QUESTION
Drawing on the themes of the topic, what is the key problem in controlling corporate crime?
SOLUTION
Key problem in controlling corporate crime
Even though we are more afraid of facing violent crimes on the street, we generally lose more money to white collar corporate crimes. These include crimes like consumer fraud, tax cheating, insurance and medical frauds and deceptive advertising. Prosecution in case of corporate crimes is more difficult as these crimes are usually very complex in nature than ordinary crimes and includes large amounts of paper work and a long list of witnesses. Another problem is that though the scope of corporate crimes is much wider than the other crimes but the corporate offenders get somewhat lenient punishment in case they are found guilty. In many cases of corporate crimes, the offenders don’t even have to go to jail and they are let off with a fine only. This fine is a trivial amount for the large corporations which can easily write off these amounts as business costs. The corporate criminals have the services of the best criminal lawyers and law firms. More over there are several loopholes in the present legal system, which are exploited by the corporate criminals (Tomasic and Bottomley, 1993).
An official of the Attorney General’s Department once said that it is difficult to prove criminal cases in Australia. The problem is aggravated in case of corporate crimes which are much more complex to prove. Many experts have advocated using civil penalties as there are many difficulties in proving complicated corporate crimes beyond doubt.
Another issue involved with proving corporate crimes is the general belief that the criminal justice system of the country is not well equipped to deal with cases of corporate crime. There is a wide spread perception that courts are reluctant when it comes to convicting corporate criminals. They don’t generally send people in suits to jail, is the common perception. The problem is further aggravated by difficulties in presenting sufficient regarding these crimes.
The complex nature of criminal trials is factor which presents difficulties in the prosecution of corporate criminals. These cases involve too much time and many prosecutors prefer civil remedies. But these civil remedies do not have the same deterrent effect as the criminal provisions have. Several federal judges have also supported the greater use of civil remedies as they feel that prosecuting corporate criminals under the present system is too difficult. Many lawyers support the use of civil action against corporate criminals because they feel criminal prosecution is too expensive and difficult. In such cases they feel that it is better to achieve something rather than nothing (Moffat, 1990).
Another point in favor of civil proceedings as compared to criminal proceedings is the availability of compensation in civil rights. On the other hand in criminal proceedings the fine imposed on the criminal goes to the state. However it should be noted that there should be some funds left with corporation to pay the compensation. Little could be done in case of criminal proceedings to deprive the offender of the fruits of his wrongdoings. Not much can be done in case of criminal proceedings to recover these ill-gotten profits.
There are many advocates of civil action in case of corporate crimes as they feel that criminal action should be taken only in cases of fraud, deceit and misappropriation. The feel that if the offense has taken place in ordinary course of business, it is not a matter of criminal law and civil penalties should be applied in such cases. They argue that criminal law should be used only in cases of gross acts of dishonesty and persons should not be held criminally accountable for their bad business decisions only. Civil action against corporate criminals is preferred by many. It is felt that the main purpose of corporate law should be to protect the creditors and investors and it should not be obsessed with giving punishment to the corporate. The main aim of controlling corporate law is to maintain the market and also to punish the offenders. Other aim of this control is to handle the abuse of limited liability and improve the corporate morality. Generally it is believed that the main purpose of corporate law is to maintain the boundaries and standards of business and also to protect the interests of creditors and shareholders (Jenkins and Braithwaite, 1990).
It is a common perception that the number of cases against corporate law breaches is not as high as are the cases of abuse of law by the corporate. One main reason behind the lack of ability to successfully plead cases against the breach of law by corporate is the lack of funds to bring such action and the difficulties in producing evidence in such cases. The destruction of record by the offenders and certain corporate transactions or structures which are difficult to follow later on is another problem in controlling corporate crimes (Jamieson, 1994).
It is important to identify different types of corporate crimes and individual strategies need to be developed for handling each type of corporate crime. There is relatively limited research on this topic and a vast potential for research exists in this area, especially in Australia. The traditional notions of corporate criminal responsibility are not in tune with the complex nature of modern corporate crimes as these crimes involve corporate decision-making process or its group structure within the corporation itself (Hill, 1992). The regulatory agencies, particularly the larger ones which on what geographical areas like that of Australia and has been constructed various earlier traditions cannot be said to be monolithic at all. Even within these agencies, there is a debate going on regarding the appropriate approach that needs to be adopted to tackle the corporate crime (Hartman,1998). We can say that a civil culture dominates the approach of the judges and lawyers when it comes to enforcing corporate law. Although honesty and ethical standards are considered important there is not much enthusiasm regarding the use of punitive measures for developing a reliable mechanism to achieve this purpose. The main aim of corporate law enforcement is to maintain the standards and boundaries which ensure that the interests of creditors and shareholders are protected.
References:
Hartman, E. “The Role of Character in Business Ethics.” Business Ethics Quarterly, (1998)
Hill, C., Kelley, P., Agle, B., Hitt, M, and Hoskisson, R. “An Empirical Examination of the Causes of Corporate Wrongdoing in the United States” Human Relations, (1992)
Jamieson, K. The Organization of Corporate Crime: Dynamics of Antitrust Violation. Thousand Oaks, CA: Sage Publications. (1994)
Jenkins, A. and Braithwaite, J. “Profits, Pressure and Corporate Lawbreaking” Crime Law and Social Change, (1993)
Moffat, M. “Undergraduate Cheating” Mimeograph New Brunswick, NJ: Rutgers University. (1990)
Tomasic, R and S Bottomley; Directing the Top 500: Corporate governance and accountability in Australian public companies Sydney, Allen & Unwin, 1993
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