Australian Criminal Justice System Respond

¶ … Australian Criminal Justice System respond to white collar and corporate crime?

Crimes are breach of the law. Criminal law as in the common law differentiates between crimes that mala per se' that is crimes that are repugnant to humankind for example, murder, robbery and so on which forms the basis of the penal code. There are crimes that are caused by activities that the state prohibits or by social customs called 'mala prohibitia'. While the activity may not be repugnant to human kind, it becomes a crime on account of statute. Some examples include the bar on persons below a stipulated age to drive motor vehicles. Although a teenager at the wheel of a car is dangerous, it is not a crime that is repugnant to the whole of mankind. The crime is thus a crime that is caused by violating a statute. A better example will be the smoking regulations. Smoking has been banned in some public places but is not a crime for a person to smoke in his home. Now the same act becomes a violation where it is indulged in a place where it is prohibited. Earlier the definition of crime centred on physical harm caused to individuals and property and both the parties were identifiable. ("Definition of white collar crime" (from the scanned reference mailed by client -- book title not clear) Please insert book title here)

That is a did some harmful act of which B. can complain. There is a great difference between these types of crimes and white collar ones. Distinguishing between these types of crime is necessary in the analysis of the 'white collar crime'. This is because the crime defined as 'white collar' crime actually may fall into both these categories. For example if a clerk embezzles money from the cash box it is theft. If another person diverts money online from one account to his own he also commits theft. But the modus operandi for them is different. The thief online has to be a technically competent and educated person who is probably in a better position of trust and therefore the crime becomes all the more repugnant.

It therefore follows that crimes that are defined as white collar essentially has a boundary -- first at a work place or profession or some entity that has transactions and employees and second degree of learning or training that makes the individual capable of committing the crime. 'The blue collar criminal' or the worker may be a person who, like the clerk just embezzles cash from the till. Are these the boundaries? Is the crime the white collar criminal commits mala per se or mala prohibitia? How do these crimes occur and what is being done about it? These shall be the subject matter of this paper. To begin with therefore the definitions and parameters of the 'white collar crime and the position of the state and the laws have to be examined.

The Background

Edwin Sutherland introduced the term white-collar crime in 1939 in the paper "White-Collar Criminality," at the American Sociological Society Meeting. (Price; Norris, 2009) He showed the interrelationship between business and crime. The highlight of the paper was the statement that "robber barons of the late 1800s" evidenced practices similar to those of business and professional men of the 1930s, including physicians," he also pointed out that the criminals are a power lobby and the victims weak. Thus white collar crimes then can be defined as those crimes that are committed by educated and high placed individuals. That these crimes are committed by individuals in the top rung of the society makes the crime more reprehensible and dangerous.

However there are still controversies over which crimes can be strictly defined as white collar. The scope and ambit has indeed become large. The question then is if we can add the economic crime, violation of statutes other than criminal law as white collar crime. Some of this is resolved when we consider definitions of the crime as stated by Friedriech who divides these into categories like 'occupational crimes' and 'corporate crimes'. (Hayes; Prenzier, 2007)

Further crimes committed by the state are also included and the special category added is computer crimes. There are also financial crimes and scams. Well some of these could be crimes per se and some on account of state prohibition and regulation. Thus we can say that white collar crime can belong to the category mala per se and also mala prohibitia. The types of crimes that are sought to be defined as white collar crimes, it is argued cause extensive harm to the society and these crimes are mostly committed by the powerful people in the society. (Hayes; Prenzier, 2007)

There is a greater chance that these people also avoid being punished. Such crimes tend to cause illness and death work place accidents and other calamities on a large scale. The crimes in this category can be of the type where the culpability falls within the established justice system and penal procedure. For example a careless safety procedure causing death may be one example. These are dealt with by the customary law. However certain crimes like falsifying accounts, evading taxes and operating without license and in the case of some medicines falsifying the records to make an unsafe medicine as safe, all these are not detected and are dealt with by different departments that may not be directly connected with the justice department or the jurisdiction of law enforcers. (Hayes; Prenzier, 2007)

From the range of the crime it would be clear that it is not possible to deal with all the types in a single paper. Therefore to illustrate the content of the topic it is necessary to accommodate only one type of crime for discussion. In modern times the corporate entity has become the hub of controversy and is always in the news for one or another alleged crime. Corporate crimes - with the legal fiction operating that corporate entities are 'persons' in the eye of law, it would be appropriate to dwell on this type of offenders. Firstly the fact that the corporation is made up of its officers must not be forgotten. What makes the officers commit transgressions is explained by the pressure of the market and corporate objectives. The transgressions in the company and the business world are often put down to reasons like competitive environment, and the type of the organization and its ethics. What regulations control the activity of the company then determine the nature of the crime. (Schlegel; Weisburd, 1992)

It is therefore now clear that corporate crimes are of two types, those perpetuated by the corporation as an entity and those committed by its agents and servants defrauding the corporations and stake holders. While the second class is also roped into white collar crime they are mostly crimes that are also crimes that can fall into the category of theft and so on, but the corporate crimes as an entity are a class apart.

Discussion:

Taking corporate crime as a class, Braithwaite (1985) argues that there can be only generalizations as to what must be classified as white collar crime. There is a general belief that firms that are in financial difficulty resort to for survival. It is argued that pressure downward create the tendency to cut corners and then create a system that is evasive of the law. The agencies that are in charge of controlling these offences thus have to contend with litigation and though the agencies prefer direct action over this and the community supports punitive measures over corporate fraud, corporate represent the upper class interests and thus has created the practice of occupational crime and corporate crime. Researchers have shown that today corporate crimes are viewed more seriously than street crimes and while it was believed earlier that the general public is indifferent to crimes of the elite, it is now shown that the public believe that the white collar crime are serious. Among the crimes, some of them have been rated as more serious than others and some white-collar crimes are ranked as more serious than street crimes. (Piquero; Carmichael; Piquero, 2008)

It has also been shown that the corporate criminality shows repetitive patterns or recidivism. The research conducted by Simpson and Koper (2006) which was based on event history analysis, showed that for a sample of 38 corporations the recidivism patterns showed that punishments of severe nature often end the criminal behavior. Thus punishment decreases the likelihood of a firm's re-offending. Thus corporate deterrence using measures like the antitrust law and the economic conditions of the firm, will determine the responses. The researchers observed that industry conditions drive corporations to illegality and thus the nature of the industry is a determining factor. (Simpson; Koper, 2006)

It is also to be borne in mind that competition, market pressure and the changes in legislation that make the business unproductive all turn the otherwise normal corporation to commit crimes. "Industry-level pressures have been identified as influencing factors. Industries that face stiff competition may favor and encourage an aggressive approach from employees that produces rapid results, rather than thoughtful, strategic action. When the gains cannot be realized in the desired time frame, there is a temptation to implement short cuts; resulting in fraud." (Price; Norris, 2009) That however is not a justification, although it prompts some regulations on the way industries operate.

The Law Catches Up

Today the criminal justice system responds to corporate crime much better than before. This is because earlier the scams were an unknown commodity in Australia and it was a U.S. phenomenon. Globalization changed that and now, according to the National Crime Prevention office in Australia the fraudster type of activities in firms were classified as fake billing and invoicing, investments and money chain scams, advance fee frauds, borrowing from the public as in ponzi type scams, the pyramid and money chain, insolvency trading, insurance scams, and lotteries form a coterie of such activities that are meant to defraud the public. (Hayes; Prenzier, 2007)

These scams became very serious and the state had to take notice with the collapse of Enron and other U.S. based companies from where the scam originates. The 1980s was the peak period of such scams. In Australia, the government took steps to curb this by setting up regulatory agencies and the publications at the time pointed out that the enforcement by these agencies are bound to be weak. To counter this some of the legal powers created made it mandatory for serious offence prosecutions and these are to result in heavy fines and imprisonment, publishing the offender in media to prevent recidivism, issuing warnings suo motto, and the power to even shut down the company. It also vested these agencies the power to enter premises and seize documents. It also made it easy for the public to make complaints. (Hayes; Prenzier, 2007)

There is evidence that punishments do deter crime of this sort. It is argued by Rebovich and Kane (2002) that although there is a perception on the need for corporate prosecution and punishments, the fact is that this crime is new to the era and hence the punishment severity for white collar criminals are not based on demographic variables, and the growing high technology crimes have actually determined the methods of punishment because the malicious, computer attacks against corporations, consumer fraud, has made people from all the strata of society become the victim to white collar crime. Secondly the corporate misconduct affects the public at large as investors, and consumers. Thus scams like Enron, Worldcom, Adelphia and Imclone Systems has aroused the public sentiment against white collar crimes of large corporations and in turn the justice system has been compelled to do some soul searching and come up with working procedures for prosecution. (Rebovich; Kane, 2002)

Thus today the internet and the computing systems have not only made the public vulnerable but ahs put the entire state in a state of security threat. Because most corporate and government transact in the network, it is a field for manipulation. Law enforcement agencies have not given thought to this aspect and no serious effort is seen to be made in the direction of security for the network, because all the government policy depends upon information technology; and while organizations brought about changes in the way information was being used, the information technology also changed the way many organizations work. The existing tasks have been remade to suit it and new tasks come into existence by new policy opportunities that were not previously possible. (White; Fisch; Pooch, 1996)

Any nation must now confront the global organizational networks, which necessitate change in the commercial and military technologies, and the government is now giving way to flexible network systems as against the traditional hierarchical structures of administration. Neglecting this aspect actually caused the collapse of the Soviet Union. The fact that persistent intruders could access at any time the systems and play havoc prompted the trial of many security systems within the it system of the organizations. This opens up a possibility of unauthorized entry, or where there is sensitive data that is not to be disclosed and the vulnerability of the system persists. There are many criteria with which individual institutions may define security. It may be the integrity factor, where the primary concern is protecting the interest defined either in terms of integrity, privacy or the safety of transactions. In modern times all three are relevant and are probably basic requirements. (White; Fisch; Pooch, 1996)

The enforcers have failed in controlling cyber crime and online fraud and this also is done with the corporate players. While the laws like legislating for hacking and corporate crime is necessary, it is also necessary to make agencies like ICAC and AFP more powerful removing procedural fetters that now shield the corporate criminals, there is also a safety aspect involved. These crimes often make the city and state inhospitable by not only defrauding but encouraging street crimes.

In Australia, legislations have not made a great dent in controlling these crimes. As Braithwaite (1992) argued, some crimes like insider trading for example the chance of getting caught is very slim and penalty for insider trading would have to be set at over $100 million to make it rational to desist from the practice. Australia is still in the deterrence trap by fining the firm. Thus "there are other reform options beyond becoming just another country which increases the level of cash fines or prison sentences for corporate criminals." (Braithwaite, 1992)