Volume 90 Issue 2/3 (April/June) 2007
[in English]

Crossing the Borders

Economic Crime From an International Perspective

Editorial

by Kai-D. Bussmann

Economic crime continues to be a highly topical concern, and not just since Enron or Worldcom. Even while this two-part issue was being prepared, the uproar over criminal proceedings involving the president of Deutsche Bank or the board of directors at Volkswagen had barely subsided before scandals at international companies like Siemens AG started hitting the headlines. It is hard to imagine that this is anything other than the tip of the iceberg.

Yet when we look for scientific analyses of these types of crime, pickings tend to be meager compared with all the work on the classic crimes of violence, sex offences, drug abuse, and crimes against property. In light of the cost of economic crime, we might even propose that our limited criminological research budgets also seem to be based on a firm belief in homeopathy! Nonetheless, there are reasons for this paucity - the main one certainly being that access to the field is exceptionally difficult, complicated, and, therefore, expensive.

Therefore, the idea behind the present collection of articles is to offer readers of the Monatsschrift a way of getting to know both the variety and the high quality of international research on this topic. The initial proposal for this two-part issue emerged during four special workshops held in August 2005 at the 14th World Congress of Criminology in Philadelphia - generously funded by the Volkswagen Foundation as part of our research project on »Economic Crime in Companies« at the Martin Luther University Halle-Wittenberg. It was these workshops that enabled us to realize the breadth of existing topics and research approaches.

What links together all the articles is the admittedly fuzzy terms »economic crime« or also »white-collar crime«. Topic boundaries were deliberately set as broadly as possible with the keyword being diversity in every respect. The articles come from the workshops of recognized experts in our discipline; some of them address classic topics; others, new ones; some are more theoretical, others more empirical. Whereas several are more qualitative, there are also some purely quantitative analyses, and a few take a look at countries on which very little literature has been available up to now. In general, we can see how many of the articles reflect our growing international interdependencies and the phenomenon of increasing globalization.

Because English has now become the scientific language that draws us all together, and also the language in which the majority of articles were submitted, the few German-speaking authors also decided to use this global medium in the present issue. Therefore, I thank Jonathan Harrow (Bielefeld), an experienced native speaker who painstakingly subjected all articles to a critical examination while also translating some of them. I also thank Annette Olleff for doing the layout and for carefully checking the references.

Put simply, I can only hope that our special issue on this topic will serve as an inspiration for criminological work in German-speaking countries and perhaps even beyond.

p. 77

Articles

I. Economic Crime and Society, State, and Politics

From the Crimes of the Powerful to the Crimes of Power
An Uncomfortable Situation

Summary
When the crimes of the powerful first entered criminology’s field of vision, the »powerful« seemed to be a group easy to define. They were members of industrial-military-political elites exerting power in more authoritarian states as well as in democracies. A powerful state apparatus likewise emerged as the target of criminologists who ventured into the world of the powerful and their crimes. The world of clear-cut lines between the powerful and those who are not seems to have vanished. New »criminal« elites and new crimes of the powerful require a change of perspectives. It is no longer the powerful state, but often the failed and powerless state that is the scene of most heinous crimes of those who rise to unrestricted power. This article discusses new strategies of the powerful like the »outsourcing« of crimes, and it explores global legal and other strategies to counter the crimes of the powerful.

Keywords: Crimes of the powerful, human rights, failed states, globalisation

pp. 78-90

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Political Corruption as White-Collar Crime
A Framework for the Theory and Policy

Summary
Political corruption is characterized as a cognate form of white-collar crime, with some attention to the relationship between governmental crimes (crimes of states, and political white-collar crime) and traditional white-collar crime (corporate crime and occupational crime). A typology of crimes of states – including criminal states, repressive states, corrupt states, and negligent states – is explicated with an emphasis on the specific connections with political corruption. Several key terms – including abuse of power, political corruption, bribery, and political scandal – are discussed in terms of some conceptual and definitional issues that have generated confusion in the study of political corruption. Hybrid forms of white-collar crime – especially crimes of globalization – are defined in relation to the problem of political corruption. The basic premise of this article is that any coherent attempt to explain and address political corruption must begin with a thorough examination of the definitional, conceptual, and typological issues involved.

Keywords: Political corruption, white-collar cime, crimes of states, crimes of globalization

pp. 91-102

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The Paradox of Economic Crime in Japan
The Thalidomide Scourge, the Lockheed Scandal, and Endemic Political Corruption

by Henry Pontell and Gilbert Geis

Summary
The discrepancy in Japan between the admirably low rate of street crimes, such as robbery, assault, and burglary, and the elevated rate of white-collar offenses challenges those who look to the characteristics of Japanese culture to explain the levels of law-breaking in the society. The article reviews episodes of upperworld crime in Japan and suggests that the communitarian ethos that inhibits street offenses does not carry over into the country’s commercial and political realms.

Keywords: Causes of street and economic crime, scandals of upperworld crime, impact of culture, communitarism, Japan

pp. 103-113

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The Production and Choice of Economic Crime

by Neal Shover and Andy Hochstetler

Summary
This paper uses rational-choice theory to explain variation in rates of white-collar economic crime and also decision-making by individual offenders. Sustained political, economic and technological changes since World War II have increased the supply of white-collar economic lure, but credible oversight has not kept pace. The result is a burgeoning supply of economic criminal opportunities which is matched by a growing pool of citizens and organizations predisposed or easily tempted to exploit them. Those who do so craft their decisions more carefully than street-offenders and weigh the upkeep of conventional appearances more heavily. Performance pressure figures prominently in the decision to commit white-collar economic crimes, but contrivances that provide an air of legitimacy ease the choice. Any hope of slowing the rising tide of economic crime will require organized citizen demands for action and more certain application of penalties.

Keywords: Rational choice theory, causes of economic crime, impact of social changes, counterstrategies

pp. 114-125

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Corruption, Quality of Governance, and Economic Growth
The Slovenian Dilemma Between True Reform From Within and Mere Façade

by Urban Vehovar and Matjaž Jager

Summary
The relation between quality of governance (including effective control of corruption) and economic growth is asymmetric. High-quality governance with little corruption contributes to economic growth, but economic growth by itself does not necessarily improve governance and limit corruption. Improvements in quality of governance are the result of a deliberate strategic effort by policymakers and civil society. The article illustrates this idea by focusing on the current quality of governance and control of corruption in Slovenia compared with the other 24 members of the recently expanded European Union. We rely on the most recent quality-of-governance cluster indicators compiled by Kaufmann et al. in 2005 and complement them with findings from a recent domestic survey.
The findings appear to support the asymmetry thesis. Long EU membership does not automatically bring about a high quality of governance, nor does the quality of governance improve automatically with economic development. In the case of Slovenia, the quality-of-governance indicators fall considerably behind the top-ranking »old« EU member states. Now that it is a member state, Slovenia is under considerably less outside pressure to address its problem of corruption and quality of governance than during the pre-accession negotiations. It is doubtful whether the domestic policymaking elite is prepared to commit itself in the absence of effective external and internal pressures. Thus, Slovenia may well end up as a living example for the asymmetry thesis: on the one hand, an economically highly developed EU member state, with, on the other hand, a second-rate quality of governance and weak control of corruption.

Keywords: Quality of governance, corruption, Slovenia, economic growth, European Union

pp. 126-139

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II. Mechanisms of Regulation, Selection, and Sanctioning

A Theory of Selection in the Response to Economic Crime

by Lars Korsell

Summary
Many criminal offences remain undiscovered. Some of those discovered are not reported, and not all those reported will be investigated by the police and result finally in a verdict. Criminal offences are thus subject to extensive sorting and selection. A theoretical model is developed in order to describe and explain this selection process. It builds on three structural factors – strategies, legislation, and organisations associated with economic crime control – and three operative factors – characteristics of the organisations, characteristics of the cases, and the influence or absence of influence of various interested parties. Theories relating to organisations and the use of discretion are employed to explain why those holding official positions work towards certain goals and not others. The basic idea is that, in line with the model, the selection process is dependant on several factors. At the structural level, selection is to a large extent the result of awareness and does not represent a conscious effort to safeguard particular class interests. At the operational level, the selection is the result of, amongst other things, a heavy caseload and the pressure to produce results.

Keywords: White-collar crime, economic crime, selection, discretion, organisation theory

pp. 140-157

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Sentencing Frauds: A Comparative Perspective

by Michael Levi

Summary
This article examines the sentencing of different types of fraud and the principles that lies behind them. It shows that in the UK, most fraud offenders get off comparatively lightly – even when they have not pleaded guilty – but that offences involving overt damage to individuals are sentenced more toughly, in line with populist »law and order« attitudes, reinforced by media hostility to such frauds. However in the US, the more sensational cases have attracted very heavy sentences, in keeping with the tough guideline sentences revised after Enron. In continental Europe, systematic sentencing data (as in the UK) is difficult to find that relates sentences to specific sorts of frauds and fraud victims, but appears to be closer to the UK than to the US sentencing levels. Finally, the article raises questions about what sentences mean to fraud offenders from different social groups, and what are the social and cultural effects of sanctions, as well as whether such effects should be included in the retributive elements of punishments.

Key words:Economic crime, comparison of international sentencing levels, sentencing criteria, individual, cultural, and social effects of punishment

pp. 158-174

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The Breadth and Dynamics of Illegal Internet Drug Sales
The Emergence of an Ill-Defined Marketplace and the Case of the United States

Summary
For the past decade, the International Narcotics Control Board (INCB) has been attentive to the problem of internationally controlled substances marketed illegally through Internet pharmacies (INCB 2006). Online sale of controlled substances poses unique and complex challenges for regulatory and law enforcement agencies internationally. While prescription drug abuse is not new, concerns about access to controlled substances over the Internet is a fairly new phenomenon, and laws and regulations have yet to catch up. The Internet market is extremely volatile and flexible and consequently does not lend itself easily to a systematic assessment of the scope of the problem. Currently, only a small number of countries have adopted specific legal measures to prevent such misuse of the Internet. Furthermore, even in countries where legislation exists, dissimilar laws and regulations make it difficult to identify, investigate, and suppress misuse of the Internet. The limited research findings related to this area suggest that this is already a situation that needs further regulatory control, further technology, and much more research so that significant policy recommendations can be based on sound practical solutions. The debate has taken on truly global proportions; the observations and recommendations made in this article are designed therefore to apply globally.

Keywords: Internet pharmacies, control strategies, global cyber market, legal challenges, USA

pp. 175-190

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III. Companies Face up to Economic Crime

Suspected Irregularities in Stock-Exchange-Listed Companies
What Are the Effects of Negative Publicity?

by Tage Alalehto

Summary
In the fall of 2003, financial irregularities in a well-known insurance company listed on the Swedish stock exchange were reported live on Swedish television. This event activated the question of what effects does negative publicity over suspected irregularities have for a stock exchange company. This article investigates stock market reactions to negative publicity in the period 1990-2003 and discusses three hypotheses: two (Fisse & Braithwaite; Kahan & Posner) arguing that a company suffers financially as a result of negative publicity; and the third (Sutherland) arguing that actors in the business world do not react negatively to news that a company is suspected of economic crimes, because they share the same values and attitude against regulations in the stock market.

Keywords: Negative publicity, economic crime, event study, stock exchange, Sweden

pp. 191-206

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Responses of Entrepreneurs and Managers to Dishonest Competition and Coercion in Poland

by A. Jan Kutylowski

Summary
The perceptions and experience of dishonest competition are examined on the basis of a national survey of Polish firms (mainly represented by owners, directors or managers). The structure of dishonest competition is investigated in terms of which behaviours constitute it and how they are distributed. The analysis distinguishes between direct experience of dishonest competition and opinions concerning its forms and incidence. Components of extra-legal or illegal coercion are then described (such as blackmail and threats of violence) that contribute to the intention to restrict or abandon economic activity (a form of economic exclusion). Some extensions of the presented analysis are briefly proposed for modelling the factors affecting the perceptions and experience of dishonest competition and threats of violence.

Keywords: Dishonest competition, coercion, threat of violence, regulation, Poland

pp. 207-223

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Commitment and Counterproductive Work Behavior as Correlates of Ethical Climate in Organizations

Summary
A pilot study with a German translation of Cullen, Victor & Bronson's (1993) Ethical Climate Questionnaire (ECQ) was used to examine how certain ethical climates in organizations seem to facilitate the prevention of counterproductive work behavior (CWB). 189 employees aged 18-62 years completed a questionnaire containing the ECQ and also assessing CWB, organizational commitment, organizational conditions and provisions, organizational framing conditions, and demographic data. Results confirmed known relations between ethical norms in organizations and employee attitudes and behavior. There was a positive relation between supportive climate factors, rule orientation, and affective commitment. In contrast, there was a negative relation between supportive climate factors, rule orientation, and CWB. CWB did correspond with more perceived injustice in organizations but not with a lack of career opportunities, and material compensations. It is concluded that the ECQ is a valid instrument for assessing ethical climate and can also be used in cross-cultural comparisons.

Keywords: Ethical climate, counterproductive work behavior, commitment

pp. 224-244

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Corporate Governance of Security
The Regulation and Control of Economic Crime in the Business World

by Diana Ziegleder

Summary
Codes of business conduct have experienced rapid growth over the last few years. Not only do more and more companies rely on ethical guidelines as one measure of corporate governance, but also the types of these self-regulating measurements are more and more differentiated within themselves. Compared with economic research, criminology has often ignored the possibilities of an in-depth analysis of codes of business conduct, and of offering a knowledge base on the logics of self-regulation of economic crime within business. This article uses an analysis of codes of business conduct combined with empirical data from a comparative survey on economic crime to deepen criminological knowledge on the corporate governance of security. Using German and US companies as examples, it reconstructs the processes of investigation and punitive or nonpunitive reactions focusing particularly on the impact of private actors on the regulation of economic crime within business.

Keywords: Corporate governance, economic crime, business ethics, investigation, regulation

pp. 245-259

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The Control Paradox and the Impact of Business Ethics
A Comparison of US and German Companies

by Kai-D. Bussmann

Summary
This article presents an international overview on how business tries to get a grip on the problem of economic crime. It concentrates on a comparison between US companies, US subsidiaries in Germany, and German companies. There are many indications that more advanced US regulations such as the US Federal Sentencing Guidelines and the Sarbanes-Oxley Act (SOX) are partly responsible for the better performance of US companies. Laws in particular, can create incentives for strengthening the acceptance of own responsibility for crime prevention. The study also provides empirical confirmation of the paradoxical effects of an intensive campaign against economic crime: A more powerful control environment detects more economic crime offences, whereas more intensive prevention tends to stop such offences happening. Hence, this results in two contradictory effects. Finally, empirical data on corruption are used to confirm the positive effect of a well-implemented system of business ethics.

Keywords: Control paradox, impact of business ethics, Sarbanes-Oxley Act, US-Federal Sentencing Guidelines, international comparison, USA, Germany

pp. 260-276

Coming Events

Drogen - Sucht - Kriminalität
10. Wissenschaftliche Fachtagung der Neuen Kriminologischen Gesellschaft (NKG) vom 20.- 22.9.2007 in Innsbruck

p. 277

Fördern - Fordern - Fallenlassen
Aktuelle Entwicklungen im Umgang mit Jugenddelinquenz
27. Deutscher Jugendgerichtstag vom 15.-18.9.2007 in Freiburg

p. 278

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Internet Adresses

Mindeststandards für den Jugendstrafvollzug

http://www.dvjj.de/artikel.php?artikel=842

Masterstudiengang „Kriminologie und Polizeiwissenschaft" an der Ruhr-Universität Bochum

http://www.ruhr-uni-bochum.de/kriminologie/master.html

p. 278

Book Reviews

Zweiter Periodischer Sicherheitsbericht 2006
296 Seiten, online verfügbar unter www.bmj.bund.de, www.bmi.bund.de und www.bka.de

pp. 279-282

Actuele Criminologie
5. herziene druk, Sdu Uitgevers, Den Haag 2006, kart. 384 Seiten, € 35,50

pp. 282-284