Corporate Crime Network (second meeting)
May 2011, Vilnius
This conference addressed issues of state-corporate crime (state encouragement and facilitation of criminal activity by companies) and corporate-state crime (corporate complicity in human rights violations by state governments). All events were held at the Amberton Hotel, Tower Hall.
- State-Corporate Crime After the Crisis – Steve Tombs, Liverpool John Moores University
The international ‘credit crunch’ and subsequent economic crisis prompted a succession of states to rush headlong into virtually unprecedented levels of corporate welfare to maintain specific corporations and, some might argue, capitalist economies. In so doing, however, states in general have hardly increased their leverage over private corporations. This presentation seeks to demonstrate, with (unfortunately) no hint of irony, how, in many ways, quite the opposite has occurred – that, in fact, the material and ideological leverage of corporations over states and their citizens has increased, and that this has had the effect that the psychological and physical opportunities for corporate crimes have been augmented. Drawing upon evidence from the UK, it will argue that states are less likely to further regulate corporate activity, less likely to enforce existing laws, and have made themselves structurally more dependant upon the private sector. The latter in particular is a further illustration of the fact that ‘the’ state – at its various levels – is intimately implicated in the production of corporate crime through the complex (and dynamic) inter-dependence of these apparently separate sets of entities. The extent to which this inter-dependence is captured by the emerging concept of ‘state-corporate crime’ is critically considered. On the basis of this exploration of the role of states in the production of corporate crime, the paper indicates what it claims is a more realistic view both of the extent to which illegal and harmful corporate activities can be more effectively controlled.
- Corporations, Crime and Liability – Maurice Punch, Mannheim Centre for Criminology, LSE, and King’s College London
There has been a tendency in academia to study state crime, organized crime and corporate crime as separate areas; Ruggiero drew attention to this division a few years back. For a number of reasons there has been in recent years both a growing attention to state crime (Green and Ward: 2004) and to the interlinks between the state and other sectors as in Glenny`s journalistic overview in “McMafia” and Rawlinson`s (2009) work on Russia. This is evident in some of the cases used by Green and Ward (2004) with regard to internationally operating companies and human rights violations. This theme is also central in the work of Huisman (2010). Drawing on these sources this paper will look at a number of examples of internationally operating companies breaking the law, at which industries appear to be particularly involved and about issues of liability.
- “Untackling” the Misuse of Migrant Labor – Anne Alvesalo, Finnish Institute of Occupational Health
In 2004, a special unit to tackle the Misuse of Migrant Labour (MLU) was established in the Finnish National Bureau of Investigation (NBI). The establishment of the unit had its basis in the General Incomes Policy settlement of 2003-2004. The prevention of the exploitation of migrant labour was the central argument in the founding and financing of the new unit. In the second, supplementary budget of 2003, the NBI was granted extra assets, and 25 people were recruited to work in the MLU. The financing of the unit was placed on a regular footing in 2007. This presentation reports on a research project which examined all the cases MLU investigated from January 2004 – May 2008. The research found that only a fraction of the cases investigated dealt with crimes where the victim was a migrant worker. In other words, the NBI neglected to investigate the infractions by employers against migrant employees, and instead concentrated its investigative energies on crimes against the state (tax-evasion) or crimes against other companies (fraud). The MLU no longer exists: it was assimilated in another unit – the so called Real-time Investigation Unit – during an organizational change in 2008. The current and former Ministers of the Interior had a spectacular dispute in Parliament over the issue of and responsibility for the shutdown of the NBI. To this day, the unit has not been revived. The presentation will conclude by considering reasons for the disinterest of the NBI (and the state) towards the misuse of migrant labour.
- State-Corporate Crime: a view from the Antipodes – Rick Sarre, University of South Australia
Those who study white collar crime continue to draw attention to the massive levels of criminal offending that emanates from corporate boardrooms. Their work attempts to downplay the ‘standard’ explanations of crime that almost exclusively rely upon an individual’s poverty and disadvantage as the root cause of his or her criminality. These explanations are not challenged by governments, keen to highlight the aberrant loner as the person to be feared and keen to distance themselves from any allegation that laxity in corporate regulation has anything to do with levels of criminality. It is quite clear, however, that inconsistency in the enforcement of corporate laws, confusion in legal prosecution, and inter-agency rivalry in regulation have meant that corporate criminals are, generally speaking, treated differently than other criminals.
Some academic work has focused upon trends in sentencing white collar offenders. Michael Levi tracked sentencing trends in the United Kingdom in the early 1990s. He compared the sentences given to those who had defrauded social security departments and tax agencies (which he classified as ‘blue collar’ workers) with the sentences meted out to entrepreneurs who had committed securities fraud (the ‘white collar’ workers). He reported that the latter category of offender was more likely than the former category to be diverted from the criminal justice system into the regulatory system. Similar conclusions were reached in Australia at the same time by John Braithwaite and Toni Makkai, namely that the higher social status of white collar offenders not only permitted them greater opportunity to commit fraud, but also served to shelter them from more serious punishments.
On this view the state facilitates criminal activity by companies by turning a blind eye to activities and/or failing to resource required and appropriate prosecutions. In considering some of the sentences given to corporate fraudsters in the USA in recent memory, one now sees a far more punitive process unfolding in that country. Bernard Ebbers (WorldCom), Dennis Kozlowski (Tyco), Jeffrey Skilling (Enron) and Bernard Madoff (the notorious ‘ponzi’ scheme operator) have been sentenced to decades and, in the case of Madoff, lifetimes behind bars. This is not a trend unfolding in the UK, nor in Australia.
What do we make of this? Does this mean that the USA, the bastion of free enterprise, is taking state-corporate crime more seriously than their less punitive allies? I am not sure. The more likely explanation is that there is a trend (in Australia at least) to punish corporate offending in ways that are a little more creative (and presumably more effective) than simply slamming the prison door shut for a very long period of time.
This paper will review the role of regulatory activity, criminal penalties and sentencing trends in Australia as a means of determining a government’s commitment to reducing criminal activity by companies.
- Liability standards with regard to corporate complicity in gross human rights violations – Sabine Michalowski, University of Essex
One of the main difficulties faced by legal approaches to corporate complicity is that of how to define liability standards, as it is these standards which determine the line between acceptable business activities with regimes that clearly commit gross human rights violations, and activities that make the corporation complicit in these violations committed by such a regime. With regard to the actus reus and causation element, important questions that need to be addressed are whether every support given to a regime, including indirect assistance in the form of financial or other benefits the regime derives from the business transactions, gives rise to complicity liability, or what else is needed for a corporation to cross the line between acceptable business activities and complicity. Would liability depend on the closeness of the corporation to the violations carried out, and on the effects of the assistance provided? Or does it depend on the nature of the regime, so that assistance given to a government with a particularly bad human rights record could never be benign? Turning to the mens rea requirements, does the corporation need to provide the assistance with the intent to facilitate gross human rights violations, or would it be sufficient that it acted with the knowledge that its activities will or are likely to result in such violations? In my paper I will address these questions by introducing and critiquing some of the most recent decisions handed down by US courts in the context of litigation under the Alien Tort Claims Act.
- Taking corporate out of corporate complicity: The disturbing decision in Kiobel – Jim Gobert, University of Essex
In 1980, in Filartiga v. Pena-Irela, 630 F.2d 786 (2d Cir. 1980), new life was breathed into the Alien Tort Claims Act (ATCA) (also referred to as the Alien Tort Statute or ATS), which had lain virtually dormant since its enactment by the US Congress in 1789. The full potential of the ATCA did not begin to be realised, however, until the following decade when suits against multi-national corporations (MNCs) were brought by victims of human rights abuses. The abuses had usually been inflicted by the governments of the countries in question (as opposed to the MNC’s themselves) but the plaintiffs argued that the violations had been aided and abetted by products, advice and often simply financial support (taxes, revenues, loans, etc) provided to that government by an MNC. The Khulumani litigation, brought against transnational firms that allegedly aided the apartheid government in South Africa to oppress their minority citizens, typified this class of case. Many issues then began to be seriously examined, including the actus reus, mens rea and the causal connection required to establish corporate complicity. This promising legal development was brought to an abrupt halt by the 2010 decision of a three judge panel of the Second Circuit Court of Appeals in Kiobel v. Royal Dutch Petroleum Company. The court held that who can be sued under the Alien Tort statute was a question to be determined by customary international law and that the absence of any precedent imposing liability on corporations under customary international law indicated that companies could not be sued for corporate complicity. Needless to add, this decision, if upheld on appeal, renders all other substantive and procedural issues moot.
My presentation will examine not only the Kiobel court’s arguably flawed reasoning but also its more fundamental failure to even ask what a “corporation” is, what functions are served by corporate liability, and why the court’s proposed alternative of individual liability is a cure that may be worse than the disease.
- A New Law for Groups? – Janet Dine, Queen Mary University
The talk will revise the problem of piercing the corporate veil and examine extraterritoriality from the perspective of companies and subsidiaries. Each company is completely distinct and separate; this means that although groups of companies are very powerful, courts may not necessarily recognise Multinational or Transnational companies. The extraterritorial issue is that although parent companies and subsidiaries may be linked by power and money, legally each company is separate and sums can be transferred at will between them. Companies use to arbitrage jurisdictions, each state jurisdiction has some advantage for each company. I wish to talk about the Albania Company Law 2008 (which I drafted with a colleague) because it is more progressive than German Law which is normally accepted as a model for enterprise law. Article 207 of the Albania Law says that “a parent-subsidiary relationship is deemed to exist where one company regularly behaves and acts subject to the direction or instructions of another company”. This language is taken from the UK shadow directors provisions in the Companies Act 2006. In contrast, the German provisions require shareholder links between the companies. I will also look at other provisions which could be transposed into national laws, if all jurisdictions have similar group laws, the extraterritoriality issue will disappear.
- The Politics of Corporate Human Rights Violations: Approaches of the courts – David Whyte, University of Liverpool
The Politics of Corporate Human Rights Violations Based upon an analysis of cases and empirical data derived from interviews with judges at the Inter-American Court of Human Rights and the European Court of Human Rights, this paper highlights a number of differences in the approach to corporate human rights violations taken by those courts. This comparative analysis opens up space for understanding the prospects for developing new forms of liability for corporate harms through those courts, prospects that appear to be being simultaneously closed down in the political sphere and the United Nations Human Rights Council. This paper uses the data generated by the empirical study to raise a series of fundamental questions about the viability and integrity of a human rights framework and its mediation by trans-national political structures.