Desktop version

Home arrow Law

  • Increase font
  • Decrease font


<<   CONTENTS   >>

LEGAL CONTROL OF CORPORATE CRIME

A variety of regulatory agencies regulate corporate behavior and thus corporate crime.

The control of corporate activities may be prospective, as in licensing, when control is exercised before illegal acts occur; processual, as in inspection where control is continuous; and retrospective, as when a lawsuit is brought for damages after illegal acts have occurred. A later section of this chapter discusses these types of controls further. In addition, if a business concern defies the law, the government may institute, under civil law, an injunction to “cease and desist” from further violations. If further violations occur, contempt of court proceedings may be instituted. Fines and various forms of assessments are also used in attempts to control deleterious corporate activities, as, for example, in cases of levying fines on water and air polluters. At times, the government can also exercise control through its buying power by rewarding firms that comply and withdrawing from or not granting governmental contracts to those who do not.

However, as Christopher D. Stone (1978:244-245) once pointed out, “Whether we are threatening the corporation with private civil actions, criminal prosecutions, or the new hybrid ‘civil penalties,’ we aim to control the corporation through threats to its profits.” Although corporations are subjected to federal sentencing guidelines, corporate offenders are rarely criminally prosecuted and even more rarely imprisoned. A large proportion of these offenders are handled through administrative and civil sanctions, and the penalty is monetary. Because large corporations can easily afford to pay fines amounting to hundreds of millions of dollars or more, the penalty imposed for violating the law in effect amounts to little more than a reasonable licensing fee for engaging in illegal activity. Essentially, it is worthwhile for a large corporation to violate the laws regulating business.

Controlling corporations through the law becomes, as Stone (1978:250) has put it, a “misplaced faith on negative reinforcement.” Although there are now sophisticated detection and record-keeping technologies, forensic accountants, and other legal specialists, the law constitutes only one of the threats that the corporation faces in dealing with the outside world. Often, paying a fine is just considered part of doing business.

Further, the government’s response to corporate violations cannot be compared to its response to ordinary crime. Generally, penalties imposed on corporations are quite lenient, particularly in view of the gravity of the offenses committed, as compared with the penalties imposed on conventional criminals. Few members of corporate management ever go to prison, even if convicted; generally, they are placed on probation or requested to carry some kind of community service. If they go to prison, it is almost always for a very short time period. For example, a study found that, of 56 federally convicted executives, almost two-thirds received probation, 29% were incarcerated, and the remainder had their sentences suspended. The average prison sentence for all those convicted for white-collar crimes averaged just 2.8 days (U.S. Department of Justice, 1979). Gilbert Geis (1978, 1994) once pointed out that it is ironic that the penalties for corporate crime are minimal even though they are given to the very persons who might be the most affected by them. In other words, if corporate offenders are potentially the most deterred (because they simply dread the thought of imprisonment), an increase in punishment and the intensity of enforcement might result in the greatest benefit to society. As it stands now, however, the penalties for corporate crime remain far less than the harm caused.

 
<<   CONTENTS   >>

Related topics