In criminology, Pearce and Tombs define corporate crime as:Illegal acts or omissions, punishable by the state under administrative, civil or criminal law which are the result of deliberate decision making or culpable negligence within a legitimate formal organisation. These acts or omissions are based in legitimate, formal, business organisations, made in accordance with the normative goals, standard operating procedures, and/or cultural norms of the organisation, and are intended to benefit the corporation itself.These crimes are committed by legal persons (e.g. a company, as opposed to a natural person) or individuals acting on behalf of a company or other business entity (for example see vicarious liability). Corporate crime is distinct from other workplace crimes like white-collar crime because illegalities are committed for and congruent with the goals of legitimate (i.e. registered) companies, such as safety crime or price fixing. The principles of rational choice theory and rational actors are foundational to corporate crime. Corporate crimes involving health and safety offences may result in nearly 3 million work-related fatalities from injuries and ill-health every year worldwide, as the International Labour Organisation estimates that 2.93 million workers die each year from work-related factors (see Occupational safety and health). Overall, discussions on corporate crime are not usually prominent in academic, political, or public discourse. Many academics, such as Tombs and Whyte, note the relative obscurity of corporate crime in discussions concerning criminology. Corporate crime shares similarities with:
white-collar crime, because the majority of individuals who may act as or represent the interests of the corporation are white-collar professionals; organized crime, because criminals may set up corporations either for the purposes of crime or as vehicles for laundering the proceeds of crime; and state-corporate crime because, in many contexts, the opportunity to commit crime emerges from the relationship between the corporation and the state.
Definitional issues
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 as precedent to maintaining 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 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 A Salomon & Co Ltd [1897] AC 22. In Australian law, under the Corporations Act 2001 (Cth), a corporation is legally a "person".
Criminal capacity The concepts of crime and punishment, as they apply to individuals, cannot be easily transferred to the corporate domain. International treaties governing corporate malfeasance thus tend to permit but not require corporate criminal liability. Recently a number of countries and the European Union have been working to establish corporate criminal liability for certain offences."Liability of Legal Persons for Corruption Offences". 2021-05-13. United States law currently recognizes corporate criminal capacity, although it is extremely rare for corporations to be litigated in criminal proceedings. French law currently recognizes corporate criminal capacity. German law does not recognize corporate criminal capacity: German corporations are however subject to fining for administrative violations (Ordnungswidrigkeiten)
Enforcement policy Corporate crime has become politically sensitive in some countries. In the United Kingdom, for example, following wider publicity of fatal accidents on the rail network and at sea, the term is commonly used in reference to corporate manslaughter and to involve a more general discussion about the technological hazards posed by business enterprises (see Wells: 2001). In the United States, the Sarbanes-Oxley Act of 2002 was passed to reform business practices, including enhanced corporate responsibility, financial disclosures, and combat fraud, following the highly publicized and extremely harmful (to victims) scandals of Enron, WorldCom, Freddie Mac, Lehman Brothers, and Bernie Madoff. Company chief executive officer (CEO) and company chief financial officer (CFO) are required to personally certify financial reports to be accurate and compliant with applicable laws, with criminal penalties for willful misconduct including monetary fines up to $5,000,000 and prison sentence up to 20 years.
The Law Reform Commission of New South Wales offers an explanation of such criminal activities: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 (Law Reform Commission of New South Wales: 2001). 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 the people who reside in them.
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