Dorchester Dumble Corporate Crime Csr Issue102

Martin Dorchester & Paul Dumble: Corporate Responsibility - Crime

Corporate Responsibility - Crime

Authors: Martin Dorchester is the Business Managing Director: MD Interims Ltd and
Paul Dumble CEnv MIEMA is a Waste Systems Specialist and IEMA CSR SIG member
working for SMEC International Pty in the Middle East.

Abstract:
Is corporate crime simply a result of a natural interplay with Government as markets
wax and wane in the context of political risk management that exists to control the
inevitable corporate harm? Or is it as a consequence of the elitist diffusion of power
and perhaps a deviant subculture? This paper examines these issues in relation to
key recent and historical incidents that have brought corporate crime into focus and
the positioning of corporate social responsibility as an initial international response
to more regulation led systems that may be required in the future.

Introduction:
Corporate crime specifically relates to illegal actions within a jurisdiction by a
corporation. The corporation is a business entity that
Has a separate legal identity from that of the individuals that undertake its
activities, or
Is identified by association with of a group or groups of individuals (e.g.
Directors, Partners or Owners).

Corporate crime can take many forms that are not exclusive and includes:
White-collar crime (Sutherland, 1983) - committed by employees of a
corporation which includes;
o Fraud, theft, unauthorised activities
State-corporate crime – where the activities of the business entity are not in
compliance with the State law or where the activities of the business entity
lead to harm. Impacts of such activities include;
o Deaths in the workplace, work related diseases, deaths in
communities, environmental damage, tax avoidance.
Organized crime - where criminals set up what appears to be legitimate
businesses to hide criminal activities such as;
o Money laundering, racketeering, illegal drugs, and

This paper focuses on the Government interface with “white collar crime” and state-
corporate crime.

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The ‘hidden figure’ of corporate crime
Defining corporate crime has real difficulties and much corporate harm remains
either unregulated or non-criminalised. The following statistics highlight the real
scale of corporate crime:
About 5.65milion tonnes of oil have been spilled into our seas and oceans
from tankers in the period from 1970 to 2009 (ITOPF, 2010).
2006 Ivory Coast – Dumping of hazardous waste leading to an alleged 15
deaths and 30,000 injuries (McElroy & Pflanz, 2009).
2.2 Million people per year die as a result of work related injuries or disease
(Zarocostas, 2005 – citing International Labour Organisation 2001 data).
37% of the US population have been the victims of some form of corporate
fraud or theft (Rebovich et al, 2002).
It is estimated that $50 billion per year in tax revenues are lost per year to tax
havens (Pussey, 2007).
4.2 million cases of all food poisoning cases in the UK (9.2% of consumers)
were attributed to food consumed outside the home in 2000 (Food Standards
Agency, 2002).
The world’s gross criminal product has been estimated at 20 percent of world
trade. (de Brie, 2000).

Although some of these numbers look large, the data provided for deaths in the
workplace for example is from many tens of thousands of companies and normally
the impact of a single company is generally very small. However, even from this brief
review of a small subset of corporate harm data it is possible to draw two
unequivocal conclusions:
1. People are killed and harmed globally each year on a huge scale resulting
from corporate activity.
2. On the basis of a small number of ‘known’ corporate frauds and thefts, the
extent – in terms of numbers of people affected and total economic losses –
of such harms is vast.

Distribution of and influence of power
There are a number of theories on pluralism which relates to the diffusion of power
to different groups – Dahl (1961) or elite pluralism where sections of society are
excluded. C Wright Mills (1956) suggests that there is a Power Elite, comprising of
the business community, the army and the government and these elites dominate
and run society in their own interests:

In different ways and levels corporations can affect and influence the processes of
criminalisation and regulation. Muncie et al (2010) suggest a number of ways that

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corporations operate to affect the process of criminalisation: Corporations can and
do engage in direct interventions in
Policy making, lobbying of governments and policy makers being a prime
example.
Work actively within government, representing interests on quasi-
government organisations and committees.

It is interesting to note that the new Coalition Government of the UK has announced
a policy programme that includes the regulation of lobbying, a commitment to
address “white collar crime” (UK Government, 2010). Corporations can covertly
intervene in the policy making process by agenda setting, mobilising bias and by not
making decisions. The case of asbestosis is a prime example of this.

Tweedale (2000) records that although the UK Government was aware in 1907 that
asbestosis was a terminal disease it was not until 1969 that any effective legislation
was put in place. It is suggested that a number of covert methods were used to do
this including;
The co-opting of the medical profession,
Suppression of knowledge, manipulation,
Financial pressures, as well as
Lying to workers and regulators.

A corporation’s ability to influence or defer or even help write its own regulations
enables it to avoid criminalisation (Mokhiber, 1999). They can often try to defer
legislation through intensive lobbying illustrated by a report that “six lobbyists for
every member of Congress as healthcare industry heaps cash on politicians to water
down legislation” (McGreal, 2010) in opposition to President Obama’s healthcare
insurance reforms (a tactic which failed to prevent subsequent legislation) or where
an industry sector lobbies Government to encourage a softer approach to childhood
obesity through for example the adoption of a voluntary codes of practice for drinks
provided in schools (School Trust Fund, 2009).

By involvement the political process, corporations gain status and may appear to be
law abiding citizens, the politicians become responsive to the logic of the business
case and feel that business is more likely to respond to compliantly in addressing key
issues. However it is clear from many examples and studies cited in this report,
legislation is often introduced to manage the damage that has occurred because of
corporate harm rather than as a pre-emptive strike to prevent such damage. Such
actions by Government seek to change the bad practices or as Habermas (1984)
might see it from a sociological point of view excise the deviant subculture as for

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example shown in recent reports as banking Directors from RBS and Northern Rock
are fined and prevented from taking senior roles in the sector (BBC News, 2010b).

It is interesting the strong defence the banking institutions are putting forward to
seek prevent legislation that may inhibit market growth. Is this symptomatic of
deviant sub culture reacting, protectively and in unison against to such a change? An
example of corporate good practice (some may rightly argue that this has not been
executed in an exemplary manner) may be seen in the way BP have managed the
recent Deepwater Horizon Rig disaster in the Gulf of Mexico by accepting
responsibility and liability for the oil spill clean-up at the earliest opportunity (Philips,
2010), with BP Executives making themselves available for media interviews on
mainstream news channels (BP, 2010). In terms of political power, the issue is does
the elitist pluralist diffusion of power;
Provide a normal legitimate process of adaption and mitigation to corporate
harm caused?
or
Provide a platform for an embedded deviant elitist sub culture bent on
“business as usual” serving to the self interest of its members?

This has important consequences for the wider confidence and common values that
underpin Corporate Social Responsibility systems.

Theft and fraud
The cost of theft and fraud is significant as shown in examples above. Mohkiber
(1999) estimates that every year, healthcare fraud costs Americans between $100
and $400 billion. Other examples of illegal activities include
Corporate price fixing (Slapper and Tombs, 1999; Croall, 2001)
Overcharging and illegal gifts to Government personnel by the defence and
pharmaceutical industry (Clinard, 1990) and,
Market manipulation by Guinness (Punch, 2000).

Evidence here would seem to suggest that corporations commit acts of theft and
fraud, yet as in the case of Guinness they escape being criminalised. However, Mc
Barnet (2006) reports that even with reported losses in excess of $70 billion at
Enron, only six people have been sent to prison for periods of three to five years and
notes that the ability of corporations to keep things off the agenda can be clearly
seen in:
The circumvention of the financial reporting used in its accounts,
The problems with regulation, especially around tax, and
The collusion amongst some of the world’s leading organisations.

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McBarnet (2006) cites ethics in explaining how many leading corporations were
involved in the Enron scandal! Although they may have operated within the word of
the law it can be argued that they acted against the spirit of the law. The banking
crisis in the UK may be seen in a similar light, where unethical business practices,
supported by alleged collusion with the credit rating agencies (BBC News, 2010a)
provides the basis for a similar diffusion of the harm.

Violence and disasters
Willemse (2010) comments on the technical solutions and financial aspects of the
Deepwater Horizon Rig explosion in the Gulf of Mexico. Various early estimates put
the leaking oil at 1000 to 5000 tonnes a day (Norris et al; 2010). This catastrophic
event is anticipated to impact on the wetlands and with a ban on fishing stretching
bovver 45,000 sq miles along the coastlines of Texas, Florida, Mississippi, Alabama,
and Louisiana where there are millions of migratory birds and fish spawning. There
have been industry comparisons with previous spills including Exxon Valdez (36,000
tonnes, Prince William Sound, Alaska, 1989), Lxtoc-1 (465,000 tonnes, Gulf of
Mexico, 1979) and others. The tragedy of the 11 workers that were killed when the
rig exploded is included in what a BP Executive described as a modest environmental
impact (Blizzard, 2010). The full extent of this disaster remains to be seen as the oil
quantities leaked look set to exceed 150 million litres, with two major options to
quell the leak having failed (Weaver & Harris, 2010).

Table 1: Acute health impacts for the Tasmin Spirit Oil Spill in 2003 (Aftab, 2003)
Acute health impacts % of population (n = c300,000) Notes
Data from a total of c500,000
medicals carried out.
th
Headache 16% Peaked 3 to 4 week after
initial oil spill
nd th
Fever 15% Peaked 2 to 4 week after
initial oil spill
Cold, rhinitis, nasal congestion 52% decreasing to 32% which Respiratory tract symptoms
persisted for some time after showed acute exacerbation
the spill. immediately following spills
Irritation/ skin rash No data available as data Some cases with severe bulbous
collected in different formats rash, resulting from lack of
treatment available
Gastrointestinal 70% of population (Diarrhoea) Slight increase of blood in vomit
n=50 – only 50 persons and stool.
surveyed
Acute anxiety 29% reducing to 22% The higher figure recorded in
the initial survey
Depression 15% initially increasing to 23% Impact reflects mental burden
on population of poor economic
status.

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Aftab (2003) reporting to the Pakistan EPA and UNDP identified significant acute
health impacts (shown in Table 1) of the Tasmin Spirit oil tanker spill (67,000 tonnes)
on those within 10 km of the coastal areas contaminated by the spill that are mainly
dependant on the environment for their livelihoods or subsistence. Essam Ahmed
(2010) has provided personal experiences of the devastating impacts on the
livelihoods of relatives in the coastal regions affected in the early stages of the
Deepwater Horizon incident.

Estimates in the year 2000, from the International Labour Organisation (ILO) are that
2.2 million people died as a result of work-related injuries or disease per year
(Zarocostas, 2005), that there are annually approximately 270 million occupational
injuries and 160 million victims of work related illnesses annually (ILO, 2005). The
scale of corporate harm becomes overwhelming. Is it therefore then that:
‘Companies then get away with “murder” because the law and the courts are not
geared to organisational deviance and corporate violence’ (Punch, 2000, p243) or a
result or impact of the distribution (Tombs, 2008) or the diffusion of power.

Punch (2000) asserts that there is growing evidence that business, kills, maims and
poisons and cites as examples; the explosion at the Union Carbide factory in Bhopal,
India (Shrivastava, 1987), the Ford ‘Pinto’ automobile case (Swiggert and Farrell,
1980/81), the Herald of Free Enterprise in 1987 and the issue of Thalidomide
(Knightley et al, 1980). The issues here are;
Have these corporations learned from their experiences of the past?
Have the bad practices or deviant sub cultures been excised through
subsequent regulation?
Has this approach been affective or has the problem moved elsewhere?

Let’s examine the first question - Do corporations learn from their experiences?
Huijer (2005) reports on oil tanker spillages and reviews data collected over 30 years.
The average number of oil spills and quantities of oil spilled from tankers has
decreased in each decade as new international (Marpol Convention, 1978,
International Management Code for the Safety of Ships and for Pollution Prevention
“The ISM Code”, July 1998) and national legislation has made a significant positive
impact as shown below.

In any serious crime there needs to be an underlying motive. In corporate crime
there is corporate liability, which is the extent a corporation as a legal person is liable
for the acts and omissions of the people it employs. In serious cases such as
homicide, unless the act is deliberate and malicious (motive) and there is intent to
cause harm, usually in relation to an individual or individuals (vicarious liability). It is

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much more difficult to pin the blame on a corporation or people within the
organisation with specific job roles or decision making responsibilities in relation to
the harm caused. Even in jurisdictions where there are regulations, companies may
seek to export the problem somewhere elsewhere there are less stringent regulation
and standards to maximise profit.

The 2006 Ivory Coast dumping of a reported 500 tonnes of hazardous waste at 12
sites around the Ivorian Port of Abidjan leading to the alleged deaths of 15 people
and injuries to 30,000 victims (McElroy & Pflanz, 2009) provides an example of
where there were a series of events that led to this disaster. In a statement provided
by their solicitors, Trafigura, one of the companies involved insists that the “slops
were not dumped by Trafigura but by a licensed independent contractor, Compagnie
Tommy, which had been appointed in good faith by Trafigura on the basis that it
would carry out its responsibilities safely and legally. Tommy had been
recommended to Trafigura by a longstanding and experienced shipping agent in
Abidjan”. The company also claim that chemical analysis of the slops has shown that
“it is simply not possible that this material could have led to the deaths and
widespread injuries alleged”. (Trafigura Statement, 2009). It is understood that
Trafigura is paying £1000 to each of the 30,000 victims (Amnesty, 2009) and money
to the Ivorian Government to cover clean up costs, a total of $198 million (Ormsby,
2009).

Other versions of events have been widely reported in the media and in a UNDAC
report (Gelas et al, 2006) on the incident that do not support the company position.
European media coverage was largely silenced by court injunctions at one stage and
were prevented reporting parliamentary proceedings in the UK in relation to a draft
report produced by scientific consultants Minton, Treharne & Davies, the “Minton
Report” which drew conclusions based on “limited” information that the slops were
"capable of causing severe human health effects" (Leigh, 2009). The case for
compensation was tried in the UK Courts and not the Ivory Coast undermining a
third world country’s ability to determine its own rights and values, avoiding what
could have been severe criminal penalties on those responsible

Compare the corporate actions of the Ivory Coast case with the current actions of BP
responding to the Deepwater Horizon Rig explosion which appears to be open to the
liabilities of the incident beyond the statutory limit and paying out initial claims
(Philips, 2010), yet the company was not directly involved. The Obama Government
is now focusing the regulators role of “cozying up” to the oil sector as the
government and industry and set about addressing liability issues (Blizzard, 2010,
Philips, 2010), as the costs borne by BP exceed $940million (BBC News, 2010d ). Here

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we see a natural corporate interplay and communication with Government seeking
to address the issues that seemed initially to be sadly missing in the Ivory Coast case.

Globalisation
The concept of globalisation in corporate terms can be used to imply the way that
economic forces have shifted power and authority away from national governments
towards external, transnational capital. (Drake et al, 2010). Nader (1999) suggests
that the world is ‘witnessing its subjugation to the large corporate model of
economic development, the large corporate model of technology and the large
corporate model of culture itself.’ In terms of the global economy, many
transnational corporations are now operating in the ‘global south’, exporting goods
and services there, leveraging the inequalities of power in labour and consumer
markets and operating in countries where the laws in relation to the workplace and
environment are less well developed than in most westernised economies. (Muncie
et al, 2010).

Corporations operate in Export Processing Zones (EPZs) such as Saipan, where
immigration controls and labour rights are controlled differently. Corporations are
able to pressure countries into removing worker rights (Michalowski et al, 1987) and
influence government decision making to make specific economies more attractive
to them by influencing social and environmental regulations, taxes and incentives.

Tombs and Whyte (2003) argue that ‘it is governments that still decide when, how
and to what extent corporations should be regulated.’ Muncie et al (2010) suggest
that EPZ’s reflect a wider phenomenon known as the ‘race to the bottom’ where
fierce completion between nations leads to the situation where regulatory standards
are deliberately reduced. This pressure to reduce standards may result from
conditions applied from institutions such as the International Monetary Fund or
World Bank and is more often experienced by developing countries.

Markets and market cycles
There instinctively seems to be a relationship between the market cycle and the
corporate crime. Deliberate and malicious crimes will occur any time throughout the
market cycle as the opportunities for deviant behaviour arise. Table 2 helps review
the impacts and outcomes of some of the case studies reviewed by this paper. The
issues related to transparency seem to provide a good indicator of something more
engrained than simply bad practice (errors and omissions). Transparency can be
measured simply by the openness of information and communication in addressing
corporate harm and provides a key indicator (not proof) of deviant practices.

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Table 2: Review of key issues related to corporate harm
Incident or Likely cause Transparen Significant Market cycle and Outcome
issue cy Event costs
Oils spills Bad practices, Yes Yes Growth to International and
from oil bad design maturity national
tankers 1970 (Huijer, 2005) ($ billions, regulation Huijer,
– 2009 5.65 million 2005 (Timescale
tonnes of oil 40 years)
ITOPF, 2010)
Hazardous Bad practices, No Yes N/A Compensation,
waste Indications of ($198 million – Local
dumping – Deviant Ormsby, 2009, 15 Government
Ivory Coast subculture deaths alleged - officials resign.
2006 (Leigh, 2009) McElroy, D., (BBC News, 2006)
Pflanz, M. (2009) (4 years).
Financial Bad practices No Yes Growth of National
Crisis 2007- Indications of financial services Regulation,
date deviant sub ($11.9 trillion – international co
culture Conway, 2009 operation sought
(BBC News quoting source (HM Government
2010a) IMF) 2010). Individuals
dismissed or
banned (BBC
News 2010b)
BP Issues over Yes Yes Market Reform of
Deepwater bad design or development off regulator (Norris
Horizon practice shore drilling US. et al, 2010),
incident 2010 (Philips 2010) (Estimate up to liability being
$12 billion, 11 debated (Philips
deaths – Mason, 2010)
2010). BP costs
$940 million+ on
30 May 2010, (BBC
news, 2010d)
ENRON Bad practices. No Yes N/A Criminal
2001 Deviant sub ($70 billion – proceedings
culture widely reported) Industry
(McBarnet, regulation (Mc
2006) Barnet 2006)

In the case of oil tanker spillages we can see the significant harm caused by oil spills
from the early 1970’s and the impact of international and national legislation with
the 1978 MARPOL Protocol coming into effect in 1983 with an overall drop in the
total oil spilled from tankers at sea. In 1990, as a response to the Exxon Valdez spill in
Prince William Sound, the USA introduced the Oil Pollution Act 1990. This had a
dramatic impact throughout the nineties which was followed by the ISM Code that
was introduced by the IMO in July 1998. This demonstrates how poor design and bad

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practices of one type of corporate harm can be controlled internationally (Huijer,
2005).

Volume of oil spilled from tankers 1970 - 2009.
Data Source: ITOPF (2010)
700

600

500

400

300 Volume/ 000's tonnes

200

100

0
2006
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003

2009

It is clear that when a market area represents significant growth (hence increased
revenues for Government or inward investment) there are clearly defined synergies
between Government and corporate entities. Unless increased or significant harm is
caused Governments tend to give corporate in expanding markets a free hand and
hold off from any regulatory interventions. A good example is in the IT sector where
interference by Governments has been resisted but international security issues and
abuse of the web based systems have erode this position for the US Government
(Mc Carthy, 2010).

Muncie (2010) sees that the need to attract inward investment by developing
nations provides leverage for less regulated enterprise zones and a greater risk of
corporate harm. As evidence of harm increases as new markets are developed,
Governments tend to take a voluntary, rather than regulatory approach to limit
detrimental market growth such as the Voluntary Code of Practice on Employing
Migrant Workers/ Overseas Staff in Great Britain (BiTC, 2008).

Regulation put in place often as a response to significant incidents of corporate harm
that are identified throughout the market cycle. E.g. Sarbanes-Oxley Act on
corporate governance in the wake of the Enron scandal - McBarnet (2006), Laws
passed in senate for regulation of banks in USA - BBC News (2010c). At the other end

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of market spectrum we have the mature industries with defined innovative
strategies that are highly regulated as shown by Walsh (2010) in looking at the
impact of the financial crisis and regulatory burden on the future of the
pharmaceutical Industry.

This political interplay, allocation of responsibility (liability) or power diffusion is a
key factor in determining criminality and the extent or seriousness of the criminality
that may result from corporate harm. This is better understood in risk based
management systems where the risks are identified, managed and controlled. In
effect the corporate system under the pluralist model is an extension of political
power base, but this power can be withdrawn with different levels of effectiveness
and rapidity at Global and national level into the political arena in the form of
regulation.

Policy
Policies are position statements sometimes called “White Papers” and proposed
actions requiring discussion described as “Green papers” by the UK Government
(House of Commons, 2010) that may be adopted in formal legislation and regulation
usually over a period of up to 5 years or the lifetime of an elected Government.
When a policy is implemented it usually becomes legislation, but may take other less
formal forms such as;
A code of practice which may be mandatory or voluntary
Standards such as risk based management systems based on international
standards including ISO14001 (Environment), OHAS18000 (Heath & Safety),
ISO9000 (Quality) which may relate to a product, process, good or
management practice
Self regulation – a common feature usually linked to standards or voluntary
systems including ethical auditing systems such as SEDEX (2010).
Guidance (possibly in relation to existing laws that may have some currency
in relation to an issue).

A number of policies have been implemented to redress the balance of power
between corporations and society. McBarnet (2006) suggests that Enron had put
ethics, culture and the spirit of the law on the corporate professional and regulatory
agenda, and as a result of this and other financial issues, the US government
introduced the Sarbanes-Oxley Act on corporate governance.

Pussey (2007) suggests that as a result of the high profile financial cases such as BCCI
and Barings both the United Nations and The Basle Committee on Banking came
together to produce the Vienna Convention 1988 and the Basle Concordat which
addressed the issue of money laundering. Further policies from The Financial Action

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Taskforce were introduced to further combat money laundering and after the
terrorist attacks of September 11th. This was then enlarged to include the issue of
terrorist financing.

The Huijer (2005) study shows the impacts of the Marpol Convention on oil leakages
from tankers discussed earlier follows the same tried and trusted model of a treaty
followed by national interventions, though this process did take over 30 years.

Corporations have been able to avoid criminalisation in what Muncie et al (2010)
describe as the attempt to close the ‘space between laws’. If powerful corporations
can leverage their financial, political and economic power to influence government
and government policy, if they can operate across borders and ignore or flout the
laws and conventions of their resident country, then how can policy redress the
balance?

In terms of policy Muncie et al (p159, 2010) state that: ‘International law has so far
failed to develop universal legal stands for corporations.’ However the establishment
of the Norms on the Responsibilities of Transnational Corporations and Other
Business Enterprises with Regards to Human Rights, published by the UN
Commission on Human Rights and adopted by the UN in 2003 provides a policy
response that attempts to redress the balance in the distribution of power between
corporations and society. The Norms include:
General obligations: States have primary responsibility for ensuring that
transnational corporations and other businesses respect human rights.
Corporations also have an obligation to promote and respect human rights,
including vulnerable groups and indigenous peoples:
Rights to equal opportunity and non-discriminatory treatment: Corporations
have the responsibility to ensure equality rights are derived from
international instruments and national legislation, including international
human rights law.
Rights to security of person: Corporations should not benefit from war
crimes, crimes against humanity, genocide, torture, forced labour and
security provision shall observe international human rights norms.
Rights of workers: Corporations shall not use forced labour, shall respect the
rights of children, provide a safe working environment, provide wages
commensurate with the provision of adequate living conditions and finally
corporations shall ensure freedom of association.
Respect for national sovereignty and human rights: Corporations shall
recognise and respect international laws, national laws and the regulatory
environment and respect the countries’ policies which they operate in and do
so with transparency.

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Corporations shall not offer, condone or engage in any acts of bribery and
corruption.
Corporations shall refrain from any activity which supports or encourages
abuses of human rights nor should they provide goods or services that can be
used to abuse human rights. Corporations shall respect the rights of people
and contribute to the realisation of a better and improved standard of
physical and mental health as well as improved education, housing and civil
rights.
Obligations with regard to consumer protection: Corporations shall market
their products in line with fair business standards and not produce,
distribute, market or advertise harmful or potentially harmful products for
use by consumers.
Obligations with regard to environmental protection: Corporations shall
observe national laws and regulations relating to the preservation of the
environment and also seek to conduct their activities in a manner
contributing to the wider goal of sustainable development.
(Adapted from UNCHR, 2003)

From reviewing these obligations it is possible to note responses to the power that
corporations can leverage. In terms of corporations leveraging their ‘economic
attractiveness” to influence countries to relax their employment and equality laws
we can see that there are obligations concerning equal opportunity and non-
discriminatory treatment. We can clearly see the global foundations of the
framework for corporate and social responsibility.

In terms of pollution and incidents such as the Union Carbide factory there are now
clearly stated global obligations concerning the environment. Instruments such as
Export Processing Zones can now be challenged as the obligations cover workers
rights, standards of living. The policy also covers consumer protection, thereby
addressing incidents such as the Cadbury’s and salmonella outbreak in 2006. There
is a very clear link between the act and the corporate harms that corporations inflict.

It must be noted though that these are obligations not legal sanctions. Corporations
comply voluntarily with the principles of the policy and these principles must be
legally sanctioned in national courts or through international instruments. A number
of significant challenges can therefore be made. The first challenge concerns the use
of Export Processing Zones: as an example of what Muncie et al (2010) has referred
to an Export Processing Zone such as Saipan operates within and without of the US.
Saipan, it is claimed can only operate because the American government allows it to
do so.

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The principle of the norms can only be sanctioned by national or international law
and here is a prime case of a nation state saying one thing, i.e. adhering and
supporting international human rights, and doing another. Examples of this can be
seen in China, and Nielsen (2007) asserts that there are over 260 EPZs in 67
countries. Another significant challenge facing the norms is the ‘economic” need
that, those developing countries have and the pressure that loans from the IMF and
the World Bank impose.

Many developing countries need to encourage large corporations to come into their
markets to drive prosperity, build infrastructure and so on. A method of doing this is
to make the regulatory system as amenable as possible, thus negating many of the
obligations concerning workers rights and consumer’s rights. At the same time
pressure from loan agreements can induce countries to provide what are considered
more favourable business conditions. However, we see the retail industry seeking to
establish best practices through the voluntary development of the SEDEX (Supplier
Ethical data Exchange) scheme which now covers over 22,000 company sites
employing about 8.5 million workers (Sedex, 2010) in trying to address ethical global
supply chain concerns.

It can be argued that underpinning the norms would require a global or international
form of jurisprudence. Given the variance in laws between countries, the variance in
the value sets between people, the variance in the uptake or interpretation of
human rights between countries there is, and will continue to be great difficulty in
harmonising what is criminal and what is not in a global business environment.

Punch (2000) and Mokhiber (1999) assert that corporations are seen as legitimate
businesses and clean cut executives pursuing business are not seen as criminal and
they also have the financial, legal and social power to bargain their way out of
trouble. Punch (2000), Mokbiber (1999) and McBarnet (2006) see the use of
corporate power as an enabler to avoid sanctions (which can be viewed as policy
responses) and criminalisation: be it through plea-bargaining into civil courts, self
and increased regulation, mobilisation or making deals with the government. Punch
(2000) goes further than this though, and suggests that there are more facets to the
distribution of power that enable corporations to avoid criminalisation citing key
factors such as:
Legal systems that have great difficulty in tracing decision making from the
boardroom to the scene of the disaster or accident, it is very difficult to make
an explicit connection between corporate policies and violent outcomes, and
The law is fundamentally focused on the individual and not the organisation
at a structural as well as an ideological level.

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Discussion and some conclusions
To increasing criminalise corporations for the harm that they cause will require
significant cultural, ideological and structural change. It is clear that bringing
corporate actions into line to address harm on a global scale requires a long time and
lot of patience supported by clear international agreements and commitments that
can be eventually transposed to national law level.

We have seen examples of corporate harm that may be described as a deliberate act
that leads to obvious demonstrable harm through deaths and injury and/or can be
traced through theft, fraud and selfish financial gain – this is our deviant elitist sub
culture referred to earlier. This clearly is an area where the criminal law with
punitive consequences can be brought to bear to excise the wrongful behaviour and
deviant practices.

Other types of corporate harm do not rationally fit this model. In situations where it
is clear that significant harm has been caused, but the malicious motives to commit
the crime are not obvious or simply not there, it is difficult to place the blame on
individuals within a corporate entity that seem simply observers (rather than players
with deliberate motives) to such damaging or tragic events.

The race to globalise is based on short to medium term gain (high returns) with
significant and what seems in hind sight (often inexplicably) accepted gain against
the pain of any harm (governments would refer to this as the balance of risk),
provides a key driver for global corporate expansion. The diffusion of power through
the corporate entities offers a method to spread, mitigate and in essence control the
risks through an iterative process where governments and corporate entities jostle in
a power struggle that waxes and wanes with Governments as the markets take their
natural cyclical progression. The punishments here are generally economic to deter
future reoccurrences and to ensure adopted bad practices are changed and brought
under proper control.

The UN has set out a universal global framework for good corporate practice. Today
we recognise this as corporate social responsibility that now takes different forms
within corporate entities on a voluntary basis. In essence, it represents a process of
power exchange between government and corporate sector that in time is likely to
become increasing enforceable with future global treaties and national legislation. It
is complex and far reaching corporate obligation that Muncie et al (p159, 2010)
recognise is not in place and history indicates will take many decades to translate
into effective global regulation.

15


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