Sample Definition Essay: What are Corporate Crimes
Private and public companies provide a significant impact on the world’s economy and social order. They offer jobs to the population and deliver services that are necessary for people’s everyday lives. Some private businesses can act as the backbone of the economy and help maintain the stability of a nation. However, the corporate environment can cause individuals to commit corporate crimes that benefit an organization. Companies may find it profitable to falsify information and avoid taxes that would otherwise cost a percentage of a sale. They may choose to manufacture products and ignore their unhealthy effects on the customer and the environment. Corporate crimes are actions that an organization commits to achieve profitability despite their negative impact on financial welfare, consumers, employees, and the environment.
Corporate crime is a type of white-collar crime that revolves around an organization’s criminal actions. According to Hagan (2017), there are two types of white-collar crimes which are corporate crime and occupation crime. Corporate crimes are illegal actions that benefit an organization while occupational crime is an individual’s criminal activity that benefits them. Personal greed and issues mostly motivate occupational crime while corporate crimes center around the profitability of an organization. In some cases, organizations provide informal approval to their employees to commit corporate crimes. Pearce & Tombs (2019) stated that corporate crimes are illegal acts or omissions that an employee may commit in pursuing the organization’s goals (cited in Tombs & Whyte 2020). These definitions provide the understanding that employees commit this type of white-collar crime to promote the welfare of their organization.
While corporate crime is a type of white-collar crime, the concept consists of subtypes that can provide a holistic understanding of its meaning. According to Tombs & White (2020), there are four types of corporate crimes which are: corporate theft and fraud, crimes against consumers, crimes against workers, and crimes against the environment. These subtypes pertain to the different implications of corporate operations and crimes towards the population and the environment. Some of the subtypes focus on an organization’s internal operations while others highlight a companies adverse effect on external factors such as the national economy and natural environment. The discussion of these subtypes is necessary to define the concept of corporate crimes.
Crimes Against Financial Welfare
Crimes against financial welfare pertain to an organization’s illegal actions that deal with financial crimes. These actions are mostly in the form of corporate theft and fraud. Corporate theft and fraud are illegal or deceptive transactions that greatly benefit the organization. Fraud is a deceptive criminal act which in the corporate environment involves document falsification, bribery, tax evasion, rate fixing, black market dealings, and other illegal transactions (Tombs & Whyte 2020). These criminal acts are common activities that companies utilize to avoid government taxes or hasten transaction processes.
Corporate crimes like the falsification of documents can lead a company to increase its market value and gain shareholders. Companies like Wirecard, Luckin Coffee, and Volkswagen are some examples of organizations that committed these forms of corporate crimes. Wirecard was a German electronic company that falsified its financial reports to impress potential shareholders (7 of the Biggest Corporate Frauds 2020). Auditors later found out that there was a $2 billion discrepancy in the company’s financial statements which led to the CEO’s arrest. The falsified document implied to the shareholders that the company is profitable which assures them of their investment’s value. However, the $2 billion discrepancy shows that the company does not possess the shareholder’s money. Similar to this, the company Luckin Coffee created false sales reports of around $310 million and a false supply purchase of $140 million to increase their initial public offering from $20 to $50. There was also the issue of the car company Volkswagen fabricating emission test results. (7 of the Biggest Corporate Frauds 2020). The company developed a computer software and installed it in 11 million cars to bypass diesel emission regulations. When authorities learned of the corporate crime, Volkswagen recalled 480,000 vehicles and is continuously addressing financial issues due to the crime. These examples of fraudulent corporate crimes showcase the benefit that companies can receive through criminal actions as well as their adverse legal consequence.
Crimes Against Consumers
Corporate crimes against consumers are criminal actions that organizations commit directly to the consumers. These can include illegal and unethical marketing practices, price-fixing, selling illegally acquired items, and selling unfit goods (Tombs & Whyte 2020). These forms of corporate crimes have direct effects on consumers as they aim to increase an organization’s profitability without regard to consumer welfare. Illegal and unethical marketing practices, for example, can force an individual to purchase a product or service through deception. A company may promote a whitening cream and omit information regarding its long-term effect on a user’s skin. The omission of vital information is a criminal act, however, the consumer may not associate the product to their future symptoms which absolves the company from legal consequences.
Aside from illegal marketing practices, food crimes are common corporate crimes against consumers. A good example of food crime is food adulteration which is the act of mixing a foreign object in a food product to increase volume or change color. Companies commonly perform the practice for milk and powdered products to maximize the profitability of their resources. However, food adulteration can make food products unsafe and unsanitary due to the manufacturer’s poor handling (Choudhary et al. 2020). Manufacturers will have to manually open containers to add foreign objects which can lead to a compromised product. There is also the risk of adding a foreign object that may result in the poor health of consumers. According to Choudhary et al. (2020), food adulteration can lead to cancer, asthma, ulcer, and intestinal problems. This implies that food adulteration poses a serious threat to consumer health which makes it an explicit corporate crime against consumers.
Crimes Against Workers
Corporate crimes against workers involve the maltreatment of employers towards their employees. These corporate crimes involve discrimination , human rights violations, wage laws violations, and breaches of privacy (Tobs & Whyte 2020). These corporate crimes are concerned with the welfare of employees that some organizations tend to abuse. The aforementioned examples of corporate crimes against workers involve a company’s disregard towards the rights of employees. According to the International Labour Organization (2015), 2.3 million employees die every year due to work-related injuries and diseases (as cited in Tomb & Whyte 2020). Work-related injuries are due to hazardous work environments, such as a construction site. Some injuries may also be due to workplace harassment that eventually leads to murder. Work-related diseases may be due to overwork and unhealthy workplace practices. These workplace crimes and deaths are due to companies’ lack of strict human resource management as well as the officer’s abusive use of authority.
Aside from physical harm, corporate crimes also involve wage theft and misclassification. According to Cooper and Kroeger (2017), companies in popular states pay less than the minimum wage of low-wage workers (cited in Gerstein 2021). This form of wage theft is common as low-wage workers tend to be desperate individuals with a minimum choice of jobs. Companies abuse the workers’ position and offer low wages to minimize expenses and increase the organization’s assets. Along with wage theft are worker misclassification and payroll fraud. These corporate crimes involve a company misclassifying workers as independent contractors to avoid taxes and insurance fees (Gerstein 2021). Misclassification puts an employee at a disadvantage as they receive fewer benefits while possessing similar responsibilities and treatment as regular workers. Worker misclassification coincides with payroll fraud as companies utilize misclassification to falsify payroll reports and avoid additional taxes. These corporate crimes lead workers to experience poor working conditions while companies acquire the benefits of payroll fraud.
Crimes Against the Environment
Corporate crimes against the environment are illegal activities that organizations commit that have adverse effects on the natural environment. These crimes involve environmental and health damages from pollution, loss of wildlife, and other green crimes. According to Beirnie and South (2007), green crimes are criminal acts of ecosystem abuse and exploitation that lead to lasting damages due to organizational profiteering (cited in Lynch 2019). This definition implies that corporate crimes against the environment are also green crimes. For example, plastic factories that produce toxic gasses that harm the ozone layer commit corporate crime as they cause environmental damage from their profiteering. According to the World Health Organization, airborne pollutants cause 4.2 million deaths per year (Tombs & Whyte 2020). This data shows that the environmental effects of certain corporations can lead to unnatural deaths.
While environmental pollution is a good way to measure an organization’s corporate crime against the environment, there are more effective measurement methods. According to Lynch (2019), experts can utilize the nine planetary boundaries to assess an organization’s environmental impact. The nine planetary boundaries are; stratospheric ozone depletion, biosphere integrity loss, chemical pollution, climate change, ocean acidification, freshwater consumption, land system change, nitrogen/phosphorus flows, and atmospheric aerosol loading (The Nine n.d.). Boundaries like ozone depletion and ocean acidification can indicate a company’s contribution towards an environmental issue. Authorities can use these boundaries to assess the impact of a factory that produces greenhouse gasses. Lynch (2019) also stated that ecological footprint and anthropogenic species loss are useful methods in measuring green crimes. Experts can assess crimes that contribute to wildlife habitat loss and ignore sustainable practices through these methods. For example, agricultural programs may require deforestation which can lead to the habitat loss of certain endemic species. The program’s effect on the species’ habitat can indicate the degree of the crime and its just punishment.
Corporate crimes are illegal actions that a company willingly commits to increase profitability at the expense of consumers’, employees’, environments’, and financial welfare. Financial welfare crimes involve corporate theft and fraud where companies and their employees falsify accounts and receive money from victims. Corporate crimes against consumers and workers revolve around the unjust treatment of companies. Food crimes such as food adulteration inflict harm to consumers which can lead to serious diseases and death. Crimes against workers highlight the abusive use of corporate authority and disregard for human rights. Lastly, corporate crimes against the environment deal with green crimes that cause environmental degradation and species population loss. These different types of crimes illustrate the wide scope of corporate crimes and their adverse effect on consumers, employees, investors, and the environment.
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Gerstein, T. 2021. How District Attorneys and State Attorneys General are Fighting Workplace Abuses. Economic Policy Institute. Available at https://www.epi.org/publication/fighting-workplace-abuses-criminal-prosecutions-of-wage-theft-and-other-employer-crimes-against-workers/. Accessed October 28, 2021.
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