White collar crime is a generic term for crimes relating to the abuse of trust (Sutherland, 1949, white collar crime, new york

White-collar crime is a generic term for crimes relating to the abuse of trust (Sutherland, 1949, white collar crime, new York Dryden press). A more familiar term yet similarly generic as the term white-collar crime is the term “Fraud”. Duffield and Grabowsky (2001, p. 1) have defined Fraud:” obtaining something of value or avoiding an obligation by means of deception”. Duffield and Grabowsky (2001) state that the organisational context of fraud needs to be seen in light of the perpetrators and victims situation in relation to the specific offence or offences.

Chart 1. categories of corporate fraud.

4 Categories of Fraud

Perpetrator	Organisational context	victim
Principal or Senior official	Any organisation	The organisation, the investors, or the public.
Client Outsider Insider	Any organisation	The oraganisation, the investors or the public.
Face to face/ predatory	Sole operators and company representatives	Any individual
Print electronic media	Organised crime groups or individuals	Many individuals

Robin Sarah Greenburg established the Western Womens Financial Services PTY LTD. in WA in 1987 and is a good provides a good example of a white collar crime of a Principal (Brown, 1987). Greenburg stole approximately $3 million from investors. Described as a spoke conspiracy, Greenburg used employees for various purposes of fraud though each employed was used for there sychophant associate quality. In 1992 Greenburg was charged with 47 counts of stealing and abuses of trust offences for which she received a seventeen year prison sentence, the largest ever for a white collar crime in Australia (Brown 1998).

Oustsider fraud is very popular at state welfare organisations. Helen Iliou aged 45 of Darwin recently received 13 months imprisonment for claiming social security payments while also working. Iliou has defrauded the state social welfare agency of $13698. (Watt, 2002. p 1, 3). Insider fraud occurs when there is missapropriation of company resources by employees for their own benefit. Smith (1999) has pointed out that the elderly who become succeptible to dementia often fall victim to medical promotors who trick them into signing up for treatments they do not need however when the scams are uncovered the company usually has to suffer the cost and loss of business.

Print and electronic media fraud often involves organised groups of individuals. The Info4pc.com PTY.Ltd group advertised in the West Australian newspaper a special deal on cheap computers. The ACCC prosecuted and found them guilty of bait advertising and accepting payment with no intention to supply in the Adelaide Federal Court with further prodecding in Perth. (ACCC, 2001). The Nigerian Advance Fee Fraud (Smith, Holmes and Kaufmann, 1999) involved a group of Nigerian nationals who have written to people in other nations offering them a opportunity to make a profit with an elaborate scheme with the requirement of sending an advance fee.The scams included the opportunity to purchase cases of bank notes, involvent in opening bank accounts to protect people from government corruption and offers of investment oppourtuities that do not exist all for an up front fee (Smith, Holmes and Kaufmann, 1999).

Not all fraud will be white-collar crime however not all white collar crimes are related to fraud. Corporate crime is deemed as a subset of white-collar crime (in reader 1). Corporate crime is defined as “a breach of corporate criminal law by a corporation or its agents or a breach of corporate criminal law involving the manipulation of the corporate from itself” (Tomasic, p 245, 1994). Tomasic (1994) has also outlined four types of corporate crime

Chart 2. Typology of corporate crime

Type of corporate crime

Example

Corporate crime by a corporation for its own benefit.

Using unethical business practices in a less developed nation by a corporation based in a highly developed nation.

Corporate crime by the agents or controllers of a corporation for the benefit of that corporation.

John Donovan established a corporation known as the Good life company and friends pty ltd. The scheme involved taking investment funds to produce an alternitve dairy product called Kefir. The production was expanding quite well however there was no market for any of the produs. Donovan continued to take ivestment money to pay producers to produce kefir despite having no market for the product until the company was forced in to liquidation .(Brown, 1998)

Corporate crime against a corporation but for the benefit of another corporation.

A good example is when an individual steals sensitive information from one corporation and gives to another corporation.

Corporate crime against a corporation but for the benefit of its agents or controllers.

Police in queensland charged 10 people involved in home loan scam that revolved around inflated property valuations and falsified documents. The scam was uncoverd by Mike Oshea of Access Home Loans in Perth when a Mortgage broker from Queensland applied for $240,000 for a bottom end of the market property. There were at least 30 applications previous to this of a similar nature. The police investigation then found that the documents used by the scammers for proof of identity was fake. Quinlivan, (2002)

Adapted from typology of corporate crime Tomasic, p. 294, 1994

As can be seen not all corporate crimes are related to fraud, sometimes it includes elements of criminal negligence at times known to cause death however white collar crimes, corporate crimes, and fraud have the necessary requirement, the abuse of trust.

There is a contention among theorists as to who is capable of committing white-collar crimes. Sutherland has made the distinction between street crimes and white-collar crimes using his theory of differential association.

Chart 3. Sutherlands development explanation of crime.

Differential association

Behaviour is learned through social interactions

Individuals will learn (i) methods & (ii) specific motives and drives

Delinquincy results when predominant influences are oppositional of law abiding norms.

(Adapted from Colman, 1976)

In Sutherlands differential association theory criminal behavior is learned. Individuals will learn how to offend in the context of their criminal associations. For example a young man may grow up in a family environment that allows low risk personal development to occur, such as following through with education all the way to gaining a tertiary qualification in Management. During this period the individual is exposed to good ethics and practice however upon commencing employment he finds that many of his colleagues are corrupt and are engaging in white collar crime. These associations coupled with the need to establish a customary lifestyle may overtake the honest way of life and as such the offender has learned to commit acts that are criminal. In times past certain individuals may have been exposed to high-risk environments often associated with impoverishment. In Sutherlands opinion those individuals would be classified as street offenders if they committed a criminal act. Further more street crimes are generally violent in nature where as white collar crime is not intended in many cases to be violent. Such a fine line between classes can not longer be drawn.

Bonger (cited in Shrivasan, W, (1989)) related white-collar crime to upper class citizens of society. Bonger (reference) believed that high status was the key element that provided necessary power to engage in white-collar criminal activity. In terms of corporate crime it may be difficult to gain power in a corporation by mere acquisition of company ownership or a majority of shareholdings. For example there are rules that any individual may only own 5% of a major company listed on the public investment market and a group of individuals is only allowed to gain 5% rather than gaining control by group ownership of a combination of 5% shares. Such was the case with the BCCI scandals when Abedi, the founder of the bank tried to take control of America’s “Financial General” .(Jaffa, p. 258, 1997). This shows how wealthy people do have limits of how they can capatalize with there wealth.

White-collar crime however is often associated with discriminatory practices. High status individuals may be seen as controlling their choice of employees for the purpose of facilitating trust violations. Robin Greenberg of the Western Women’s Group pty ltd (Brown, 1998) used her high status position as a qualified company director to defraud her clients of millions of dollars. This was achieved by surrounding herself with employees that could not challenge her authority even though Brown (1998) notes that some of Greenbergs employees would be described as innocent accessories. Duffield and Grabowski (2001) have labelled this as sycophant association: Greenbergs employees would be describe as organised conformists whom are easily dominated.

The entrepreneurial corporate criminal (Duffield and Grabowski, 2001) is renowned for mimicking the status of the truly Burgois. Similar to Hares (Hare, Hart, & Harpur, 1991) classification of the psychopath the entrepreneurial corporate criminal will possess extreme ambition characterised by an obsession with power and control. Another aspect is a grandiose sense of self worth. In relation to the issue of grandiosity is the quality of narcissistic superiority. Duffield and Grabowsky (2001) have stated that Christopher Skase possessed this trait noting that he would show faith in his cause as if it was a just cause. The reality however was that Skase was engineering a cover up of his fradualent business transactions. Alan Bond and Robin Greenburg (Brown, 1998) have also been seen as possessing a sense of narcisistic superiority.

The Psychopath offender in many cases can portray a normal character and show no signs of odd behaviour for long periods of time yet they will suddenly be seen doing some risky act often criminal in nature (Bartol, 1998). It may be that often a serious deceptive class of offender will conceal their criminal activities very well. Further more they will use personal means to gain the confidence of there chosen victims, this is described by Hare as superficial charm (Hare, Hart, & Harpur, 1991). There is good research on unsuccessful serious offenders and these individuals have reported that they were responsible for a much greater level of offences in comparison to the other classes of criminals within the system (Hare, Hart, & Harpur, 1991). In comparison to those above mentioned facts is the profiles of many corporate fraud convicts. For extended periods of time they periodically siphon money from other individuals accounts and investments while pretending to be honest business people. This also can occour for years with out the individual being detected.

Even as the investors become suspicious of the behavior some remain convincing to their victims that there is no real problem. It does not mean however that all white collare offences are commited by psychopathic individuals however white collar criminal activity does portray a great deal of psychopathological characteristics. It is noted that there may be a comparison between the personality of an offender, the offender’s biological traits and the actual crimes chosen. For example the successful con may use his similarity or his attractiveness on the victims or the sycophant associations however other criminals may not fit the stereotypical character of a high profile businessperson and as such will be less associated with these kinds of offices.

The motive of white-collar criminals however is seen as being related to a number of factors. A number of motivational factors are outlined by Duffield and Grabowski (2001). Individuals may not resist the need for property they can ill afford. Sometimes this can be were an individual is loosing control over a company position and reports better results than the truth about their accounts. Anderson Accounting Corporation is a good example of this. Enron Corporation filed for Bankruptcy after Anderson “overstated Enron’s Earnings by $567 million dollars for four years” (Walters, p. 51, 2002, February, 21-27). Shoe bridge, (cited in Walters, 2002, February, 21-27) stated that management were pressured to cut corners in financial assessments. The difficulty now being however is that who is responsible for the issue of such practice through the company. Arthur Andersons alleged involvement in verifying false account is a subject of the current HIH royal commission, and Enron’s indictment for destroying documents may slow a propensity that could see Anderson book his place in the next wave of scams and swindlers along side Alan Bond and Christopher Scase

Cohen, Lindesmith & Schuessler (cited in Coleman, 1976) state that Sutherland did not explain white-collar crime with psychological explanations. Sutherland himself cited in Coleman (1976) stated that personality factors do have an influence on white-collar crime, however research has shown that recidivism is extremely low among white-collar criminals, which indicates that it was not related to psychological mechanisms in the same way as street crime was. While Sutherlands differential assocciation theory may help to explain why an individual will be attracted to a particular area of criminal activity based on the experience that influences them there have been crucial changes to society and an emergence of theories that show a more realistic perspective. The majority of white collar crime seems to be fraud related and in many ways can be explained by the individuals methods and motivations. Sometimes white collar crimes can be called corporate crimes based on liability principles associated with corporate law. The need to determine who is criminally responsible for the offence needs to be matched with the existing circumstances of the offence and the organisational content in which the offence takes place.

Psychological factors such as modus operandi and motivational aspects will be important in identifying the classification of an offence as white-collar crime in general or more specifically corporate crime. For example the ease of which an individual can obtain a high status position of trust and power is far more relaxed than it was in the early 20^th century. Alan Bond emerged from the humble beginnings as a window cleaner. Furthermore there are a lot of changes to corporate law that disallows many abuses of power and the prosecutions increasingly greater power to prosecute the perpetrators is evidentiary of these changes. For example the chairman of the ACCC, Allan Wells, has recently been granted a “27% increase” (Brenchley, 2002, January 29) in funding to investigate white collar and corporate fraud. Therefore it is necessary to look past social status as an indicator of white collar criminality and evolve a view to include both learning aspects and environmental aspects such as determined in the Bonger and Sutherland schools of thought however an important distinction in the organisational aspects of the white collar crimes that are perpetrated, the extent that victims are affected and the nature of the individuals involved in the perpetration of the offences have proven beneficial in determining the distinctions between true white collar crime and a further distinction of the various levels of corporate crime as can be seen from the perspectives of Duffiels and Grabowski (2001)and Tommassic (1994).

References

ACCC. (2001) ACCC working in Western Australia: 2000-2001 report. (ISSN 144-7843) ACT: Australian competition and consumer commission.

Bartol, C., R., (1999) Criminal Behavior: a psychosocial approach (5^th ed) New Jersey: Prentice Hall.

Brenchley, F. (2002, January 29) The man corporate austalia hates and the push to clip his wings. BRW 16-19.

Brown, B., (1998) Scams and Swindlers: Investment disasters and how to avoid them: true stories from the ASIC. Australia: Australian print group.

Coleman, J., W., (1976). The causes of white collare crime. In The criminal Elite (ch: 6, p 199-242). New York: St Martins Press. ISBN 0-312-009763

Duffield and Grabowsky (2001) The psychology of Fraud. AIC paper

Hare, R.D., Hart, S. D., & Harpur, T. J (1991) Psychopathy and the DSM 4 criteria for Antisocial personality disorder. Journal of Abnormal Psychology, v 100, n 3, 391-398.

Jaffa, S. (1997). Great financial Scandals: The schemers and scams behind the worlds greatest financial disasters (p. 253-263). London: Robson Books Ltd.

Quinlivan, B., (2002, May 9-15) The home loan heist. BRW 46-53

Shrinivasan, N. (1989). White Collar Crime: an analysis of some selected cases of fraud (Ch 1, pp. 1-20). M Phil Dissertation at University of Cambridge.

Smith, R., G., (1999) Trends and issues: Fraud & Financial Abuse of older persons, Australian institute of criminology. 132, October.

Smith, R., G., Holmes, M., N., & Kaufmann, P. (1999)Trends and Issues in Criminal Justice: Nigerian Advance Fee Fraud (ISSN 0817-8542) ACT: Australian Institute of Criminology. Available: http://www.aic.gov.au/publications/

Sutherland (1949) White Collar Crime, New York: Dryden Press.

Tomasic, R. (1994). Corporate crime. In D. Chappel & P. Wilson (eds.) The Australian Criminal Justice system: the mid 1990’s (ch.`12, pp 253-269). Sydney: Butterworths. ISBN 0-409-30583-9

Watt, B., (2002) Northern Territory news. July 19.

Walters, K., (2002, February, 21-27). Crisis at Andersen BRW 51-56