similarities between capital and organzation
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Corporate crime is a form of fraud that is closely related to
“white-collar crime,” which takes place in business organizations and
other corporate institutions such as banks, manufacturing industries,
and non-governmental organizations. Unlike organized crime which may
involve illegal street activities such as kidnappings and cross-border
operations like drug trafficking, corporate crime involves “clean jobs”
like manipulation of accounting records by finance officers, insider
trading, misappropriation of funds, tax evasion, etc. However, both
forms of crime require some degree of financial, social or political
influence to be successfully carried out. This is because although
organized crime is not exclusive to a specific race, profession or
class, “many studies have shown that those with power, influence, and
respectability in local, regional, national, or international society
have tended to organize crime more successfully and securely than those
without” (Woodwiss, 2001, p. 3). Further, as Edwin Sutherland (1939)
once observed, corporate crime is a large-scale version of white collar
crime, because it involves people of high-class society, committed in
the course of their occupation. Thus, the two forms of crime
(white-collar and corporate) overlap each other because they all happen
within similar environments, in which the incentives are high for an
individual or group of individuals to engage in bribery, money
laundering, insider trading, forgery, and embezzlement. As in organized
crime, the market is similar in both cases, since “the same market
forces and factors that apply to legitimate (corporate) business markets
are also mirrored in crime markets” (Dean, et al., 2010, p. 144). This
paper discusses the similarities and differences between corporate and
organized crime.
Perhaps the common denominator in both corporate and organized crime is
the influence of money as the ultimate goal. As Jeffrey Sachs, Professor
of Economics at Columbia University notes in The Global Economy’s
Corporate Crime Wave, money talks, and it is the vice that corrupts
politics and markets around the world. In the world’s big economies
where mega-scandals thrive, such as in the U.S., “Every Wall Street firm
has paid significant fines during the past decade for phony accounting,
insider trading, securities fraud, Ponzi schemes, or outright
embezzlement by CEOs” (Sachs, 2011, p. 1). It is corporate crime
involving insider trading and manipulation of financial records that is
presently shaking Wall Street, beginning with ENRON’s concealing of a
staggering$50 billion debt in 2001. Similarly, it was the same kind of
fraud that, in 2007, saw a number of supermarkets and dairy companies in
the UK get fined $116 million for price fixing so as to artificially
keep milk and cheese prices and profits high amidst a collapsing economy
(Browne, 2011, p. 225). In this regard, the pursuit of financial gains
through illegal means is what essentially ties corporate and organized
crime together. Organized crime, such as mafias, engages in illegal
activities such as drug and human trafficking for the sole purpose of
making money. Likewise, companies engage in fraud in situations when
keeping to the book rules will minimize profits, or lead to losses and,
eventually, bankruptcy. Without money, the incentive of taking the risk
will be absent, thereby eliminating the need for undertaking a venture
that, if caught, is punishable by the law.