wikipedia.org/wiki/Deloitte_%26_Touchehttp://en.wikipedia.org/wiki/Miranthttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Nicorhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Peregrine_Systemshttp://en.wikipedia.org/wiki/Peregrine_Systemshttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/KPMGhttp://en.wikipedia.org/wiki/Qwest_Communicationshttp://en.wikipedia.org/wiki/Qwest_Communicationshttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Reliant_Energyhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Deloitte_%26_Touchehttp://en.wikipedia.org/wiki/Sunbeam_Productshttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-24http://en.wikipedia.org/wiki/Tyco_Internationalhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/PricewaterhouseCoopershttp://en.wikipedia.org/wiki/El_Paso_Corporationhttp://en.wikipedia.org/wiki/El_Paso_Corporationhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Deloitte_%26_Touchehttp://en.wikipedia.org/wiki/Freddie_Machttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-19http://en.wikipedia.org/wiki/Global_Crossinghttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/Halliburtonhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/Move.comhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-20http://en.wikipedia.org/wiki/ImClone_Systemshttp://en.wikipedia.org/wiki/ImClone_Systemshttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-21http://en.wikipedia.org/wiki/KPMGhttp://en.wikipedia.org/wiki/Samuel_D._Waksalhttp://en.wikipedia.org/wiki/Kmarthttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-22http://en.wikipedia.org/wiki/PricewaterhouseCoopershttp://en.wikipedia.org/wiki/Merck_%26_Co.http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Merrill_Lynchhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-23http://en.wikipedia.org/wiki/Deloitte_%26_Touchehttp://en.wikipedia.org/wiki/Miranthttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Nicorhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Peregrine_Systemshttp://en.wikipedia.org/wiki/Peregrine_Systemshttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/KPMGhttp://en.wikipedia.org/wiki/Qwest_Communicationshttp://en.wikipedia.org/wiki/Qwest_Communicationshttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Reliant_Energyhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Deloitte_%26_Touchehttp://en.wikipedia.org/wiki/Sunbeam_Productshttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-24http://en.wikipedia.org/wiki/Tyco_Internationalhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/PricewaterhouseCoopers


29/60


Internationalaccounting,Dennis

Kozlowski

WorldCom 2002[14] Arthur Andersen United States

Overstated cash

flows,Bernard

Ebbers

Royal Ahold 2003[26] Deloitte & Touche Netherlands

Inflating

promotional

allowances

Parmalat 2003[27][28] Grant Thornton SpA Italy

Falsified

accounting

documents, Calisto

TanziHealthSouth

Corporation2003[29] Ernst & Young United States Richard M. Scrushy

Chiquita Brands

International2004[30] United States Illegal payments

AIG 2004[31] PricewaterhouseCoopers United States

Accounting of

structured financial

deals

Bernard L.

Madoff

Investment

Securities LLC

2008[32] Friehling & Horowitz United States Ponzi scheme.[33]

Anglo Irish

Bank2008[34] Ernst & Young Ireland

Anglo Irish Bank

hidden loans

controversy

SatyamComputer

Services

2009[35] PricewaterhouseCoopers India Falsified accounts

Lernout &

HauspieBelgium

Lehman 2010[36] Ernst & Young United States Failure to

29
http://en.wikipedia.org/wiki/Tyco_Internationalhttp://en.wikipedia.org/wiki/Dennis_Kozlowskihttp://en.wikipedia.org/wiki/Dennis_Kozlowskihttp://en.wikipedia.org/wiki/Dennis_Kozlowskihttp://en.wikipedia.org/wiki/WorldComhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-f2002-13http://en.wikipedia.org/wiki/Arthur_Andersenhttp://en.wikipedia.org/wiki/Bernard_Ebbershttp://en.wikipedia.org/wiki/Bernard_Ebbershttp://en.wikipedia.org/wiki/Bernard_Ebbershttp://en.wikipedia.org/wiki/Aholdhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-25http://en.wikipedia.org/wiki/Deloitte_%26_Touchehttp://en.wikipedia.org/wiki/Parmalathttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-26http://en.wikipedia.org/wiki/Accounting_scandals#cite_note-27http://en.wikipedia.org/wiki/Grant_Thorntonhttp://en.wikipedia.org/wiki/Calisto_Tanzihttp://en.wikipedia.org/wiki/Calisto_Tanzihttp://en.wikipedia.org/wiki/HealthSouth_Corporationhttp://en.wikipedia.org/wiki/HealthSouth_Corporationhttp://en.wikipedia.org/wiki/Accounting_scandals#cite_note-28http://en.wikipedia.org/wiki/Ernst_%26_Younghttp://en.wikipedia.org/wiki/Richard_M._Scrush

corruption in management

Documents