Corporate Crime Explained

Corporate crime is a crime that a corporation perpetrates, like cheating its employees or the people who purchase its products. At its worst, corporate crime can cause deadly harm to its victims. At its most insidious it can stealthily damage a customer’s health, neighborhood, or bank account.

There is another kind of corporate crime however. That is crime committed by individuals associated with a corporation. They may perpetrate crimes to advance their position in the company, to gain immediate benefits like performance bonuses, or simply out of arrogance.

Greed motivates many corporate crimes, just as it inspires street crimes. Other corporate criminals sometimes act out of misguided ambition, a desire to improve their reputation and raise their status. This can be a motivation in street gangs as well. Corporate criminals seldom act out of an immediate need however, the way that addicted criminals may, and that is an important distinction.

Corporate criminals are more apt to act with a cool head than muggers do, and may never have to face an actual victim. This is likely to make them more successful, since their crimes are less likely to be improvised. Corporate criminals have a better plan than robbers do. Street criminals quite frequently are caught and do time, sooner or later, while corporate criminals seldom see a real prison.

Corporate crime can be physically dangerous, for example when poisonous products like insecticidal chalk are imported into countries that do not sanction their sale, or when a business contaminates food or water as a side effect of producing its goods. However, most corporate crime is aimed at financial gain, and so most victims are bamboozled or defrauded rather than being placed in actual physical jeopardy.

Nevertheless, it is a serious matter. People who have been bilked of their pensions or health care benefits are justly outraged when corporate criminals get light sentences, or “community service.” Often companies or their officers pay fines or judgments, and agree to desist from certain behaviors without admitting guilt.

It is hard for victims to understand why these obvious criminals get away with it. One reason is that most of the agencies charged with policing corporations are understaffed and under-funded. The FDA, for example, which oversees the pharmaceutical industry and the food supply, cannot afford to inspect more than a tiny fraction of the products they are mandated to police. In these circumstances, getting corporations to stop their misbehavior is often the best an agency can do.

Another reason corporations can get away with crime is that they have skillful lawyers. This is a constitutional protection to which corporations are justly entitled. However, it can make victims angry.

Actions against corporations with large foot-dragging legal staffs on retainer may take years to wind through the courts. An overseeing agency may reasonably decide that the best way to protect the public is to negotiate an end to the crime rather than try to prosecute the criminal.

Another reason these crimes go unpunished is that they may be hard to understand. Insider trading, antitrust violations, and failure of fiduciary responsibility are financial crimes that take some serious explaining. When corporations take the position that there was no harm done, it is hard to demonstrate otherwise, especially if the public is not interested in the first place.

There are businesses which are started expressly for the purpose of committing fraud, such as certain “bucket shop” stock brokerages. It is more common, though, for a business to mix an element of crime in with its everyday activity. In this case, the crime hides behind the facade of an enterprise that appears to be a good corporate citizen. The company is still motivated by greed, however, and still demonstrating its disrespect for the ordinary citizen.

Many corporate crimes do not outrage the public the way that street crime does. There may be a sense that corporate crime is not truly dangerous, or that respectable people aren’t really criminals. People who cheat and steal are indeed criminals, whatever their status or standing.